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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 September 30, 2023
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 filerx
Non-accelerated filer¨Smaller 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 November 3, 2023, the registrant had 41,501,280 shares of common stock outstanding.


Table of Contents
Page
Item 1.
Item 2
Item 3
Item 4
Item 1.
Item 1A.
Item 2.
Item 3.
Item 5
Item 6.

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 grow our revenue;
our ability to attract new customers and expand sales to existing customers.
fluctuation in our performance, our history of net losses and any increases in our expenses;
competition and technological development in our markets and any decline in demand for our solutions or generally in our markets;
adverse general economic and market conditions and spending on sales and marketing technology;
our ability to expand our sales and marketing capabilities and achieve growth;
the impact of the resumption of in-person marketing activities on our customer growth rate;
disruptions, interruptions, outages or other issues with our technology or our use of third-party services, data connectors and data centers;
the impact of any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely;
our sales cycle, our international presence 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)
September 30, 2023December 31, 2022
Assets
Current assets
Cash and cash equivalents$10,804$26,996
Marketable securities202,935301,125
Accounts receivable, net of allowances and reserves of $3,475 and $2,930 as of September 30, 2023 and December 31, 2022, respectively
25,88543,757
Deferred contract acquisition costs, current12,32713,136
Prepaid expenses and other current assets6,5386,281
Total current assets258,489 391,295 
Property and equipment, net5,851 7,212 
Operating right-of-use assets3,312 5,606 
Intangible asset, net1,394 1,979 
Deferred contract acquisition costs, non-current15,642 17,773 
Other long-term assets1,271 1,608 
Total assets$285,959 $425,473 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$2,696 $4,611 
Accrued and other current liabilities16,626 18,465 
Deferred revenue66,603 83,453 
Finance lease liabilities, current345 1,554 
Operating lease liabilities, current
2,692 2,648 
Total current liabilities88,962 110,731 
Operating lease liabilities, non-current3,176 5,040 
Other long-term liabilities1,302 1,741 
Total liabilities93,440 117,512 
Commitments and contingencies (See Note 9)
Stockholders’ equity
Common stock, $0.0001 par value per share; 500,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 42,595,628 and 47,554,801 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
4 5 
Additional paid-in capital488,305 562,555 
Accumulated deficit(295,638)(253,727)
Accumulated other comprehensive loss
(152)(872)
Total stockholders’ equity
192,519 307,961 
Total liabilities and stockholders’ equity
$285,959 $425,473 
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 September 30,Nine Months Ended September 30,
2023202220232022
Revenue
  
Subscription and other platform$36,430 $43,271 $114,130 $129,812 
Professional services2,792 4,304 10,241 14,493 
Total revenue39,222 47,575 124,371 144,305 
Cost of revenue
Subscription and other platform8,390 10,120 27,345 29,680 
Professional services2,457 3,182 8,908 9,867 
Total cost of revenue10,847 13,302 36,253 39,547 
Gross profit28,375 34,273 88,118 104,758 
Operating expenses
Sales and marketing21,510 26,553 68,555 84,596 
Research and development9,730 11,324 31,759 32,916 
General and administrative11,200 11,164 37,583 33,199 
Total operating expenses42,440 49,041 137,897 150,711 
Loss from operations
(14,065)(14,768)(49,779)(45,953)
Interest expense18 42 80 145 
Other income, net
(2,718)(463)(8,483)(183)
Loss before provision for income taxes
(11,365)(14,347)(41,376)(45,915)
Provision for income taxes
109 40 535 163 
Net loss
(11,474)(14,387)(41,911)(46,078)
Net loss per share:
Basic and diluted
$(0.26)$(0.30)$(0.92)$(0.97)
Weighted-average shares used in computing net loss per share:
Basic and diluted
43,832,475 47,640,200 45,655,106 47,357,711 
See accompanying notes to condensed consolidated financial statements.
4

ON24, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss
$(11,474)$(14,387)$(41,911)$(46,078)
Other comprehensive income (loss)
Foreign currency translation adjustment, net of tax(36)18 (18)(59)
Unrealized gain (loss) on available for sale debt securities, net of tax
154 235 738 (1,611)
Total other comprehensive income (loss)
118 253 720 (1,670)
Total comprehensive loss
$(11,356)$(14,134)$(41,191)$(47,748)
See accompanying notes to condensed consolidated financial statements.
5

