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 endedSeptember 30, ~~2022~~2023


¨			~~TRANSITION~~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)


Delaware			94-3292599
(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 class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

ONTF

New 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

¨x

Non-accelerated filer

x¨

Smaller reporting company

Emerging growth company

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 ~~4, 2022,~~3, 2023, the registrant had ~~48,047,496~~41,501,280 shares of common stock outstanding.

Table of Contents


		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		2

PART I.I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of ~~Convertible Preferred Stock and~~ Stockholders' Equity ~~(Deficit)~~	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.2	~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	2522
Item 3.3	Quantitative and Qualitative Disclosures ~~About~~about Market Risk	3734
Item 4.4	Controls and Procedures	3734

PART ~~II.~~II	OTHER INFORMATION	37
Item 1.	Legal Proceedings	3734
Item 1A.	Risk Factors	3835
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6259
Item 3.	~~Defaults~~Default Upon Senior Securities	6259
Item 4.	Mine Safety Disclosures	6259
Item 5.5	Other Information	6260
Item 6.	Exhibits	6360

Signatures		6460

Table of Contents

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.

•~~our revenue growth rate may continue to decline in future periods;~~

•fluctuation in our performance, our history of net losses and ~~expected~~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 ~~otherwise manage our~~achieve growth;

•the impact of the ~~COVID-19 pandemic and future variants~~resumption of ~~the virus~~in-person marketing activities on our customer growth rate, which has declined in recent periods and may decline in future periods compared to 2021, as the impact of COVID-19 lessens and our customers and their users increasingly resume in-person marketing activities;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 ~~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 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.

Table of Contents

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, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	36,367	$	164,948	Cash and cash equivalents	$	10,804	$	26,996
Marketable securities	Marketable securities	305,457		217,609		Marketable securities	202,935		301,125
Accounts receivable, net of allowances and reserves of $2,622 and $2,677 as of September 30, 2022 and December 31, 2021, respectively		31,213		46,117
Accounts receivable, net of allowances and reserves of $3,475 and $2,930 as of September 30, 2023 and December 31, 2022, respectively						Accounts receivable, net of allowances and reserves of $3,475 and $2,930 as of September 30, 2023 and December 31, 2022, respectively	25,885		43,757
Deferred contract acquisition costs, current	Deferred contract acquisition costs, current	12,018		11,921		Deferred contract acquisition costs, current	12,327		13,136
Prepaid expenses and other current assets	Prepaid expenses and other current assets	8,375		8,467		Prepaid expenses and other current assets	6,538		6,281
Total current assets	Total current assets	393,430		449,062		Total current assets	258,489		391,295
Property and equipment, net	Property and equipment, net	8,129		8,780		Property and equipment, net	5,851		7,212
Operating right-of-use assets	Operating right-of-use assets	6,011		—		Operating right-of-use assets	3,312		5,606
Intangible asset, net	Intangible asset, net	1,931		—		Intangible asset, net	1,394		1,979
Deferred contract acquisition costs, non-current	Deferred contract acquisition costs, non-current	18,980		20,887		Deferred contract acquisition costs, non-current	15,642		17,773
Other long-term assets	Other long-term assets	1,824		1,760		Other long-term assets	1,271		1,608
Total assets	Total assets	$	430,305	$	480,489	Total assets	$	285,959	$	425,473
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	4,283	$	3,123	Accounts payable	$	2,696	$	4,611
Accrued and other current liabilities	Accrued and other current liabilities	17,058		19,011		Accrued and other current liabilities	16,626		18,465
Deferred revenue	Deferred revenue	81,029		96,225		Deferred revenue	66,603		83,453
Finance lease liabilities, current	Finance lease liabilities, current	1,762		1,768		Finance lease liabilities, current	345		1,554
Operating lease liabilities, current	Operating lease liabilities, current	2,676		—		Operating lease liabilities, current	2,692		2,648
Total current liabilities	Total current liabilities	106,808		120,127		Total current liabilities	88,962		110,731
Finance lease liabilities, non-current		300		1,648

