ON24 Announces Fourth Quarter and Full Year 2021 Financial Results

• ARR of $171.4 million

• Total of 366 customers contributing at least $100K in ARR, up 21% year-over-year

• Fourth quarter subscription and other platform revenue increased 9% year-over-year to $45.0 million

• Full year 2021 total revenue increased 30% year-over-year to $203.6 million

• Full year 2021 subscription and other platform revenue increased 43% year-over-year to $175.9 million

ON24, a leading cloud-based hybrid engagement platform, today announced financial results for its fourth quarter and fiscal year ended December 31, 2021.

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“2021 was the most pivotal year in the company’s history as we achieved numerous milestones across the business. To continue on our path towards reaching $500 million of ARR and beyond, the entire team is focused on executing against key priorities in 2022”

“2021 was the most pivotal year in the company’s history as we achieved numerous milestones across the business. To continue on our path towards reaching $500 million of ARR and beyond, the entire team is focused on executing against key priorities in 2022,” said Sharat Sharan, co-founder and CEO of ON24. “I continue to be optimistic as ever about our future as sales and marketing for B2B organizations is rapidly moving towards digital channels. We are the leading B2B sales and marketing platform for digital engagement, delivering actionable insights to drive measurable business growth. ON24 is a growth business against the backdrop of powerful secular trends and a large TAM.”

Steven Vattuone, Chief Financial Officer of ON24 added, “In 2021, we delivered 43% year-over-year growth in subscription and other platform revenue and saw 21% year-over-year growth in the number of customers contributing more than $100K in ARR. While we had a solid Q4, our outlook reflects some near-term factors as we transition to a post-pandemic world that are impacting top-line growth. We expect Q1 2022 to be the trough with ARR growth to accelerate throughout the year, exiting fiscal 2022 with low teens ARR growth which will further accelerate into fiscal 2023. We are proactively making improvements in areas of our business that we believe will drive operational excellence and re-accelerate growth.”

Fourth Quarter 2021 Financial Highlights

• ARR of $171.4 million as of December 31, 2021, an increase of 12% year-over-year.
• Revenue:
  • Total revenue was $52.0 million, a decrease of 2% year-over-year.
  • Subscription and Other Platform Revenue, was $45.0 million, an increase of 9% year-over-year.
  • Professional Services Revenue, was $7.0 million, a decrease of 41% year-over-year.
• GAAP Operating Loss was $9.6 million, compared to GAAP operating income of $9.6 million in the fourth quarter of 2020.
• Non-GAAP Operating Loss was $1.8 million, compared to non-GAAP operating income of $11.1 million in the fourth quarter of 2020.
• GAAP Net Loss attributable to common stockholders was $9.5 million, or $(0.20) per diluted share, compared to net income attributable to common stockholders of $8.0 million, or $0.17 per diluted share in the fourth quarter of 2020.
• Non-GAAP Net Loss was $1.7 million, or $(0.03) per diluted share, compared to a non-GAAP net income of $11.0 million, or $0.57 per diluted share in the fourth quarter of 2020.
• Cash Flow: Net cash used in operating activities was $4.5 million, compared to $10.7 million provided by operating activities in the fourth quarter of 2020. Free cash flow was negative $5.6 million for the quarter, compared to $10.3 million in the fourth quarter of 2020.
• Cash, Cash Equivalents and Marketable Securities totaled $382.6 million as of December 31, 2021.

Full Year 2021 Financial Highlights

• Revenue:
  • Total revenue was $203.6 million, an increase of 30% year-over-year.
  • Subscription and Other Platform revenue, was $175.9 million, an increase of 43% year-over-year.
  • Professional Services revenue was $27.7 million, a decrease of 19% year-over-year.
• GAAP Operating Loss was $23.6 million, compared to GAAP operating income of $21.8 million in 2020.
• Non-GAAP Operating Income was $2.1 million, compared to non-GAAP operating income of $24.8 million in 2020.
• GAAP Net Loss attributable to common stockholders was $24.8 million, or $(0.57) per diluted share, compared to net income attributable to common stockholders of $15.1 million, or $0.35 per diluted share in 2020.
• Non-GAAP Net Income was $1.4 million, or $0.03 per diluted share, compared to $23.7 million, or $1.46 per diluted share in 2020.
• Cash Flow: Net cash generated in operating activities was $5.2 million, compared to $37.5 million provided by operating activities in 2020. Free cash flow was $1.6 million for 2021 compared to $36.5 million in 2020.

For more information regarding non-GAAP operating income (loss), non-GAAP net income (loss) and free cash flows, see the section titled “Non-GAAP Financial Measures” below. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure, see the tables at the end of this press release.

