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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _____
Commission File Number: 001-39965
ON24, INC.
(Exact Name of Registrant as Specified in its Charter)


Delaware94-3292599
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
50 Beale Street, 8th Floor,
San Francisco, CA
94105
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (415) 369-8000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareONTFNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filer¨
Non-accelerated filerxSmaller reporting company¨
Emerging growth company
 x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
As of May 5, 2022, the registrant had 46,849,344 shares of common stock outstanding.


Table of Contents
Page
Item 1.
PART II.
1

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or this Report, contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. The forward-looking statements are contained principally in, but not limited to, the sections titled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts”, “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements include, but are not limited to, statements about:
our ability to attract new customers and expand sales to existing customers.
our ability to increase our revenue in future periods;
fluctuation in our performance, our history of net losses and expected increases in our expenses;
competition and technological development in our markets and any decline in demand for our solutions or generally in our markets;
our ability to expand our sales and marketing capabilities and otherwise manage our growth;
the impact of the COVID-19 pandemic and future variants of the virus on our customer growth rate, which may decline in future periods compared to 2021 as the impact of COVID-19 lessens, particularly as more people get vaccinated, mask mandates ease and our customers and their users consider engaging more frequently in in-person marketing activities;
disruptions, interruptions, outages or other issues with our technology or our use of third-party services, data connectors and data centers;
the impact of the security incident involving ransomware that we experienced or any other cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely;
our sales cycle, our international expansion and our timing of revenue recognition from our sales;
interoperability with other devices, systems and applications;
compliance with data privacy, import and export controls, customs, sanctions and other laws and regulations;
intellectual property matters, including any infringements of third-party intellectual property rights by us or infringement of our intellectual property rights by third parties; and
the market for, trading price of and other matters associated with our common stock.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in the section entitled “Risk Factors” and elsewhere in this Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Report. You should read this Report completely and with the understanding that our actual future results may be materially different from what we expect.
Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.


ON24, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)
March 31, 2022December 31, 2021
Assets
Current assets
Cash and cash equivalents$97,500 $164,948 
Marketable securities261,527 217,609 
Accounts receivable, net of allowances and reserves of $2,702 and $2,677 as of March 31, 2022 and December 31, 2021, respectively
42,078 46,117 
Deferred contract acquisition costs, current14,345 11,921 
Prepaid expenses and other current assets11,759 8,467 
Total current assets427,209 449,062 
Property and equipment, net8,672 8,780 
Operating right-of-use assets6,755 — 
Deferred contract acquisition costs, non-current18,023 20,887 
Other long-term assets1,469 1,760 
Total assets$462,128 $480,489 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$5,149 $3,123 
Accrued and other current liabilities18,707 19,011 
Deferred revenue92,127 96,225 
Finance lease liabilities, current1,637 1,768 
Operating lease liabilities, current
2,462 — 
Total current liabilities120,082 120,127 
Finance lease liabilities, non-current1,377 1,648 
Operating lease liabilities, non-current6,744 — 
Other long-term liabilities1,379 3,624 
Total liabilities129,582 125,399 
Commitments and contingencies (See Note 8)
Stockholders’ equity
Common stock, $0.0001 par value per share; 500,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 47,408,846 and 47,727,346 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively
5 5 
Additional paid-in capital545,144 550,839 
Accumulated deficit(210,998)(195,519)
Accumulated other comprehensive loss
(1,605)(235)
Total stockholders’ equity (deficit)332,546 355,090 
Total liabilities and stockholders’ equity
$462,128 $480,489 
See accompanying notes to condensed consolidated financial statements.
3

ON24, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)
Three Months Ended March 31,
20222021
Revenue:
Subscription and other platform$43,477 $42,910 
Professional services5,015 7,189 
Total revenue48,492 50,099 
Cost of revenue:
Subscription and other platform9,602 7,485 
Professional services3,342 3,209 
Total cost of revenue12,944 10,694 
Gross profit35,548 39,405 
Operating expenses:
Sales and marketing29,193 23,925 
Research and development10,644 7,946 
General and administrative10,877 9,768 
Total operating expenses50,714 41,639 
Loss from operations
(15,166)(2,234)
Interest expense54 231 
Other (income) expense, net177 116 
Loss before provision for income taxes
(15,397)(2,581)
Provision for income taxes
82 249 
Net loss
(15,479)(2,830)
Cumulative preferred dividends allocated to preferred stockholders (558)
Net loss attributable to common stockholders
$(15,479)$(3,388)
Net loss per share attributable to common stockholders:
Basic and diluted
$(0.32)$(0.10)
Weighted-average shares used in computing net loss per share attributable to common stockholders:
Basic and diluted
47,631,813 32,615,648 
See accompanying notes to condensed consolidated financial statements.
4