Operating lease liabilities, non-current	Operating lease liabilities, non-current	5,628		—		Operating lease liabilities, non-current	3,176		5,040
Other long-term liabilities	Other long-term liabilities	1,685		3,624		Other long-term liabilities	1,302		1,741
Total liabilities	Total liabilities	114,421		125,399		Total liabilities	93,440		117,512
Commitments and contingencies (See Note 10)
Commitments and contingencies (See Note 9)						Commitments and contingencies (See Note 9)
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Common stock, $0.0001 par value per share; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 47,972,204 and 47,727,346 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		5		5
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						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 capital	Additional paid-in capital	559,381		550,839		Additional paid-in capital	488,305		562,555
Accumulated deficit	Accumulated deficit	(241,597)		(195,519)		Accumulated deficit	(295,638)		(253,727)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,905)		(235)		Accumulated other comprehensive loss	(152)		(872)
Total stockholders’ equity	Total stockholders’ equity	315,884		355,090		Total stockholders’ equity	192,519		307,961
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	430,305	$	480,489	Total liabilities and stockholders’ equity	$	285,959	$	425,473

See accompanying notes to condensed consolidated financial statements.

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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,				Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021				2023		2022		2023		2022
Revenue:
Revenue											Revenue
Subscription and other platform	Subscription and other platform	$	43,271	$	43,601	$	129,812	$	130,888		Subscription and other platform	$	36,430	$	43,271	$	114,130	$	129,812
Professional services	Professional services	4,304		5,761		14,493		20,691			Professional services	2,792		4,304		10,241		14,493
Total revenue	Total revenue	47,575		49,362		144,305		151,579			Total revenue	39,222		47,575		124,371		144,305
Cost of revenue:
Cost of revenue											Cost of revenue
Subscription and other platform	Subscription and other platform	10,120		8,718		29,680		24,382			Subscription and other platform	8,390		10,120		27,345		29,680
Professional services	Professional services	3,182		3,349		9,867		10,252			Professional services	2,457		3,182		8,908		9,867
Total cost of revenue	Total cost of revenue	13,302		12,067		39,547		34,634			Total cost of revenue	10,847		13,302		36,253		39,547
Gross profit	Gross profit	34,273		37,295		104,758		116,945			Gross profit	28,375		34,273		88,118		104,758
Operating expenses:
Operating expenses											Operating expenses
Sales and marketing	Sales and marketing	26,553		26,591		84,596		75,981			Sales and marketing	21,510		26,553		68,555		84,596
Research and development	Research and development	11,324		9,114		32,916		25,222			Research and development	9,730		11,324		31,759		32,916
General and administrative	General and administrative	11,164		10,851		33,199		29,719			General and administrative	11,200		11,164		37,583		33,199
Total operating expenses	Total operating expenses	49,041		46,556		150,711		130,922			Total operating expenses	42,440		49,041		137,897		150,711
Loss from operations	Loss from operations	(14,768)		(9,261)		(45,953)		(13,977)			Loss from operations	(14,065)		(14,768)		(49,779)		(45,953)
Interest expense	Interest expense	42		65		145		402			Interest expense	18		42		80		145
Other (income) expense, net		(463)		106		(183)		433
Loss before provision for (benefit from) income taxes		(14,347)		(9,432)		(45,915)		(14,812)
Provision for (benefit from) income taxes		40		(32)		163		(65)
Other income, net											Other income, net	(2,718)		(463)		(8,483)		(183)
Loss before provision for income taxes											Loss before provision for income taxes	(11,365)		(14,347)		(41,376)		(45,915)
Provision for income taxes											Provision for income taxes	109		40		535		163
Net loss	Net loss	(14,387)		(9,400)		(46,078)		(14,747)			Net loss	(11,474)		(14,387)		(41,911)		(46,078)
Cumulative preferred dividends allocated to preferred stockholders		—		—		—		(558)
Net loss attributable to common stockholders		$	(14,387)	$	(9,400)	$	(46,078)	$	(15,305)
Net loss per share attributable to common stockholders:

Net loss per share:											Net loss per share:
Basic and diluted	Basic and diluted	$	(0.30)	$	(0.20)	$	(0.97)	$	(0.36)		Basic and diluted	$	(0.26)	$	(0.30)	$	(0.92)	$	(0.97)

Weighted-average shares used in computing net loss per share attributable to common stockholders:
Weighted-average shares used in computing net loss per share:											Weighted-average shares used in computing net loss per share:
Basic and diluted	Basic and diluted	47,640,200		47,101,200		47,357,711		42,149,108			Basic and diluted	43,832,475		47,640,200		45,655,106		47,357,711

See accompanying notes to condensed consolidated financial statements.

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ON24, Inc.