ON24, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
SharesAmount
Balance as of June 30, 2023
45,013,743 $4 $501,416 $(284,164)$(270)$216,986 
Repurchase of common stock(3,416,682) (25,026)— — (25,026)
Excise taxes on repurchase of common stock
— — (179)— — (179)
Issuance of common stock upon exercise of stock options335,662  529 — — 529 
Issuance of common stock upon release of restricted stock units662,905   — —  
Stock-based compensation expense— — 11,565 — — 11,565 
Other comprehensive income
— — — — 118 118 
Net loss— — — (11,474)— (11,474)
Balance as of September 30, 2023
42,595,628 $4 $488,305 $(295,638)$(152)$192,519 

Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
SharesAmount
Balance as of June 30, 2022
47,421,627 $5 $548,740 $(227,210)$(2,158)$319,377 
Repurchase of common stock   — —  
Issuance of common stock upon exercise of stock options315,501  738 — — 738 
Issuance of common stock upon release of restricted stock units235,076   — —  
Stock-based compensation expense— — 9,903 — — 9,903 
Other comprehensive income
— — — — 253 253 
Net loss— — — (14,387)— (14,387)
Balance as of September 30, 2022
47,972,204 $5 $559,381 $(241,597)$(1,905)$315,884 
6

ON24, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
SharesAmount
Balance as of December 31, 2022
47,554,801 $5 $562,555 $(253,727)$(872)$307,961 
Cash dividend declared ($1.09 per share)
— — (49,872)— — (49,872)
Repurchase of common stock(7,517,260)(1)(59,238)— — (59,239)
Excise taxes on repurchase of common stock
— — (394)— — (394)
Issuance of common stock upon exercise of stock options733,884  1,417 — — 1,417 
Issuance of common stock upon release of restricted stock units1,741,765   — —  
Issuance of common stock under Employee Stock Purchase Plan (ESPP)82,438  546 — — 546 
Stock-based compensation expense— — 33,291 — — 33,291 
Other comprehensive income
— — — — 720 720 
Net loss— — — (41,911)— (41,911)
Balance as of September 30, 2023
42,595,628 $4 $488,305 $(295,638)$(152)$192,519 

Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
SharesAmount
Balance as of December 31, 2021
47,727,346 $5 $550,839 $(195,519)$(235)$355,090 
Repurchase of common stock(1,531,209) (21,808)— — (21,808)
Issuance of common stock upon exercise of stock options978,629  2,165 — — 2,165 
Issuance of common stock upon release of restricted stock units708,237   — —  
Issuance of common stock under ESPP89,201  833 — — 833 
Payment for employee tax withholding upon net share settlement on equity awards— — (1,756)— — (1,756)
Stock-based compensation expense— — 29,108 — — 29,108 
Other comprehensive loss
— — — — (1,670)(1,670)
Net loss— — — (46,078)— (46,078)
Balance as of September 30, 2022
47,972,204 $5 $559,381 $(241,597)$(1,905)$315,884 
See accompanying notes to condensed consolidated financial statements.
7

