Digital engagement platform ON24 (NYSE: ONTF) reported Q3 CY2025 results topping the market’s revenue expectations, but sales fell by 4.7% year on year to $34.6 million. The company expects next quarter’s revenue to be around $34.2 million, close to analysts’ estimates. Its non-GAAP profit of $0.03 per share was $0.02 above analysts’ consensus estimates.

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StockStory’s Take

ON24’s third quarter results were well received by the market, as the company exceeded Wall Street’s revenue and non-GAAP profit expectations. Management credited the outperformance to rising adoption of its AI-enabled products and a growing share of customers using multiple ON24 offerings. CEO Sharat Sharan highlighted that nearly one in five customers now pay for AI solutions, and the company saw a record high in average annual recurring revenue (ARR) per customer. While ON24 experienced softness in new growth bookings—particularly in the life sciences vertical—deal slippage was partially offset by strong customer win-backs and deeper product utilization across its enterprise base.

Looking ahead, ON24’s updated guidance reflects expectations for improved ARR performance and continued momentum in AI-driven offerings. Management emphasized the anticipated benefits from the company’s new partnership with LinkedIn, which is expected to drive additional event promotion and audience reach. Sharan stated that upcoming product launches, including AI Propel Plus and AI Translate, should further increase customer engagement and expansion. The company also intends to leverage AI internally to reduce sales and marketing expenses, aiming for a more efficient cost structure without compromising on product development.

Key Insights from Management’s Remarks

ON24’s management attributed quarterly performance to product innovation in AI, strategic moves in regulated industries, and deeper enterprise engagement, while targeting efficiency gains through technology.

• AI solutions uptake: Nearly 20% of customers are now paying for ON24's AI-powered offerings, such as AI Propel Plus and AI Translate, with management expecting this to become the largest driver of expansion in the coming year.
• LinkedIn partnership launch: The new integration with LinkedIn allows ON24 customers to promote and register events directly on the platform, with future phases expected to provide monetizable features such as lookalike audience targeting and deeper data integration.
• Enterprise and regulated industry focus: ON24 has shifted its go-to-market strategy toward larger enterprise clients, especially in regulated sectors like financial and professional services, which now make up about half of its business and exhibit high retention rates.
• Sales and marketing efficiency: Ongoing deployment of AI to streamline internal operations has enabled ON24 to reduce sales and marketing expenses as a percentage of revenue, with further cost reductions targeted over the next two years.
• Customer expansion and win-backs: The company saw an all-time high in customers using multiple products and noted continued success in regaining former clients, particularly in regulated industries, as organizations seek more automated and compliant engagement tools.

Drivers of Future Performance

Management expects ON24’s near-term outlook to be driven by AI product adoption, the LinkedIn partnership, and ongoing cost discipline.

• AI product expansion: Management anticipates that the rollout and increased adoption of AI Propel Plus, AI Translate, and new AI-powered analytics will drive both customer retention and expansion, helping offset areas of softness in specific verticals.
• LinkedIn partnership monetization: The phased integration with LinkedIn is expected to deliver immediate benefits in terms of customer reach and event promotion, with monetizable features like lookalike audience targeting likely to impact top-line growth beginning next year.
• Expense structure realignment: By deploying AI tools internally, ON24 aims to reduce sales and marketing costs to the low thirties as a percentage of revenue over two years, aiming to improve profitability while maintaining investment in product innovation and go-to-market initiatives.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be monitoring (1) the pace at which AI-powered products like AI Propel Plus and AI Translate are adopted across ON24’s customer base, (2) successful integration and monetization milestones in the LinkedIn partnership, and (3) sustained reductions in sales and marketing expenses. Additional watchpoints include customer win-backs in regulated industries and the commercialization of new AI features.

ON24 currently trades at $5.79, up from $4.98 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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