ON24, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(Unaudited)
Three Months Ended March 31,
20222021
Net loss
$(15,479)$(2,830)
Other comprehensive income (loss)
Foreign currency translation adjustment, net of tax21 (6)
Unrealized loss on available for sale debt securities, net of tax(1,391) 
Total other comprehensive loss
(1,370)(6)
Total comprehensive loss
$(16,849)$(2,836)
See accompanying notes to condensed consolidated financial statements.
5

ON24, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands, except share amounts)
(Unaudited)
Convertible
Preferred Stock
Redeemable convertible
preferred stock
Common StockAdditional
paid-in
capital
Accumulated
Deficit
Accumulated
other
comprehensive
income (loss)
Total
stockholders'
equity
(deficit)
Shares Amount Shares Amount SharesAmount
Balance as of December 31, 2021
 $  $ 47,727,346 $5 $550,839 $(195,519)$(235)$355,090 
Repurchase of common stock— — — — (964,895)— (14,293)— — (14,293)
Issuance of common stock upon exercise of stock options— — — — 415,918 — 847 — — 847 
Issuance of common stock upon release of restricted stock units— — — — 230,477 — — — —  
Payment for employee tax withholding upon net share settlement on equity awards— — — — — — (1,756)— — (1,756)
Stock-based compensation expense— — — — — — 9,507 — — 9,507 
Other comprehensive loss— — — — — — — — (1,370)(1,370)
Net loss— — — — — — — (15,479)— (15,479)
Balance as of March 31, 2022
 $  $ 47,408,846 $5 $545,144 $(210,998)$(1,605)$332,546 
Convertible
Preferred Stock
Redeemable convertible
preferred stock
Common StockAdditional
paid-in
capital
Accumulated
Deficit
Accumulated
other
comprehensive
income (loss)
Total
stockholders'
equity
(deficit)
Shares Amount Shares Amount SharesAmount
Balance as of December 31, 2020
21,683,548 $83,857 5,543,918 $70,000 10,896,137 $1 $27,512 $(171,263)$94 $(143,656)
Conversion of convertible preferred stock and redeemable convertible preferred stock to common stock upon initial public offering(21,683,548)(83,857)(5,543,918)(70,000)27,227,466 3 153,854 — — 153,857 
Issuance of common stock upon initial public offering, net of underwriting discounts and other offering costs— — — — 7,599,928 1 348,013 — — 348,014 
Issuance of common stock upon exercise of stock options— — — — 598,253 — 1,411 — — 1,411 
Payment for employee tax withholding upon net share settlement on equity awards— — — — — — (2,001)— — (2,001)
Stock-based compensation expense— — — — — — 4,994 — — 4,994 
Other comprehensive loss— — — — — — — — (6)(6)
Net loss— — — — — — — (2,830)— (2,830)
Balance as of March 31, 2021
 $  $ 46,321,784 $5 $533,783 $(174,093)$88 $359,783 
See accompanying notes to condensed consolidated financial statements.
6