ON24, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20232022
Cash flows from operating activities:
Net loss
$(41,911)$(46,078)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization4,041 3,953 
Stock-based compensation expense33,291 29,108 
Amortization of deferred contract acquisition costs11,621 11,850 
Provision for allowance for doubtful accounts and billing reserve2,360 1,203 
Non-cash lease expense1,339 1,475 
Accretion of marketable securities
(5,853)(117)
Lease impairment charge
1,461  
Other206 103 
Changes in operating assets and liabilities:
Accounts receivable15,512 13,741 
Deferred contract acquisition costs(8,681)(10,040)
Prepaid expenses and other assets(43)(5)
Accounts payable(2,128)263 
Accrued liabilities(3,037)(1,369)
Deferred revenue(16,850)(15,231)
Other liabilities
(2,671)(1,749)
Net cash used in operating activities
(11,343)(12,893)
Cash flows from investing activities:
Purchase of property and equipment(1,076)(2,400)
Acquisition, net of cash acquired (2,495)
Purchase of marketable securities(232,504)(211,310)
Proceeds from maturities of marketable securities
319,466 121,965 
Proceeds from sale of marketable securities17,739  
Net cash provided by (used in) investing activities
103,625 (94,240)
Cash flows from financing activities:
Proceeds from exercise of stock options1,341 2,467 
Proceeds from issuance of common stock under ESPP546 833 
Payment of tax withholding obligations related to net share settlements on equity awards (1,756)
Payment for repurchase of common stock(59,239)(21,808)
Payment of cash dividend
(49,872) 
Repayment of equipment loans
(187)(201)
Repayment of finance lease obligations
(1,315)(1,399)
Net cash used in financing activities
(108,726)(21,864)
Effect of exchange rate changes on cash, cash equivalents and restricted cash164 487 
Net decrease in cash, cash equivalents and restricted cash
(16,280)(128,510)
Cash, cash equivalents and restricted cash, beginning of period27,169 165,043 
Cash, cash equivalents and restricted cash, end of period$10,889 $36,533 
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets:
Cash and cash equivalents
$10,804 $36,367 
Restricted cash included in other assets, non-current
$85 $166 
Total cash, cash equivalent, and restricted cash
$10,889 $36,533 
Supplemental disclosures of cash flow information:
Cash paid for taxes, net of refunds$1,074 $353 
Cash paid for interest$46 $120 
See accompanying notes to condensed consolidated financial statements.
8

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 delivers insights for revenue growth 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.
Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of ON24 Inc. and its subsidiaries and 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, 2022. 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.
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 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, 2022. There have been no significant changes to these policies during the nine months ended September 30, 2023
Recently Adopted Accounting Standards
In June 2016, FASB issued ASU No. 2016-13, Financial Instruments Topic 326: Credit Losses Measurement of Credit Losses on Financial Instruments, 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. This new standard also requires credit losses related to available for sale debt securities to be recorded as an allowance through net income rather than by reducing the carrying amount under the other-than-temporary-impairment model. The Company adopted ASU No. 2016-13 on January 1, 2023 and the impact of the adoption was not material to the Company’s condensed consolidated financial statements and related disclosures.
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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 September 30,Nine Months Ended September 30,
2023202220232022
United States$30,238 $36,424 $96,181 $109,353 
EMEA6,721 7,596 20,605 23,678 
Other2,263 3,555 7,585 11,274 
Total revenue$39,222 $47,575 $124,371 $144,305 
No individual foreign country contributed more than 10% of revenue for the three and nine months ended September 30, 2023 and 2022.
No single customer accounted for 10% or more of the total revenue during the three and nine months ended September 30, 2023 and 2022. Additionally, no single customer accounted for 10% or more of accounts receivable as of September 30, 2023 and December 31, 2022.
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 September 30, 2023 and December 31, 2022, 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 September 30, 2023 and December 31, 2022.
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 and nine months ended September 30, 2023 that was included in deferred revenue at the beginning of the period was $11.8 million and $71.0 million, respectively.
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 September 30, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $127.3 million, which consists of both billed consideration in the amount of $67.2 million and unbilled consideration in the amount of $60.1 million that the Company expects to recognize as revenue. As of September 30, 2023, the Company expects to recognize 77% 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
10

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 $3.8 million and $11.6 million for the three and nine months ended September 30, 2023, respectively, and $3.9 million and $11.9 million for the three and nine months ended September 30, 2022, respectively. Amortization of deferred contract acquisition costs 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 had no impairment losses relating to deferred contract acquisition costs during the periods presented.
Note 3. Marketable Securities
Marketable securities consisted of the following as of the periods presented (in thousands):

September 30, 2023
Amortized Cost
Gross Unrealized GainsGross Unrealized Losses
Fair Value
Marketable Securities
U.S. Treasury securities$159,288 $ $(238)$159,050 
U.S. Agency securities29,352  (22)29,330 
Certificates of deposit3,365   3,365 
Corporate debt securities1,687  (3)1,684 
Commercial paper9,513  (7)9,506 
Total marketable securities$203,205 $ $(270)$202,935 
    