Condensed Consolidated Statements of ComprehensiveLoss

(in thousands)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021				2023		2022		2023		2022
Net loss	Net loss	$	(14,387)	$	(9,400)	$	(46,078)	$	(14,747)		Net loss	$	(11,474)	$	(14,387)	$	(41,911)	$	(46,078)
Other comprehensive income (loss)	Other comprehensive income (loss)										Other comprehensive income (loss)
Foreign currency translation adjustment, net of tax	Foreign currency translation adjustment, net of tax	18		46		(59)		154			Foreign currency translation adjustment, net of tax	(36)		18		(18)		(59)
Unrealized gain (loss) on available for sale debt securities, net of tax	Unrealized gain (loss) on available for sale debt securities, net of tax	235		(15)		(1,611)		(33)			Unrealized gain (loss) on available for sale debt securities, net of tax	154		235		738		(1,611)
Total other comprehensive income (loss)	Total other comprehensive income (loss)	253		31		(1,670)		121			Total other comprehensive income (loss)	118		253		720		(1,670)
Total comprehensive loss	Total comprehensive loss	$	(14,134)	$	(9,369)	$	(47,748)	$	(14,626)		Total comprehensive loss	$	(11,356)	$	(14,134)	$	(41,191)	$	(47,748)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

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 Stock
Additional
paid-in
capital
Accumulated
Deficit
Accumulated
other
comprehensive
income (loss)
Total
stockholders'
equity
(deficit)
Shares Amount Shares Amount Shares Amount
Balance as of June 30, 2022 — $ — — $ — 47,421,627 $ 5 $ 548,740 $ (227,210) $ (2,158) $ 319,377
Issuance of common stock upon exercise of stock options — — — — 315,501 — 738 — — 738
Issuance of common stock upon release of restricted stock units — — — — 235,076 — — — — —
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


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount
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 options	335,662	—		529		—		—		529
Issuance of common stock upon release of restricted stock units	662,905	—		—		—		—		—

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


		Convertible Preferred Stock			Redeemable convertible preferred stock			Common Stock			Additional paid-in capital				Accumulated Deficit			Accumulated other comprehensive income (loss)				Total stockholders' equity (deficit)				Common Stock					Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
		Shares	Amount		Shares	Amount		Shares	Amount								Shares								Amount
Balance as of June 30, 2021		—	$	—	—	$	—	46,449,556	$	5			$	539,137						$	(176,610)			$	184		$	362,716
Balance as of June 30, 2022																									Balance as of June 30, 2022	47,421,627			$	5		$	548,740		$	(227,210)		$	(2,158)		$	319,377
Repurchase of common stock																									Repurchase of common stock	—			—		—			—			—			—
Issuance of common stock upon exercise of stock options	Issuance of common stock upon exercise of stock options	—	—		—	—		962,249	—		2,487				—			—				2,487			Issuance of common stock upon exercise of stock options	315,501			—		738			—			—			738
Issuance of common stock upon release of restricted stock units	Issuance of common stock upon release of restricted stock units	—	—		—	—		13,618	—		—				—			—				—			Issuance of common stock upon release of restricted stock units	235,076			—		—			—			—			—

Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		—	—		7,831				—			—				7,831			Stock-based compensation expense	—			—		9,903			—			—			9,903
Other comprehensive income	Other comprehensive income	—	—		—	—		—	—		—				—			31				31			Other comprehensive income	—			—		—			—			253			253
Net loss	Net loss	—	—		—	—		—	—		—				(9,400)			—				(9,400)			Net loss	—			—		—			(14,387)			—			(14,387)
Balance as of September 30, 2021		—	$	—	—	$	—	47,425,423	$	5	$	549,455			$	(186,010)		$	215			$	363,665
Balance as of September 30, 2022																									Balance as of September 30, 2022	47,972,204			$	5	$	559,381		$	(241,597)		$	(1,905)		$	315,884