ON24, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net loss
$(15,479)$(2,830)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization1,207 1,160 
Stock-based compensation expense9,507 4,994 
Amortization of deferred contract acquisition costs4,067 3,674 
Provision for allowance for doubtful accounts and billing reserve260 517 
Non-cash lease expense519  
Other254  
Changes in operating assets and liabilities:
Accounts receivable3,779 2,522 
Deferred contract acquisition costs(3,627)(5,450)
Prepaid expenses and other assets(3,555)(5,053)
Accounts payable1,742 601 
Accrued liabilities(752)373 
Deferred revenue(4,098)3,322 
Other non-current liabilities(594)(126)
Net cash (used in) provided by operating activities(6,770)3,704 
Cash flows from investing activities:
Purchase of property and equipment(984)(520)
Purchase of marketable securities(60,271) 
Proceeds from maturities and paydowns of marketable securities14,708  
Net cash used in investing activities(46,547)(520)
Cash flows from financing activities:
Proceeds from initial public offering, net of underwriting discounts 353,397 
Proceeds from exercise of stock options1,157 1,411 
Payment of tax withholding obligations related to net share settlements on equity awards(1,756)(2,001)
Payment for repurchase of common stock(13,074) 
Repayments of long-term debt(66)(22,407)
Repayment of capital lease obligations(417)(577)
Payments of offering costs (2,305)
Net cash (used in) provided by financing activities(14,156)327,518 
Effect of exchange rate changes on cash, cash equivalents and restricted cash27 (6)
Net increase in cash, cash equivalents and restricted cash(67,446)330,696 
Cash, cash equivalents and restricted cash, beginning of period165,043 58,345 
Cash, cash equivalents and restricted cash, end of period$97,597 $389,041 
Supplemental disclosures of cash flow information:
Cash paid for taxes, net of refunds$31 $11 
Cash paid for interest$46 $256 
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets (in thousands):
Cash and cash equivalents$97,500 $388,940 
Restricted cash included in other assets, non-current97 101 
Total cash, cash equivalent, and restricted cash$97,597 $389,041 
See accompanying notes to condensed consolidated financial statements.
7

ON24, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1. Description of Business and Significant Accounting Policies
Description of Business
ON24, Inc. and its subsidiaries (together, ON24 or the Company) provides a leading, cloud-based platform for digital engagement that enables businesses to convert customer engagement into revenue through interactive webinar experiences, virtual event experiences and multimedia content experiences. The Company’s platform offers a portfolio of interactive, personalized and content-rich digital experience products that creates and captures actionable, real-time data at scale from millions of professionals every month to provide businesses with buying signals and behavioral insights to efficiently convert prospects into customers. The Company was incorporated in the state of Delaware in January 1998 as NewsDirect, Inc. and in December 1998 changed its name to ON24, Inc. The Company is headquartered in San Francisco, California.
Initial Public Offering
On February 5, 2021, the Company closed its initial public offering (IPO) of 7,599,928 shares of its common stock at a public offering price of $50 per share for net proceeds of approximately $347.8 million, after deducting the underwriting discount of approximately $26.6 million and other offering costs of approximately $5.6 million. The shares of common stock sold in the IPO and the net proceeds from the IPO included the full exercise of the underwriters’ option to purchase additional shares.
Upon the closing of the IPO, all of the Company's outstanding shares of Class A-1 and Class A-2 convertible preferred stock and Class B and Class B-1 redeemable convertible preferred stock were automatically converted into an aggregate of 27,227,466 shares of common stock on a one-for-one basis.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Certain information and note disclosures included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2021. In the opinion of management, the condensed consolidated financial statements reflect all adjustments that are normal and recurring in nature and necessary for fair financial statement presentation. All intercompany transactions and balances have been eliminated in consolidation.
The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results anticipated for the full year.
Certain prior period amounts have been reclassified on the condensed consolidated balance sheets and in Note 5 to conform to the current year's presentation. Prior to the adoption of Accounting Standard Update (ASU) No. 2016-02 Leases (Topic 842) on January 1, 2022 (as further discussed below), capital leases and equipment loans were reported together as long-term debt, current and non-current, on the condensed consolidated balance sheets. Upon the adoption of the new lease standard, capital leases are now presented separately as finance leases, current and non-current, on the condensed consolidated balance sheets. The current and non-current portion of equipment loans have been reclassified to accrued and other current liabilities and other long-term liabilities, respectively, on the condensed consolidated balance sheets.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, the estimated expected benefit period for deferred contract acquisition costs, the determination of standalone selling price for the Company’s performance obligations, the allowance for doubtful accounts and billing reserve, the useful lives of long-lived assets, the assumptions used to
8

