ON24's Q3 2025 Earnings Call: Contradictions in AI Solutions, Sales/Marketing Efficiency, and LinkedIn Partnership Monetization

Date of Call: November 10, 2025

Financials Results

• Revenue: $34.6M total revenue in Q3; core platform revenue $34.0M; subscription/platform $32.0M; professional services $2.6M (~8% of revenue)
• EPS: $0.03 per diluted share (net income $1.2M) in Q3, vs $0.02 per share (net income $1.1M) in Q3 last year
• Gross Margin: 76% in Q3; year-to-date through Q3 77%, consistent with FY2025 guidance
• Operating Margin: Operating loss $0.4M, negative 1% operating margin in Q3, vs operating loss $0.8M and negative 2% margin in prior-year Q3

Guidance:

• Q4 total revenue expected $33.9M–$34.5M; core platform $33.3M–$33.9M; professional services ~8%; gross margin 76%–77%.
• Q4 non-GAAP operating loss $(0.8M)–$(0.2M); non-GAAP EPS $0.01–$0.02; adjusted EBITDA positive in Q4.
• Q4 core ARR expected to range from -1% to +$0.5M vs Q3; virtual conference ARR ~$2M at year-end.
• FY2025 revenue $138.6M–$139.2M; core platform $136M–$136.6M; FY non-GAAP op loss $(4.2M)–$(3.6M); non-GAAP EPS $0.05–$0.06; FY gross margin 76%–77%; adjusted EBITDA positive and positive free cash flow for 2025.
• Target S&M expense reduction to mid-30s% of revenue in 12 months and low-30s% in 2 years.

Business Commentary:

* Revenue and Profitability Performance: - ON24 reported revenue of $34.6 million for Q3, with profitability above guidance, achieving a strong performance on gross margins and free cash flow. - The growth was driven by a strong performance in their core platform and subscription services, despite seasonal softness in new growth bookings.

• AI Solutions Adoption:
• Approximately 20% of ON24's customers are now paying for AI solutions, marking an increase from the previous year.
• This increase is attributed to the introduction of new AI offerings and the integration of AI into ON24's platform, enhancing customer engagement and retention.

• Customer Metrics and Retention:
• ON24's average core ARR per customer reached over $80,000, with 51% of ARR in multiyear agreements, indicating strong customer retention.

• The strategy of focusing on larger enterprises and longer-term commitments has improved customer retention and increased the deployment of ON24's product set across its customer base.

• LinkedIn Partnership and Strategic Alliances:

• The recent partnership with LinkedIn aims to revolutionize event marketing by combining ON24's intelligent engagement platform with LinkedIn's professional network.
• The integration is expected to drive new business, enhance customer retention, and significantly impact ON24's growth in the coming years, with monetizable phases anticipated by the end of Q1 2026.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • "delivered a strong Q3 with revenue and profitability above the high end of our guidance"; "we delivered positive adjusted EBITDA in Q3 and our seventh consecutive quarter of positive free cash flow"; management: "expect significantly better ARR performance in Q4" and multiple references to accelerating AI adoption and a monetizable LinkedIn partnership.

Q&A:

• Question from Robert Oliver (Robert W. Baird & Co. Incorporated): You called out nearly 20% of customers paying for AI—what uptick are you seeing from that, is it contributing to higher ACV/expansion, and any color on contracts?
  Response: AI is driving retention and expansion: ~1 in 5 customers pay for AI, penetration and ASPs should rise with AI Translate and AI Propel+, ~40–50% of new deals include AI, and management expects AI to become the largest expansion driver next year.

• Question from Robert Oliver (Robert W. Baird & Co. Incorporated): How much of the sales & marketing efficiency is tech/AI versus restructuring/headcount changes; how do you maintain enterprise growth while cutting costs?
  Response: Efficiency gains come from streamlining go-to-market over several years plus deploying AI internally and reallocating resources to higher-growth regulated industries; the company reduced S&M materially and will maintain needed go-to-market resources while targeting ARR growth in 2026.

• Question from Scott Berg (Needham & Company, LLC): On the deal slippage from Q3 to Q4, were there commonalities or was it random—what slipped and why?
  Response: Slippage was mostly seasonal/new-business delays (proposal-to-close) in Q3, about $600–700k slipped with ~60–65% already closed in Q4; some short-term pressure in pharma but installed-base performance remained solid.

• Question from Scott Berg (Needham & Company, LLC): For the LinkedIn partnership, is this primarily channel/distribution or will there be monetization opportunities?
  Response: Multiphase integration: initial phases boost retention/new customers and distribution; later phases will enable monetizable SKUs (e.g., LinkedIn look-alike audiences) leveraging first-party data, with monetization expected to begin by Feb/Q1 and impact top line into 2026.

• Question from Lucas Morison (Canaccord Genuity Corp.): Please explain the AI search discoverability agenda—what will the products do and what can you achieve there?
  Response: ON24 will index and optimize event and derivative content (transcripts, clips, blogs, localized versions) for LLM/AI search so millions of pieces become discoverable/indexable, enabling continuous engagement and LLM-driven audience discovery for customers.

• Question from Lucas Morison (Canaccord Genuity Corp.): What is the timeline for the LinkedIn partnership phases and completion?
  Response: Phase 1 this year; Phase 2 by year-end; monetizable elements (look-alike audiences) expected by February/Q1; tight integration and meaningful customer capability by end of Q1 to drive top-line impact.