Table of Contents

Convertible
Preferred Stock Redeemable convertible
preferred stock Common Stock Additional
paid-in
capital Accumulated
Deficit
Accumulated
other
comprehensive
income (loss)
Total
stockholders'
equity
(deficit)
Shares Amount Shares Amount Shares Amount
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 options — — — — 978,629 — 2,165 — — 2,165
Issuance of common stock upon release of restricted stock units — — — — 708,237 — — — — —
Issuance of common stock under ESPP — — — — 89,201 — 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 income (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
ON24, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount
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 options	733,884	—		1,417		—		—		1,417
Issuance of common stock upon release of restricted stock units	1,741,765	—		—		—		—		—
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 Stock						Additional Paid-in Capital				Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
		Convertible Preferred Stock			Redeemable convertible preferred stock			Common Stock			Additional paid-in capital				Accumulated Deficit		Accumulated other comprehensive income (loss)				Total stockholders' equity (deficit)			Shares			Amount
		Shares	Amount		Shares	Amount		Shares	Amount
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
Balance as of December 31, 2021																							Balance as of December 31, 2021	47,727,346			$	5				$	550,839			$	(195,519)	$	(235)	$	355,090
Repurchase of common stock																							Repurchase of common stock	(1,531,209)			—			(21,808)				—		—		(21,808)
Issuance of common stock upon exercise of stock options	Issuance of common stock upon exercise of stock options	—	—		—	—		1,688,274	—		4,282				—		—				4,282		Issuance of common stock upon exercise of stock options	978,629			—			2,165				—		—		2,165
Issuance of common stock upon release of restricted stock units	Issuance of common stock upon release of restricted stock units	—	—		—	—		13,618	—		—				—		—				—		Issuance of common stock upon release of restricted stock units	708,237			—			—				—		—		—
Issuance of common stock under ESPP																							Issuance of common stock under ESPP	89,201			—			833				—		—		833
Payment for employee tax withholding upon net share settlement on equity awards	Payment for employee tax withholding upon net share settlement on equity awards	—	—		—	—		—	—		(2,001)				—		—				(2,001)		Payment for employee tax withholding upon net share settlement on equity awards	—			—			(1,756)				—		—		(1,756)
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		—	—		17,795				—		—				17,795		Stock-based compensation expense	—			—			29,108				—		—		29,108
Other comprehensive income (loss)		—	—		—	—		—	—		—				—		121				121
Other comprehensive loss																							Other comprehensive loss	—			—			—				—		(1,670)		(1,670)
Net loss	Net loss	—	—		—	—		—	—		—				(14,747)		—				(14,747)		Net loss	—			—			—				(46,078)		—		(46,078)
Balance as of September 30, 2021		—	$	—	—	$	—	47,425,423	$	5	$	549,455			$	(186,010)	$	215			$	363,665
Balance as of September 30, 2022																							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.

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ON24, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended September 30,
2022 2021
Cash flows from operating activities:
Net loss $ (46,078) $ (14,747)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization 3,953 3,423
Stock-based compensation expense 29,108 17,795
Amortization of deferred contract acquisition costs 11,850 11,305
Provision for allowance for doubtful accounts and billing reserve 1,203 1,276
Non-cash lease expense 1,475 —
Other (14) 191
Changes in operating assets and liabilities:
Accounts receivable 13,741 10,543
Deferred contract acquisition costs (10,040) (13,947)
Prepaid expenses and other assets (5) (5,358)
Accounts payable 263 (2,219)
Accrued liabilities (1,369) 3,122
Deferred revenue (15,231) (1,055)
Other non-current liabilities (1,749) (648)
Net cash (used in) provided by operating activities (12,893) 9,681
Cash flows from investing activities:
Purchase of property and equipment (2,400) (2,440)
Acquisition, net of cash acquired (2,495) —
Purchase of marketable securities (211,310) (207,039)
Proceeds from maturities and paydowns of marketable securities 121,965 11,401
Net cash used in investing activities (94,240) (198,078)
Cash flows from financing activities:
Proceeds from initial public offering, net of underwriting discounts — 353,397
Proceeds from exercise of stock options 2,467 4,282
Proceeds from issuance of common stock under ESPP 833 —
Payment of tax withholding obligations related to net share settlements on equity awards (1,756) (2,001)
Payment for repurchase of common stock (21,808) —
Repayment of equipment loans and borrowings (201) (22,532)
Repayment of finance lease obligations (1,399) (1,885)
Payment of offering costs — (3,481)
Net cash (used in) provided by financing activities (21,864) 327,780
Effect of exchange rate changes on cash, cash equivalents and restricted cash 487 154
Net (decrease) increase in cash, cash equivalents and restricted cash (128,510) 139,537
Cash, cash equivalents and restricted cash, beginning of period 165,043 58,345
Cash, cash equivalents and restricted cash, end of period $ 36,533 $ 197,882
Supplemental disclosures of cash flow information:
Cash paid for taxes, net of refunds $ 353 $ 359
Cash paid for interest $ 120 $ 489
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents $ 36,367 $ 197,788
Restricted cash included in other assets, non-current 166 94
Total cash, cash equivalent, and restricted cash $ 36,533 $ 197,882