measure stock-based compensation, the valuation of deferred income tax assets and uncertain tax positions. Actual results could differ from those estimates.
Significant Accounting Policies
The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021. Other than the changes to the accounting policy for leases related to the adoption of ASC 842 on January 1, 2022 discussed below, there has been no material change to the Company’s significant accounting policies during the three months ended March 31, 2022.
Leases
The Company determines if an arrangement is a lease at inception. Lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. The interest rate used to determine the present value of the future lease payments is the Company's incremental borrowing rate because the interest rate implicit in its leases is not readily determinable. Right-of-use asset (ROU) asset is determined based on the lease liability initially established and reduced for any prepaid lease payments and any lease incentives received. The lease term to calculate the ROU asset and related lease liability may include options to extend or terminate the lease when the Company is reasonably certain that it will exercise the option.
Variable lease payments are expensed as incurred and are not included in the ROU assets and lease liabilities Leases with an initial term of 12 months or less are recognized in the condensed consolidated statements of operations on a straight-line basis over the lease term.
Lease expense is recognized on a straight-line basis over the lease term. The Company accounts for lease components and non-lease components as a single lease component for its new or modified office facility operating leases entered into on or after January 1, 2022.
Recently Adopted Accounting Standards
In June 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-13, Financial Instruments Topic 326: Credit Losses Measurement of Credit Losses on Financial Instruments (Topic 326), as amended, which requires an entity to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts utilizing a new impairment model known as the current expected credit loss (CECL) model. The new guidance affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. For public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, ASU No. 2016-13, is effective for the annual periods in fiscal years beginning after December 15, 2019, and interim periods therein. For all other entities ASU No. 2016-13, is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal year. The Company has elected to use the extended transition period that allows the Company to delay adoption of new or revised accounting pronouncements until such pronouncements are made applicable to private companies under the Jumpstart Our Business Startups Act of 2012. The Company is currently evaluating the impact of adopting this standard and does not expect the adoption to have a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), as amended, to supersede existing guidance on accounting for leases in Topic 840, Leases. Topic 842 generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.
The Company adopted the new lease standard effective January 1, 2022 on a modified retrospective basis using the effective date transition method, which applied the provisions of the new guidance at the effective date without adjusting the comparative periods presented. On the adoption date, the Company recognized on its condensed consolidated balance sheets $7.2 million of additional right-of-use assets, $9.6 million additional lease liabilities, and derecognized existing deferred rent and lease incentives totaling $2.4 million. The Company’s accounting for finance leases remained substantially unchanged.
9

The Company elected a number of the practical expedients permitted under the transition guidance within the new standard. This included the election to apply the practical expedient package upon transition, which comprised the following:
The Company did not reassess whether expired or existing contracts are or contain a lease;
The Company did not reassess the classification of existing leases; and
The Company did not reassess the accounting treatment for initial direct costs.
The Company also elected to apply the hindsight practical expedient which allows the Company to use hindsight in determining the lease term.
In addition, the Company elected the practical expedient related to short-term leases, which allows the Company not to recognize a ROU asset and lease liability for leases with an initial expected term of 12 months or less. The Company also elected to account for lease and non-lease components as a single lease component for operating facility leases.
Other than described above, the adoption of the new lease standard did not have any other material impacts on the Company’s consolidated financial statements. Additionally, the adoption of ASU 2016-02 has no impact on the Company’s debt-covenant compliance under its current revolving credit facility. See Note 6 for additional disclosure on leases.
Note 2. Revenue
Disaggregation of Revenue
The following table depicts the disaggregation of revenue by geographic region based on the shipping address of customers (in thousands):
Three Months Ended March 31,
20222021
United States$36,549 $36,954 
EMEA8,147 9,496 
Other3,796 3,649 
Total revenue$48,492 $50,099 
The following table summarizes the foreign countries which contributed 10% or more of the total revenue (in thousands):
Three Months Ended March 31,
20222021
United Kingdom*12 %
*Represent less than 10% of total revenue
No single customer accounted for 10% or more of the total revenue during the three months ended March 31, 2022 and 2021. Additionally, no single customer accounted for 10% or more of accounts receivable as of March 31, 2022 and December 31, 2021.
10