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Full Year 2021 Customer Metrics

As of December 31, 2021:

• Total customer count increased 6% year-over-year to 2,122
• Customers contributing at least $100,000 in ARR increased 21% year-over-year to 366
• Multi-Product Customers: 35% of customers had two or more products
• Multi-Year Contracts: 35% of ARR comprises multi-year contracts
• Dollar-based Net Retention Rate (NRR) was 97%

Recent Business Highlights

• Launched the ON24 Partner Network with more than 40 leading sales and marketing agencies, solutions integrators, and software companies. Partners get access to new co-selling, co-marketing, and integration opportunities with ON24 and fellow ecosystem partners.
• Announced the availability of ON24 Go Live, a new ON24 video and networking event experience.
• Released The 2022 State of Digital Experiences report which reviews the overall digital experiences landscape based on customer use of ON24 webinars, curated content experiences, and personalized experiences.
• Honored last year’s most innovative and creative digital experiences using the ON24 platform at the annual “Webinars and Virtual Events that Rocked.”
• Launched new integrations with the Drift platform for joint customers to seamlessly combine real-time Drift activity and conversational data with attendee and first-person engagement data from ON24 digital experiences.
• Joined the HubSpot App Marketplace with key event, attendee, and first-person engagement data flowing from ON24 Platform to HubSpot CRM to give sales and marketing teams a more complete view of prospect and customer-facing activities across digital and in-person channels.

Industry Recognition

• Recognized as a global market leader in the Marketing Event Management Category within Research In Action’s 2021 Vendor Selection Matrix. ON24 ranked first among the top 19 global vendors, receiving the highest scores for both strategy and execution.
• ON24 Webcast Elite was rated as the #1 webinar software for the third consecutive quarter on G2, one of the largest software marketplace and services review platforms. Based on user reviews, ON24 ranked highest in customer satisfaction and largest in market presence among all webinar products in G2’s Grid® Reports for Webinar Software for the Winter 2022 report.

Financial Outlook

For the first quarter of 2022, ON24 expects:

• Total revenue of $47 to $48 million.
• Non-GAAP operating loss of $8 to $7 million.
• Non-GAAP net loss per share of $(0.17) to $(0.15) using approximately 47.7 million basic and diluted shares outstanding.

For the full year 2022, ON24 expects:

• Total revenue of $200 to $204 million.
• Non-GAAP operating loss of $30 to $27 million.
• Non-GAAP net loss per share of $(0.64) to $(0.58) using approximately 49.0 million basic and diluted shares outstanding.

Conference Call Information

ON24 will host a conference call and live webcast for analysts and investors today at 2:00 p.m. Pacific Time. Parties in the United States can access the call by dialing (888) 394-8218, and international parties can access the call by dialing (323) 794-2588, using the conference ID 6121832.

Definitions of Certain Key Business Metrics

Annual Recurring Revenue (“ARR”): ARR is calculated as the sum of the annualized value of our subscription contracts as of the measurement date, including existing customers with expired contracts that we expect to be renewed. Our ARR amounts exclude professional services, overages from subscription customers and Legacy revenue.

Dollar-based Net Retention Rate (“NRR”): Our NRR as of a specified period end is calculated by dividing current period ARR by prior period ARR. Prior period ARR is the ARR for all engagement platform customers as of twelve months prior to such period end. Current period ARR is the ARR for the same customers as of the specified period end. Our NRR includes the effect of any customer renewals, expansion, contraction and churn but excludes ARR from customers that were acquired in the twelve months prior to the specified period end. Our NRR is subject to adjustment for mergers, acquisitions, dispositions and similar transactions involving our customers.

Non-GAAP Financial Measures

In addition to our results determined in accordance with generally accepted accounting principles in the United States, or GAAP, we consider our non-GAAP operating income (loss), non-GAAP net income (loss) and free cash flow in evaluating our operating performance. We define non-GAAP operating income (loss) as net income (loss) excluding, interest expense, other (income) expense, net, income tax and stock-based compensation. We define non-GAAP net income (loss) as net income (loss) excluding cumulative preferred dividends allocated to preferred shareholders and stock-based compensation. We define free cash flow as net cash provided by (used in) operating activities, less purchases of property and equipment.

We use non-GAAP operating income (loss) and non-GAAP net income (loss) to evaluate our ongoing operations and for internal planning and forecasting purposes, and we use free cash flow to measure and evaluate cash generated through normal business operations. We believe non-GAAP operating income (loss) and non-GAAP net income (loss) may be helpful to investors because they provide consistency and comparability with past financial performance. We believe free cash flow may be helpful to investors because it reflects that some purchases of property and equipment are necessary to support ongoing operations, while providing a measure of cash available to acquire customers, expand within existing customers and otherwise pursue our business strategies.

However, these non-GAAP financial measures are each presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Non-GAAP financial measures have no standardized meanings prescribed by GAAP and are not prepared under a comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measure as a tool for comparison.

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