	Nine Months Ended September 30,
	2023		2022
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 amortization	4,041		3,953
Stock-based compensation expense	33,291		29,108
Amortization of deferred contract acquisition costs	11,621		11,850
Provision for allowance for doubtful accounts and billing reserve	2,360		1,203
Non-cash lease expense	1,339		1,475
Accretion of marketable securities	(5,853)		(117)
Lease impairment charge	1,461		—
Other	206		103
Changes in operating assets and liabilities:
Accounts receivable	15,512		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 securities	17,739		—
Net cash provided by (used in) investing activities	103,625		(94,240)
Cash flows from financing activities:
Proceeds from exercise of stock options	1,341		2,467
Proceeds from issuance of common stock under ESPP	546		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 cash	164		487
Net decrease in cash, cash equivalents and restricted cash	(16,280)		(128,510)
Cash, cash equivalents and restricted cash, beginning of period	27,169		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.

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ON24, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1.1. 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~~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.

~~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~~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, ~~2021.~~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.

~~The results of operations for the three and nine months ended September 30, 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 measure stock-based compensation, the valuation of deferred income tax assets and uncertain tax positions. Actual results could differ from those estimates.

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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~~2022. There have been no significant 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~~these policies during the ~~three and~~ nine months ended September 30, ~~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 not recognized on the balance sheet as ROU assets but expensed 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, 2022.2023

Recently Adopted Accounting Standards

~~In October 2021, the Financial Accounting Standards Board (FASB) issued ASU No. 2021-08,~~ ~~Business Combinations(Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU No. 2021-08~~ ~~amended Topic 805 to require an acquirer to recognize and measure contract assets and liabilities acquired in a business combination to be in accordance with Topic 606,~~ ~~Revenue from Contracts with Customers. The Company early adopted this ASU on April 1, 2022. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.~~

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. ~~The~~This new ~~guidance affects loans,~~standard also requires credit losses related to available for sale 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~~recorded as ~~defined~~an allowance through net income rather than by reducing the ~~SEC,~~carrying amount under the other-than-temporary-impairment model. The Company adopted ASU No. 2016-13 ~~is effective for the annual periods in fiscal years beginning after December 15, 2019,~~on January 1, 2023 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 was not material to ~~have a material impact on its~~the Company’s condensed 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~~statements 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.related disclosures.

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.

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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 ~~8 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 September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021				2023		2022		2023		2022
United States	United States	$	36,424	$	36,922	$	109,353	$	112,212		United States	$	30,238	$	36,424	$	96,181	$	109,353
EMEA	EMEA	7,596		8,524		23,678		27,382			EMEA	6,721		7,596		20,605		23,678
Other	Other	3,555		3,916		11,274		11,985			Other	2,263		3,555		7,585		11,274
Total revenue	Total revenue	$	47,575	$	49,362	$	144,305	$	151,579		Total revenue	$	39,222	$	47,575	$	124,371	$	144,305

~~The following table summarizes~~No individual foreign country contributed more than 10% of revenue for the ~~foreign countries which contributed 10% or more of the total revenue (in thousands)~~:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
United Kingdom * * * 11 %


*			~~Represent less than 10% of total revenue~~

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, ~~2022~~2023 and ~~2021.~~2022. Additionally, no single customer accounted for 10% or more of accounts receivable as of September 30, ~~2022~~2023 and December 31, ~~2021.~~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, ~~2022~~2023 and December 31, ~~2021,~~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.

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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, ~~2022~~2023 and December 31, ~~2021.~~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, ~~2022~~2023 that was included in deferred revenue at the beginning of the period was ~~$16.3~~$11.8 million and ~~$83.3~~$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, ~~2022,~~2023, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$139.9~~$127.3 million, which consists of both billed consideration in the amount of ~~$81.7~~$67.2 million and unbilled consideration in the amount of ~~$58.2~~$60.1 million that the Company expects to recognize as revenue. As of September 30, ~~2022,~~2023, the Company expects to recognize ~~80%~~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

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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 ~~$3.9 million and $11.9 million or the three and nine months ended September 30, 2022, respectively, and~~ $3.8 million and ~~$11.3~~$11.6 million for the three and nine months ended September 30, ~~2021,~~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.