Contract Balances
Accounts receivable: The Company records accounts receivable when the Company has a contractual right to consideration. In some arrangements, a right to consideration for the Company’s performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled receivable. As of March 31, 2022 and December 31, 2021, unbilled receivables were included within accounts receivable, net of allowance for doubtful accounts and billing reserves on the condensed consolidated balance sheets and were not material.
Contract assets: The Company records a contract asset when the Company has satisfied a performance obligation but does not yet have an unconditional right to consideration. Contract assets are included in prepaid expenses and other current assets in the condensed consolidated balance sheets and were not material as of March 31, 2022 and December 31, 2021.
Contract liabilities: The Company defers its revenue when the Company has the right to invoice in advance of performance under a customer contract. The current portion of deferred revenue balances is recognized during the following 12-month period and the remaining portion is recorded as noncurrent, which is included in other long-term liabilities on the condensed consolidated balance sheet. The amount of revenue recognized in the three months ended March 31, 2022 that was included in deferred revenue at the beginning of the period was $40.0 million.
Remaining Performance Obligations
The terms of the Company’s subscription agreements are primarily annual and, to a lesser extent, multi-year. The Company may bill for the full term in advance or on an annual, quarterly or monthly basis, depending on the terms of the agreement. As of March 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $146.5 million, which consists of both billed consideration in the amount of $92.8 million and unbilled consideration in the amount of $53.7 million that the Company expects to recognize as revenue. As of March 31, 2022, the Company expects to recognize 81% of its remaining performance obligations as revenue over the subsequent 12 months and the remainder thereafter.
Costs to Obtain a Contract
The Company capitalizes sales commissions and associated payroll taxes paid to internal sales personnel and third-party referral fees that are incremental costs resulting from obtaining a contract with a customer. These costs are recorded as deferred contract acquisition costs on the condensed consolidated balance sheets. The Company determines whether costs should be deferred based on its sales compensation plans and if the commissions are incremental and would not have occurred absent the customer contract.
Sales commissions paid upon the initial acquisition of a customer contract are amortized over an estimated period of benefit of five years as the Company specifically anticipates renewals of customer contracts and commissions paid on renewal contracts are not commensurate with commissions paid on new customer contracts. Sales commissions paid upon renewal of customer contracts are amortized over the contractual renewal term. Amortization is recognized on a straight-line basis commensurate with the pattern of revenue recognition. Sales commissions paid related to professional services are amortized over the expected service period. The Company determines the period of benefit for commissions paid for the acquisition of the initial customer contract by taking into consideration the initial estimated customer life and the technological life of its platform and related significant features. Amortization of deferred contract acquisition costs was $4.1 million and $3.7 million for the three months ended March 31, 2022 and 2021, respectively. and is included in sales and marketing expense in the condensed consolidated statements of operations.
The Company periodically reviews these deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. The Company has no impairment losses relating to deferred contract acquisition costs during the periods presented.
11

Note 3. Marketable Securities
Marketable securities consisted of the following as of the periods presented (in thousands):
March 31, 2022
Amortized Cost
Gross Unrealized GainsGross Unrealized Losses Fair Value
Marketable Securities
U.S. Treasury securities$196,282 $1 $(1,544)$194,739 
Certificates of deposit14,273 4 (43)14,234 
Corporate debt securities32,979  (267)32,712 
Commercial paper
14,712  (48)14,664 
Asset-backed securities5,187  (9)5,178 
Total marketable securities$263,433 $5 $(1,911)$261,527 
    
December 31, 2021
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses Fair Value
Marketable Securities
U.S. Treasury securities$157,681 $ $(404)$157,277 
Certificates of deposit6,495  (5)6,490 
Corporate debt securities36,422  (95)36,327 
Commercial papers11,624 2 (6)11,620 
Asset-backed securities5,901 1 (7)5,895 
Total marketable securities$218,123 $3 $(517)$217,609 
The Company’s marketable securities have been classified as available for sale. All available for sale debt securities are available for use in current operations. Accordingly, they have been classified as current.
Marketable securities in an unrealized loss position for less than 12 months consisted of the following as of the periods presented (in thousands):
March 31, 2022December 31, 2021
Fair ValueGross Unrealized LossFair ValueGross Unrealized Loss
U.S. Treasury securities$179,056 $(1,544)$143,590 $(404)
Certificates of deposit11,727 (43)6,490 (5)
Corporate debt securities31,990 (267)36,327 (95)
Commercial paper14,663 (48)6,984 (6)
Asset-backed securities5,007 (9)4,967 (7)
Total$242,443 $(1,911)$198,358 $(517)
As of March 31, 2022 and December 31, 2021, the Company had no marketable securities in a continuous loss position for 12 months or more.
12