• Question from Alinda Li (William Blair & Company L.L.C.): Since shifting to an enterprise go-to-market focus, how has performance compared to expectations?
  Response: Regulated industries now ~50% of revenue; financial services and professional services growing mid-single digits with ~90% gross retention; the enterprise/regulatory focus is delivering improved customer metrics and winbacks.

• Question from Alinda Li (William Blair & Company L.L.C.): How has the new CMO David Lee's onboarding gone and how is marketing supporting AI/product conversations with sales?
  Response: CMO ramped; new VP-level hires in demand generation and corporate/product marketing tightly aligned with sales and customer success; marketing is running LinkedIn and regulated-industry campaigns and supporting AI-focused go-to-market to improve efficiency and growth.

Contradiction Point 1

AI Solutions Impact on Enterprise Growth and ARR

It highlights the varying impact and significance of AI solutions on enterprise growth and ARR, which are crucial for understanding ON24's revenue and business strategy.

Can you explain the impact of AI solutions on contract and enterprise growth and how AI is driving efficiencies in sales and marketing? - Robert Oliver (Robert W. Baird & Co. Incorporated, Research Division)

2025Q3: ON24 now has 1 in 5 customers paying for AI solutions. AI solutions are the 2nd-largest driver of expansion, expected to become the largest driver in 2026. AI drives growth in retention and expansion, with nearly 40% of new deals including AI. - Sharat Sharan(CEO & Chair of the Board)

Can you discuss the current market environment among your customers, the impact of Gen AI, and the pipeline for Q4? - Robert Oliver (Analyst)

2025Q2: In Q2, we saw good enterprise new business performance, improved gross retention, and traction with AI-powered ACE. Customer conversations show excitement for AI offerings, with increased traction in financial services and life sciences. - Sharat Sharan(CEO)

Contradiction Point 2

Sales and Marketing Efficiency and Spend Reduction

It involves the effectiveness and progress of sales and marketing efficiency initiatives, which are critical for ON24's operational and financial health.

Break down the components of go-to-market efficiency and how to sustain growth in high-ARR accounts without hindering progress? - Robert Oliver (Robert W. Baird & Co. Incorporated, Research Division)

2025Q3: Sales and marketing spend reduced from $25M to less than $50M per quarter since mid-2022. AI tools and reallocating resources are enhancing efficiency. - Steve Vattuone(CFO)

How are you increasing penetration with enterprise customers, and is the focus on volume or cross-selling? - Ian Black (Needham & Company)

2025Q2: We delivered over the high end of revenue guidance for Q2, with positive EBITDA and free cash flow. Guidance raised for full-year revenue. - Steve Vattuone(CFO)

Contradiction Point 3

AI-Driven Growth and Efficiency

It involves the impact and role of AI in driving growth and efficiency, which are critical for strategic decision-making and investor expectations.

Can you clarify the impact of AI on contracts and enterprise growth, and how AI is improving efficiency in sales and marketing? - Robert Oliver (Robert W. Baird & Co. Incorporated, Research Division)

2025Q3: ON24 now has 1 in 5 customers paying for AI solutions. AI solutions are the 2nd-largest driver of expansion, expected to become the largest driver in 2026. AI Translate and AI Propel+ offerings are boosting penetration. AI drives growth in retention and expansion, with nearly 40% of new deals including AI. ON24 is leveraging AI internally to improve efficiency. - Sharat Sharan(CEO)

Can you update on marketing budget trends and any green shoots, especially in the tech sector? - Noah Herman (J.P. Morgan)

2024Q4: In 2024, we accelerated our investment in AI-powered ACE platform to provide customers with immediate ROI. AI-powered ACE is the next generation of our platform. It enhances content engagement and leads to a 2x improvement in ROI for our customers. - Sharat Sharan(CEO)

Contradiction Point 4

Marketing and Sales Efficiency

It involves changes in go-to-market efficiency and strategic shifts, which are crucial for operational performance and investor expectations.

Can you break down the components of go-to-market efficiency and how to sustain growth in high-ARR accounts without hindering progress? - Robert Oliver (Robert W. Baird & Co. Incorporated, Research Division)

2025Q3: Sales and marketing spend reduced from $25M to less than $50M per quarter since mid-2022. AI tools and reallocating resources are enhancing efficiency. Focus is on regulated industries like financial services and life sciences. The team is working to maintain efficiency while ensuring ARR growth in 2026. - Steve Vattuone(CFO)

How should we view the OpEx line items (sales, marketing, R&D) in light of the guidance? - Noah Herman (J.P. Morgan)

2024Q4: Primarily focused on returning to top-line growth in 2025 while maintaining positivity. Gross margins in the mid to high-70s and positive adjusted EBITDA. Investments in product innovation (AI-powered ACE) and go-to-market efforts for regulated industries. - Steve Vattuone(CFO)

Contradiction Point 5

LinkedIn Partnership and Monetization

It involves the expected benefits and monetization strategy from the LinkedIn partnership, which is important for future growth and investor expectations.

What are the monetization opportunities from the LinkedIn partnership? Is it primarily focused on customer retention and platform improvements? - Scott Berg (Needham & Company, LLC, Research Division)

2025Q3: The LinkedIn partnership is a multi-phase initiative. Initial phases focus on retention and new business, followed by monetizable SKUs for look-alike audiences. Full integration by end of Q1 will provide meaningful impact to ON24's top line. - Sharat Sharan(CEO)

Can you summarize the current marketing budget environment and any positive trends in the technology sector? - Noah Herman (J.P. Morgan)

2024Q4: In terms of, again, net new customers or retention, we haven't seen any material changes. Our customer retention remains strong. - Sharat Sharan(CEO)