December 31, 2022
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
Marketable Securities
U.S. Treasury securities$219,895 $10 $(801)$219,104 
U.S. Agency securities19,247 19 (2)19,264 
Certificates of deposit26,624 4 (119)26,509 
Corporate debt securities13,934  (86)13,848 
Commercial paper22,433 10 (43)22,400 
Total marketable securities$302,133 $43 $(1,051)$301,125 
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.
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Marketable securities that have been in a continuous unrealized loss position consisted of the following as of the periods presented (in thousands):
September 30, 2023
Less Than 12 Months12 Months or MoreTotal
Fair ValueGross Unrealized LossFair ValueGross Unrealized LossFair ValueGross Unrealized Loss
U.S. Treasury securities$153,622 $(238)$ $ $153,622 $(238)
U.S. Agency securities29,330 (22)  29,330 (22)
Certificates of deposit3,365    3,365  
Corporate debt securities1,684 (3)  1,684 (3)
Commercial paper9,506 (7)  9,506 (7)
Total$197,507 $(270)$ $ $197,507 $(270)
December 31, 2022
Less Than 12 Months12 Months or MoreTotal
Fair ValueGross Unrealized LossFair ValueGross Unrealized LossFair ValueGross Unrealized Loss
U.S. Treasury securities$116,161 $(151)$77,173 $(650)$193,334 $(801)
U.S. Agency securities3,197 (2)  3,197 (2)
Certificates of deposit22,402 (119)  22,402 (119)
Corporate debt securities4,253 (13)8,345 (73)12,598 (86)
Commercial paper12,853 (43)  12,853 (43)
Total$158,866 $(328)$85,518 $(723)$244,384 $(1,051)
The Company periodically evaluates whether any security has experienced credit-related declines in fair value. The Company did not recognize any credit loss related to its available for sales debt securities during the three and nine months ended September 30, 2023 or 2022.
The amount of realized gains or losses from marketable securities that were reclassified out from accumulated other comprehensive loss to other income, net was based on specific identification and such amount was immaterial in the three and nine months ended September 30, 2023. The Company had no realized gains or losses from marketable securities that were reclassified out of accumulated other comprehensive loss in the three and nine months ended September 30, 2022.
The following summarizes the remaining contractual maturities of the Company’s marketable securities as of September 30, 2023 (in thousands):
Fair Value
One year or less$187,079 
Over one year through five years15,856 
Total marketable securities$202,935 
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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 (in thousands):
September 30, 2023
Level 1Level 2Level 3Total
Cash and cash equivalent
Cash equivalents - money market mutual funds
$8,842 $ $ $8,842 
Marketable Securities
U.S. Treasury securities 159,050  159,050 
U.S. Agency securities 29,330  29,330 
Certificates of deposit 3,365  3,365 
Corporate debt securities 1,684  1,684 
Commercial paper
 9,506  9,506 
Total cash equivalents and marketable securities$8,842 $202,935 $ $211,777 
December 31, 2022
Level 1Level 2Level 3Total
Cash and cash equivalent
Cash equivalents - money market mutual funds$5,608 $ $ $5,608 
Marketable Securities
U.S. Treasury securities 219,104  219,104 
U.S. Agency securities 19,264  19,264 
Certificates of deposit 26,509  26,509 
Corporate debt securities 13,848  13,848 
Commercial paper
 22,400  22,400 
Total cash equivalents and marketable securities$5,608 $301,125 $ $306,733 
As of September 30, 2023 and December 31, 2022, the Company classified its cash equivalents within level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company classified its marketable 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
Property and Equipment, Net
Property and equipment, net consisted of the following as of the periods presented (in thousands):
 September 30, 2023December 31, 2022
Computer, equipment and software(1)
$33,255 $31,243 
Furniture and fixtures1,073 1,071 
Leasehold improvements3,793 3,606 
Property and equipment, gross38,121 35,920 
Less: Accumulated depreciation and amortization(2)
(32,270)(28,708)
Property and equipment, net$5,851 $7,212 
(1)Includes assets recorded under finance leases of $3.2 million and $5.3 million as of September 30, 2023 and December 31, 2022, respectively.
(2)Includes amount for assets recorded under finance leases of $3.0 million and $4.0 million as of September 30, 2023 and December 31, 2022, respectively.
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Depreciation and amortization expense for property and equipment was $1.1 million and $3.6 million for the three and nine months ended September 30, 2023, respectively, and $1.3 million and $3.7 million for the three and nine months ended September 30, 2022, respectively.
The following table presents the property and equipment, net of depreciation and amortization, by geographic region as of the periods presented (in thousands):
 September 30, 2023December 31, 2022
United States$5,450 $6,449 
EMEA378 722 
Other23 41 
Total property and equipment, net$5,851 $7,212 
Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following as of the periods presented (in thousands):
 September 30, 2023December 31, 2022
Accrued compensation and benefits
$4,976 $5,390 
Accrued bonus and commissions4,934 6,814 
Other6,716 6,261 
Accrued and other current liabilities$16,626 $18,465 
Note 6. Business Combination
In April 2022, the Company acquired Vibbio AS (Vibbio), a privately-held cloud video software company in Norway, for approximately $3.0 million in cash. The integration of Vibbio’s video capabilities across the ON24 platform is intended to allow customers to produce video content that creates more engagement, generates first-party data, and drives further personalization.
The purchase consideration was primarily allocated to developed technology intangible asset with an estimated fair value of $2.7 million at the acquisition date, which was valued using the cost to recreate method. The fair value of the remaining acquired tangible net assets was immaterial. The goodwill that was recorded represents the excess of the purchase consideration over the assets acquired and liabilities assumed relating to the acquisition and is immaterial.