The Company reviews the individual securities that have unrealized losses on a regular basis to evaluate whether any security has experienced other-than-temporary decline in fair value below amortized cost. The Company evaluates, among other factors, whether the Company has the intention to sell any of these marketable securities and whether it is more likely than not that the Company will be required to sell any securities before recovery of the amortized cost basis. Since the Company has the ability to hold its investments until maturity, and the decline in fair value was not due to any credit-related factor, no decline was deemed to be other-than-temporary.
The Company had no realized gains or losses from marketable securities that were reclassified out of accumulated other comprehensive income for the three months ended March 31, 2022 and 2021.
The following summarizes the remaining contractual maturities of the Company’s marketable securities as of March 31, 2022:
Fair Value
One year or less$240,174 
Over one year through five years21,353 
Total marketable securities$261,527 
Note 4. Fair Value Measurement
The following tables summarize the Company’s financial instruments recorded at fair value on a recurring basis by level within the fair value hierarchy as of the periods presented
March 31, 2022
Level 1Level 2Level 3Total
Cash equivalents
Money market mutual funds
$94,358 $ $ $94,358 
Marketable Securities
U.S. Treasury securities 194,739  194,739 
Certificates of deposit 14,234  14,234 
Corporate debt securities 32,712  32,712 
Commercial paper
 14,664  14,664 
Asset-backed securities 5,178  5,178 
Total cash equivalents and marketable securities$94,358 $261,527 $ $355,885 

December 31, 2021
Level 1Level 2Level 3Total
Cash equivalents
Money market mutual funds
$151,079 $ $ $151,079 
Marketable Securities
U.S. Treasury securities 157,277  157,277 
Certificates of deposit 6,490  6,490 
Corporate debt securities 36,327  36,327 
Commercial paper 11,620  11,620 
Asset-backed securities 5,895  5,895 
Total cash equivalents and marketable securities$151,079 $217,609 $ $368,688 
13

As of March 31, 2022 and December 31, 2021, the Company classified its highly liquid money market mutual funds within level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classified its U.S. Treasury securities, certificates of deposit, commercial paper, corporate debt securities and asset-backed securities within level 2 of the fair value hierarchy because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security, which may not be actively traded.
Note 5. Balance Sheets Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following as of the periods presented (in thousands):
March 31, 2022December 31, 2021
Prepaid expenses$9,315 $5,617 
Other receivables2,245 2,786 
Other199 64 
Prepaid expenses and other current assets$11,759 $8,467 
Property and Equipment, Net
Property and equipment, net consisted of the following as of the periods presented (in thousands):
 March 31, 2022December 31, 2021
Computer, equipment and software(1)
$29,312 $28,227 
Furniture and fixtures1,118 1,118 
Leasehold improvements3,772 3,776 
Property and equipment, gross34,202 33,121 
Less: Accumulated depreciation and amortization(2)
(25,530)(24,341)
Property and equipment, net$8,672 $8,780 
(1)
Includes assets recorded under finance leases of $5.3 million as of March 31, 2022 and December 31, 2021.
(2)
Includes amount for assets recorded under finance leases of $2.6 million and $2.2 million as of March 31, 2022 and December 31, 2021, respectively.
Depreciation and amortization expense was $1.2 million for the three months ended March 31, 2022 and 2021.
The following table presents the property and equipment, net of depreciation and amortization, by geographic region as of the periods presented (in thousands):
 March 31, 2022December 31, 2021
United States$7,761 $7,899 
EMEA848 816 
Other63 65 
Total property and equipment, net$8,672 $8,780 
14

Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following as of the periods presented (in thousands):
 March 31, 2022December 31, 2021
Accrued bonus$2,000 $3,922 
Accrued vacation3,843 3,473 
Accrued commissions2,100 2,633 
Other accrued compensation and benefits2,112 2,474 
Accrued ESPP958 392 
Sales and other tax liabilities1,295 1,204 
Accrued professional service fees1,561 647 
Other4,838 4,266 
Accrued and other current liabilities$18,707 $19,011 
Other Long-term Liabilities
Other long-term liabilities consisted of the following as of the periods presented (in thousands):
 March 31, 2022December 31, 2021
Deferred rent liabilities$ $1,988 
Deferred revenue714 937 
Other665 699 
Other long-term liabilities$1,379 $3,624 
Note 6. Leases
The Company entered into operating leases primarily for office facilities and finance leases primarily for computer and network equipment purchases. These leases have terms generally ranging from 3 year to 12 years. The Company’s lease agreements generally do not contain any material variable lease payments, residual value guarantees or restrictive covenants.
The balance sheet classification of the Company’s right-of-use assets and lease liabilities as of the period presented was as follows (in thousands):
LeasesClassificationMarch 31, 2022
Non-Current Assets
Finance lease assetsProperty, plant and equipment, net$2,622 
Operating lease assetsOperating right-of-use asset6,755 
Total leased assets$9,377 
Current Liabilities
FinanceFinance lease liabilities, current$1,637 
OperatingOperating lease liabilities, current2,462 
Non-Current Liabilities
FinanceFinance lease liabilities1,377 
OperatingOperating lease liabilities6,744 
Total leased liabilities$12,220 
15

The components of lease cost were as follows (in thousands):
Lease CostClassificationThree Months Ended
March 31, 2022
Finance lease cost
Amortization of right-of-use assetsDepreciation and amortization$438 
Interest on finance lease liabilitiesInterest expense45 
Total finance lease cost$483 
Operating lease costSelling, general and administrative expenses$683 
The undiscounted future lease payments under the lease liabilities as of March 31, 2022 were as follows (in thousands):
Maturity of Lease LiabilitiesFinance LeaseOperating Lease
Remainder of 2022$1,449 $2,039 
20231,607 2,832 
202480 2,777 
2025 2,169 
Total lease payments3,136 9,817 
Less imputed interest(122)(611)
Present value of lease liabilities$3,014 $9,206 
The undiscounted future lease payments as of December 31, 2021 prior to the Company’s adoption of the new lease standard were as follows (in thousands):
Finance LeaseOperating Lease
2022$1,888 $2,633 
20231,607 2,844 
202480 2,789 
2025 2,272 
Total payments3,575 10,538 
Less: Amount representing interest(159)— 
Total payments, net of interest$3,416 $10,538 
Under ASC 840, the previous lease standard, rent expense, including common area maintenance charges, related to operating leases was $2.9 million, $2.8 million and $3.0 million, for 2021, 2020 and 2019, respectively.
The weighted-average lease term and discount rate as of March 31, 2022 were as follows:
Finance LeaseOperating Lease
Weighted-average remaining lease term1.7 years3.6 years
Weighted-average discount rate4.45 %3.76 %
16