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Note 3. Marketable Securities

Marketable securities consisted of the following as of the periods presented (in thousands):


											September 30, 2023
		September 30, 2022									Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable Securities	Marketable Securities									Marketable Securities
U.S. Treasury securities	U.S. Treasury securities	$	248,995	$	3	$	(1,730)	$	247,268	U.S. Treasury securities	$	159,288	$	—	$	(238)	$	159,050
U.S. Agency securities										U.S. Agency securities	29,352		—		(22)		29,330
Certificates of deposit	Certificates of deposit	21,641		3		(116)		21,528		Certificates of deposit	3,365		—		—		3,365
Corporate debt securities	Corporate debt securities	18,498		—		(205)		18,293		Corporate debt securities	1,687		—		(3)		1,684
Commercial paper	Commercial paper	18,380		—		(79)		18,301		Commercial paper	9,513		—		(7)		9,506
Asset-backed securities		68		—		(1)		67
Total marketable securities	Total marketable securities	$	307,582	$	6	$	(2,131)	$	305,457	Total marketable securities	$	203,205	$	—	$	(270)	$	202,935


											December 31, 2022
		December 31, 2021									Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable Securities	Marketable Securities									Marketable Securities
U.S. Treasury securities	U.S. Treasury securities	$	157,681	$	—	$	(404)	$	157,277	U.S. Treasury securities	$	219,895	$	10	$	(801)	$	219,104
U.S. Agency securities										U.S. Agency securities	19,247		19		(2)		19,264
Certificates of deposit	Certificates of deposit	6,495		—		(5)		6,490		Certificates of deposit	26,624		4		(119)		26,509
Corporate debt securities	Corporate debt securities	36,422		—		(95)		36,327		Corporate debt securities	13,934		—		(86)		13,848
Commercial paper	Commercial paper	11,624		2		(6)		11,620		Commercial paper	22,433		10		(43)		22,400
Asset-backed securities		5,901		1		(7)		5,895
Total marketable securities	Total marketable securities	$	218,123	$	3	$	(517)	$	217,609	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 ana continuous unrealized loss position consisted of the following as of the periods presented (in thousands):


		September 30, 2022													September 30, 2023
		Less Than 12 Months				12 Months or More				Total					Less Than 12 Months				12 Months or More				Total
		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
U.S. Treasury securities	U.S. Treasury securities	$	165,882	$	(968)	$	65,381	$	(762)	$	231,263	$	(1,730)	U.S. Treasury securities	$	153,622	$	(238)	$	—	$	—	$	153,622	$	(238)
U.S. Agency securities														U.S. Agency securities	29,330		(22)		—		—		29,330		(22)
Certificates of deposit	Certificates of deposit	14,550		(116)		—		—		14,550		(116)		Certificates of deposit	3,365		—		—		—		3,365		—
Corporate debt securities	Corporate debt securities	12,286		(146)		6,007		(59)		18,293		(205)		Corporate debt securities	1,684		(3)		—		—		1,684		(3)
Commercial paper	Commercial paper	18,301		(79)		—		—		18,301		(79)		Commercial paper	9,506		(7)		—		—		9,506		(7)
Asset-backed securities		68		(1)		—		—		68		(1)

Total	Total	$	211,087	$	(1,310)	$	71,388	$	(821)	$	282,475	$	(2,131)	Total	$	197,507	$	(270)	$	—	$	—	$	197,507	$	(270)

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		December 31, 2021													December 31, 2022
		Less Than 12 Months				12 Months or More				Total					Less Than 12 Months				12 Months or More				Total
		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
U.S. Treasury securities	U.S. Treasury securities	$	143,590	$	(404)	$	—	$	—	$	143,590	$	(404)	U.S. Treasury securities	$	116,161	$	(151)	$	77,173	$	(650)	$	193,334	$	(801)
U.S. Agency securities														U.S. Agency securities	3,197		(2)		—		—		3,197		(2)
Certificates of deposit	Certificates of deposit	6,490		(5)		—		—		6,490		(5)		Certificates of deposit	22,402		(119)		—		—		22,402		(119)
Corporate debt securities	Corporate debt securities	36,327		(95)		—		—		36,327		(95)		Corporate debt securities	4,253		(13)		8,345		(73)		12,598		(86)
Commercial paper	Commercial paper	6,984		(6)		—		—		6,984		(6)		Commercial paper	12,853		(43)		—		—		12,853		(43)
Asset-backed securities		4,967		(7)		—		—		4,967		(7)
Total	Total	$	198,358	$	(517)	$	—	$	—	$	198,358	$	(517)	Total	$	158,866	$	(328)	$	85,518	$	(723)	$	244,384	$	(1,051)