Note 7. Intangible Assets
The Company’s acquired intangible asset subject to amortization as of the periods presented was as follows (in thousands):
September 30, 2023
Gross Carrying
Amount
Accumulated
 Amortization
Net Carrying
Amount
Developed technology$2,700 $(852)$1,848 
Effect of foreign currency translation(486)32 (454)
Total$2,214 $(820)$1,394 
December 31, 2022
Gross Carrying
Amount
Accumulated
 Amortization
Net Carrying
Amount
Developed technology$2,700 $(434)$2,266 
Effect of foreign currency translation(276)(11)(287)
Total$2,424 $(445)$1,979 
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The intangible asset is amortized on a straight-line basis over its useful life of 4 years. As of September 30, 2023, the intangible asset had a remaining amortization period of 2.5 years.
The amortization expense was $0.1 million and $0.4 million for the three and nine months ended September 30, 2023, respectively, and was $0.2 million and $0.3 million for the three and nine months ended September 30, 2022. The amortization expense was included in research and development in the condensed consolidated statements of operations as the acquired technology is used to enhance our existing product capabilities.
The estimated future amortization expense for the intangible asset is as follows (in thousands):
Remaining 2023$139 
2024555 
2025553 
2026147 
Total$1,394 
Note 8. 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 September 30, 2023, the Company had not drawn 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 September 30, 2023, 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. The prime referenced rate was 8.50% as of September 30, 2023 and 7.50% as of December 31, 2022.
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 in deposits. As of September 30, 2023, the Company was not subject to the financial covenant as the Company had not drawn down from its line of credit. In addition, the revolving line of credit agreement restricts the Company from paying dividends without prior approval from the financing institution. In April 2023, the Company further amended its revolving line of credit to allow for certain transactions including payment of dividends and share repurchases from open market purchases or through an accelerated share repurchase program, subject to certain terms and conditions.
Note 9. Commitment and Contingencies
Purchase Obligations
The Company has non-cancelable purchase commitments of $4.2 million as of September 30, 2023, primarily related to software license fees and co-location facilities and services, of which $1.0 million is expected to be paid in the remainder of 2023, $2.4 million in 2024, $0.6 million in 2025, and $0.1 million in both 2026 and 2027.
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 September 30, 2023 and December 31, 2022.
Legal Proceedings
The Company, its Chief Executive Officer, its Chief Financial Officer, certain current and former 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 in November 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 complaint alleges 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. Plaintiff seeks, among other things, an award of damages and attorneys’ fees and costs. Defendants filed a motion to dismiss the complaint in May 2022, which the court granted with leave to amend on July 7, 2023.Plaintiff filed its amended complaint on September 1, 2023,and Defendants filed a motion to dismiss the amended complaint on October 16, 2023. The Company believes the allegations in the amended complaint 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 10. Stockholders’ Equity 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.
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 September 30, 2023, 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 outstanding7,157,218 
Restricted stock outstanding6,763,380 
Remaining shares available for future grant under 2021 Equity Incentive Plan(1)
4,107,198 
Remaining shares available for future issuance under ESPP(2)
1,895,121 
Total shares of common stock reserved as of September 30, 2023
19,922,917 
(1)Includes the automatic annual increase of 2,377,740 additional shares under the Company’s 2021 Equity Incentive Plan (“2021 Plan”) on January 1, 2023.
(2)Includes the automatic annual increase of 475,548 additional shares under the Company’s ESPP on January 1, 2023.
Repurchase of Common Stock
In March 2023, the Company’s board of directors authorized a new $125.0 million capital return program, $50.0 million of which is effected through a special dividend and $75.0 million of which is effected through the combination of an accelerated stock repurchase program and/or open market purchases. The Company may pay an additional special dividend if this $75.0 million threshold is not reached by March 2024. This capital return program replaced the prior share repurchase program originally announced in December 2021, which ended in March 2023.
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The following table presents certain information regarding shares repurchased during the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Number of shares repurchased3,416,682  7,517,260 1,531,209 
Average price per share, including commissions$7.32 $ $7.88 $14.24 
Total repurchase costs, including commissions (in millions)$25.0 $ $59.2 $21.8 
As of September 30, 2023, the Company had $20.5 million available for future share buybacks under the repurchase program.
The Company repurchased an additional 1,234,909 shares of common stock at an average per share price of $6.33 (including commissions) in October 2023. As of October 31, 2023, the Company has $12.7 million remaining for future share buyback under the repurchase program. The Company expects its repurchase program to be completed in the first quarter of 2024.
Dividend