Supplemental cash flow information was as follows (in thousands):
Three Months Ended
March 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases$470 
Financing cash used by finance leases417 
Right of use assets obtained in exchange for new lease liabilities:
Operating leases - adoption7,246 
Operating leases - three months ended March 31, 2022 
Finance leases 
Note 7. Credit Facility
In September 2021, the Company amended its revolving line of credit with a financial institution effective August 2021, which increased the Company's borrowing capacity to a maximum of $50.0 million with a letter of credit sublimit of $4.0 million and a credit card sublimit of $1.0 million. The amendment allows the Company to borrow up to $50.0 million if the Company maintains at least $100.0 million on deposit at the institution. If such deposit is less than $100.0 million, the Company may borrow up to the lesser of $50.0 million or an amount determined by the Company's trailing five months of recurring revenue, annualized renewal rate and annualized monthly churn rate, as defined by the agreement. As of March 31, 2022, the Company did not draw down on its line of credit and has a borrowing capacity of $50.0 million. The terms of the agreement permit voluntary prepayment without premium or penalty. The revolving credit facility matures in August 2024 and is secured by substantially all of the Company’s assets. The outstanding principal balance on the revolving line of credit, if any, is due at maturity. The Company is required to pay quarterly in arrears a commitment fee of 0.15% per annum on the undrawn portion available under the revolving line of credit. As of March 31, 2022, the Company had an outstanding standby letter of credit of $1.2 million as a guarantee for a leased space.
Interest on the revolving credit facility is payable monthly in arrears at a rate equal to the lender’s prime referenced rate as defined in the agreement. Prior to this amendment, interest on the revolving line of credit was the prime rate, as published by the Wall Street Journal (Prime Rate), plus 0.75% effective July 31, 2020, and Prime Rate plus 0.50% prior to July 31, 2020. The referenced prime rate was 3.50% as of March 31, 2022 and the Prime Rate was 3.25% as of March 31, 2021, respectively.
The revolving credit facility is subject to certain restrictions and financial covenants, including the requirement of maintaining a minimum debt to EBITDA ratio when the Company’s current portion of the total borrowing exceeds $5.0 million and the Company fails to maintain $100.0 million on deposits. In addition, the revolving line of credit agreement restricts the Company from paying dividends without prior approval from the financing institution. The Company was not subject to the financial covenants as of March 31, 2022.
Note 8. Commitment and Contingencies
Purchase Obligations
The Company has non-cancelable purchase commitments of $5.1 million as of March 31, 2022, primarily related to software license fees and co-location facilities and services, of which $2.7 million is expected to be paid in remainder of 2022, $2.3 million in 2023 and $0.1 million in 2024.
Contingencies
The Company has agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that may enable the Company to recover a portion of any future amounts paid.
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FASB ASC 450-20, Contingencies, sets forth the rules for accounting for uncertain tax positions for taxes not based on income. When a loss contingency exists, the likelihood of the incurrence of the liability can range from probable to remote. The Company believes it is reasonably possible that a loss will result from the sales and use tax assessments in the range of zero to $0.4 million. The Company has not recorded an accrual as of March 31, 2022 and 2021.
Legal Proceedings
The Company, its Chief Executive Officer, its Chief Financial Officer, the members of its Board of Directors and the underwriters that participated in the Company’s IPO are named as defendants in a consolidated putative class action, captioned In re ON24, Inc. Securities Litigation, 4:21-cv-08578-YGR (filed November 3, 2021), that is currently pending in the United States District Court for the Northern District of California. The consolidated complaint purports to assert claims under Sections 11 and 15 of the Securities Act of 1933 on behalf of all persons and entities that purchased, or otherwise acquired, the Company’s common stock issued in connection with the Company’s IPO. The complaints allege that the Company’s registration statement and prospectus contained untrue statements of material fact and/or omitted material facts about ON24’s growth and customer base. Plaintiffs seek, among other things, an award of damages and attorneys’ fees and costs. The Company believes the allegations in the lawsuits are without merit. The Company is unable to reasonably estimate a possible loss or range of possible loss, if any, arising from this matter at this early stage. Accordingly, no accrued litigation expense has been recorded in the accompanying condensed consolidated financial statements.
In the ordinary course of business, the Company may be subject from time to time to various proceedings, lawsuits, disputes or claims. Although the Company cannot predict with assurance the outcome of any litigation, the Company does not believe there are currently any actions, other than those described in the prior paragraph, that if resolved unfavorably, would have a material impact on its financial condition, results of operations or cash flows.
Note 9. Stockholders’ Equity (Deficit) and Equity Incentive Plan
Preferred Stock
The Company’s amended and restated certificate of incorporation authorized the issuance of 10,000,000 shares of undesignated preferred stock with a par value of $0.0001 per share. The Company’s board of directors is authorized to designate the rights, preferences, privileges and restrictions of the preferred stock from time to time.
Common Stock
The Company’s amended and restated certificate of incorporation authorized the issuance of 500,000,000 shares of common stock, $0.0001 par value per share. Holders of common stock are entitled to one vote per share.
Common Stock Reserved for Future Issuance
As of March 31, 2022, the Company had the following shares of common stock reserved for future issuance under its equity incentive plan and employee share purchase plan:
Stock options outstanding8,643,616 
Restricted stock units outstanding3,855,788 
Remaining shares available for future grant under 2021 Equity Incentive Plan(1)
7,066,086