The Company ~~reviews the individual securities that have unrealized losses on a regular basis to evaluate~~periodically evaluates whether any security has experienced ~~other-than-temporary decline~~credit-related declines in fair ~~value below amortized cost.~~value. The Company ~~evaluates, among other factors, whether~~did not recognize any credit loss related to its available for sales debt securities during the ~~Company has the intention to sell any~~three and nine months ended September 30, 2023 or 2022.

The amount of ~~these~~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 ~~whether it is more likely than not that~~such amount was immaterial in 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,~~three and ~~the decline in fair value was not due to any credit-related factor, no decline was deemed to be other-than-temporary.~~

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 ~~income for~~loss in the three and nine months ended September 30, ~~2022 and 2021.~~2022.

The following summarizes the remaining contractual maturities of the Company’s marketable securities as of September 30, ~~2022~~ ~~(in~~2023 (in thousands):


	Fair Value
One year or less	$	~~305,457~~187,079
Over one year through five years	—15,856
Total marketable securities	$	~~305,457~~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, 2022									September 30, 2023
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Cash and cash equivalent	Cash and cash equivalent									Cash and cash equivalent
Cash equivalents - money market mutual funds	Cash equivalents - money market mutual funds	$	32,629	$	—	$	—	$	32,629	Cash equivalents - money market mutual funds	$	8,842	$	—	$	—	$	8,842
Cash equivalents - commercial paper		—		2,632		—		2,632

Marketable Securities	Marketable Securities									Marketable Securities
U.S. Treasury securities	U.S. Treasury securities	—		247,268		—		247,268		U.S. Treasury securities	—		159,050		—		159,050
U.S. Agency securities										U.S. Agency securities	—		29,330		—		29,330
Certificates of deposit	Certificates of deposit	—		21,528		—		21,528		Certificates of deposit	—		3,365		—		3,365
Corporate debt securities	Corporate debt securities	—		18,293		—		18,293		Corporate debt securities	—		1,684		—		1,684
Commercial paper	Commercial paper	—		18,301		—		18,301		Commercial paper	—		9,506		—		9,506
Asset-backed securities		—		67		—		67

Total cash equivalents and marketable securities	Total cash equivalents and marketable securities	$	32,629	$	308,089	$	—	$	340,718	Total cash equivalents and marketable securities	$	8,842	$	202,935	$	—	$	211,777

~~Table of Contents~~


		December 31, 2021									December 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Cash and cash equivalent	Cash and cash equivalent									Cash and cash equivalent
Cash equivalents - money market mutual funds	Cash equivalents - money market mutual funds	$	151,079	$	—	$	—	$	151,079	Cash equivalents - money market mutual funds	$	5,608	$	—	$	—	$	5,608
Marketable Securities	Marketable Securities									Marketable Securities
U.S. Treasury securities	U.S. Treasury securities	—		157,277		—		157,277		U.S. Treasury securities	—		219,104		—		219,104
U.S. Agency securities										U.S. Agency securities	—		19,264		—		19,264
Certificates of deposit	Certificates of deposit	—		6,490		—		6,490		Certificates of deposit	—		26,509		—		26,509
Corporate debt securities	Corporate debt securities	—		36,327		—		36,327		Corporate debt securities	—		13,848		—		13,848
Commercial paper	Commercial paper	—		11,620		—		11,620		Commercial paper	—		22,400		—		22,400
Asset-backed securities		—		5,895		—		5,895
Total cash equivalents and marketable securities	Total cash equivalents and marketable securities	$	151,079	$	217,609	$	—	$	368,688	Total cash equivalents and marketable securities	$	5,608	$	301,125	$	—	$	306,733

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company classified its cash equivalents within level 1 ~~or level 2~~ of the fair value hierarchy because they are valued using quoted market ~~prices or alternative pricing sources and models utilizing observable market inputs.~~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