Pursuant to the capital return program, on May 8, 2023, the Company’s board of directors declared a one-time special cash dividend of $1.09 per share, which was paid on June 15, 2023 in an aggregate amount of $49.9 million, to all stockholders of record as of the close of business on May 22, 2023 (the “Special Dividend”).
Anti-Dilution Adjustment to the Outstanding Awards
Pursuant to the terms of the Company’s 2021 Plan, 2014 Stock Option Plan (“2014 Plan”) and 2000 Stock Option Plan (“2000 Plan,” and together with the 2021 Plan and 2014 Plan, the “Plans”), participants holding outstanding equity awards are entitled to receive an anti-dilution adjustment in the event of payment of a dividend. In conjunction with the declaration of the Special Dividend on May 8, 2023, the compensation committee of the Company’s board of directors approved an adjustment to outstanding equity awards (both vested and unvested) in the form of exercise price reductions and/or increases in the number of shares issuable upon vesting and settlement of each award. This anti-dilution adjustment was designed to equalize the fair value of the awards before and after the Special Dividend. Accordingly, no incremental compensation cost was recognized.
Grant Activities
Stock Options
A summary of stock option activity and related information is as follows:
Options Outstanding
Number
of
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual Life
(in years)
Aggregate
Intrinsic Value
(in thousands)
Balance as of December 31, 2022
7,756,680 $6.96 
Granted
  
Anti-dilution adjustment(1)
389,037 1.92 
Exercised(733,884)1.93 $4,415 
Cancelled and forfeited(254,615)19.14 
Balance as of September 30, 2023
7,157,218 $5.91 5.09$23,721 
Vested and exercisable6,289,769 $4.89 4.82$22,948 
(1)Represents the incremental increase in the number of shares issuable upon vesting of options outstanding prior to the Special Dividend pursuant to the anti-dilution adjustment.
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Restricted Stock Units
A summary of RSU activity and related information is as follows:
RSUs Outstanding
Number of
Shares
Weighted-Average
Grant Date
Fair Value
Unvested balance as of December 31, 2022
5,134,934 $14.37 
Granted2,771,342 8.42 
Anti-dilution adjustment(1)
950,208 12.43 
Vested(1,727,598)14.61 
Cancelled and forfeited(996,281)13.47 
Unvested balance as of September 30, 2023
6,132,605 $11.46 
(1)Represents the incremental increase in the number of shares issuable upon vesting of RSUs outstanding prior to the Special Dividend pursuant to the anti-dilution adjustment.
The total fair value of RSUs vested in the three and nine months ended September 30, 2023 was $9.1 million and $25.2 million, respectively. The total fair value of RSUs vested in the three and nine months ended September 30, 2022 was $4.9 million and $15.7 million, respectively.
Restricted Stock Unit with Performance Conditions (PSUs)
In the fourth quarter of 2022, the Company’s board of directors granted 341,404 market performance-based restricted stock units to an executive officer with a grant date fair value of $4.2 million. The PSUs vest following three annual performance periods beginning in 2023, each in an amount equal to one-third of the target number of PSUs multiplied by a percentage determined by comparing the Company’s total stockholder return to a benchmark index during the performance period. The actual payout can range from 0% to 200% of the shares granted under this award, with the maximum earned PSUs capped at 125% for the first two performance periods. The maximum payout for the entire award is capped at 200% of the granted shares. These PSUs additionally are subject to continued service by the award holder through the end of each performance period. In May 2023, an additional 54,167 PSUs were issued in connection with the anti-dilution adjustment. As of September 30, 2023, none of these PSUs have vested.
In the second quarter of 2023, the Company’s board of directors granted 203,000 market performance-based restricted stock units to certain executive officers with a grant date fair value of $2.5 million. The PSUs vest following three annual performance periods beginning in 2023, each in an amount equal to one-third of the target number of PSUs multiplied by a percentage determined by comparing the Company’s total stockholder return to a benchmark index during the performance period. The actual payout can range from 0% to 200% of the shares granted under this award, with the maximum earned PSUs capped at 125% for the first two performance periods. The maximum payout for the entire award is capped at 200% of the granted shares. These PSUs additionally are subject to continued service by the award holder through the end of each performance period. In May 2023, an additional 32,204 PSUs were issued in connection with the anti-dilution adjustment. As of September 30, 2023, none of these PSUs have vested.
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Stock-Based Compensation
The stock-based compensation expense by line item in the condensed consolidated statements of operations is summarized as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Cost of revenue
Subscription and other platform$638 $849 $2,132 $2,540 
Professional services123 165 419 505 
Total cost of revenue761 1,014 2,551 3,045 
Sales and marketing3,693 3,597 10,305 10,986 
Research and development2,332 2,019 6,716 5,925 
General and administrative4,779 3,273 13,719 9,152 
Total stock-based compensation expense$11,565 $9,903 $33,291 $29,108 
The following table presents the unrecognized stock-based compensation expense and weighted-average recognition periods as of September 30, 2023 (in thousands, except years):
Stock Option
Restricted Stock
ESPP
Unrecognized stock-based compensation expense$14,427 $58,991 $46 
Weighted-average amortization period1.47 years2.24 years0.13 years
Note 11. Other Income, Net
Other income, net consisted of the following for the periods presented (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Interest income$(694)$(477)$(3,191)$(1,236)
Accretion on marketable securities
(2,142)(447)(5,853)(117)
Foreign currency losses
119 555 610 1,322 
Other(1)(94)(49)(152)
Other income, net
$(2,718)$(463)$(8,483)$(183)
Note 12. Income Taxes
The Company’s provision for income taxes were as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Provision for income taxes
$109 $40 $535 $163 
The Company’s provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any. The Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision quarterly. Provision for income taxes for the three and nine months ended September 30, 2023 increased $0.1 million and $0.4 million, compared to the three and nine months ended September 30, 2022. These changes in provision for income taxes were primarily driven by the increased activity and higher tax rates in a foreign jurisdiction.
The Company regularly performs an assessment of the likelihood of realizing benefits of its deferred tax assets. As of September 30, 2023, the Company recorded a valuation allowance against its U.S. deferred tax assets based on available evidence. However, if there are favorable changes to actual operating results or to projections of future income, the Company may determine that it is more likely than not that such deferred tax assets may be realizable.
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Utilization of net operating loss carryforwards, tax credits and other attributes may be subject to future annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions.
Note 13. Net Loss Per Share
The following tables set forth the computation of basic and diluted net loss per share for the periods presented (in thousands, except share and per share data):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss
$(11,474)$(14,387)$(41,911)$(46,078)
Net loss per share of common stock, basic and diluted
$