~~Prepaid Expenses and Other Current Assets~~

~~Prepaid expenses and other current assets consisted of the following as of the periods presented (in thousands):~~

September 30, 2022 December 31, 2021
Prepaid expenses $ 6,557 $ 5,617
Other receivables 1,661 2,786
Other 157 64
Prepaid expenses and other current assets $ 8,375 $ 8,467

Property and Equipment, Net

Property and equipment, net consisted of the following as of the periods presented (in thousands):


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Computer, equipment and software(1)	Computer, equipment and software(1)	$	31,010	$	28,227	Computer, equipment and software(1)	$	33,255	$	31,243
Furniture and fixtures	Furniture and fixtures	1,056		1,118		Furniture and fixtures	1,073		1,071
Leasehold improvements	Leasehold improvements	3,584		3,776		Leasehold improvements	3,793		3,606
Property and equipment, gross	Property and equipment, gross	35,650		33,121		Property and equipment, gross	38,121		35,920
Less: Accumulated depreciation and amortization(2)	Less: Accumulated depreciation and amortization(2)	(27,521)		(24,341)		Less: Accumulated depreciation and amortization(2)	(32,270)		(28,708)
Property and equipment, net	Property and equipment, net	$	8,129	$	8,780	Property and equipment, net	$	5,851	$	7,212

(1)I~~ncludes~~Includes assets recorded under finance leases of $3.2 million and $5.3 million as of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022, respectively.

(2)In~~cludes~~Includes amount for assets recorded under finance leases of ~~$3.6~~$3.0 million and ~~$2.2~~$4.0 million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~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, and $1.1 million and $3.4 million for the three and nine months ended September 30, 2021,~~ respectively.

~~Table of Contents~~

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, 2022		December 31, 2021			September 30, 2023		December 31, 2022
United States	United States	$	7,368	$	7,899	United States	$	5,450	$	6,449
EMEA	EMEA	722		816		EMEA	378		722
Other	Other	39		65		Other	23		41
Total property and equipment, net	Total property and equipment, net	$	8,129	$	8,780	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, 2022 December 31, 2021
Accrued compensation and benefits $ 6,449 $ 6,339
Accrued bonus and commissions 5,147 6,555
Other 5,462 6,117
Accrued and other current liabilities $ 17,058 $ 19,011

~~Other Long-term Liabilities~~

~~Other long-term liabilities consisted of the following as of the periods presented (in thousands):~~

September 30, 2022 December 31, 2021
Deferred rent liabilities $ — $ 1,988
Deferred revenue 698 937
Other 987 699
Other long-term liabilities $ 1,685 $ 3,624


	September 30, 2023		December 31, 2022
Accrued compensation and benefits	$	4,976	$	5,390
Accrued bonus and commissions	4,934		6,814
Other	6,716		6,261
Accrued and other current liabilities	$	16,626	$	18,465

Note 6.6. 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.

~~The Company has not separately presented pro forma results reflecting the acquisition of Vibbio as the impacts were not material to the condensed consolidated financial statements.~~

~~Table of Contents~~

Note 7.7. Intangible Assets

The Company’s acquired intangible asset subject to amortization as of the periods presented was as follows (in thousands):


		September 30, 2022							September 30, 2023
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	Developed technology	$	2,700	$	(285)	$	2,415	Developed technology	$	2,700	$	(852)	$	1,848
Effect of foreign currency translation	Effect of foreign currency translation	(504)		20		(484)		Effect of foreign currency translation	(486)		32		(454)
Total	Total	$	2,196	$	(265)	$	1,931	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

Table of ~~December 31, 2021, the Company had no intangible assets.~~Contents

The intangible asset is amortized on a straight-line basis over its useful life of 4 years. As of September 30, ~~2022,~~2023, the intangible asset had a remaining amortization period of ~~3.5~~2.5 years.

The amortization expense was $0.1 million and $0.4 million for the three and nine months ended September 30, ~~2022~~2023, respectively, and was $0.2 million and $0.3 million ~~respectively,~~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 ~~will be~~is used to enhance our existing product capabilities.

The estimated future amortization expense for the intangible asset is as follows (in thousands):


Remainder of 2022		$	138
2023		549
Remaining 2023				Remaining 2023	$	139
2024	2024	549		2024	555
2025	2025	549		2025	553
2026	2026	146		2026	147
Total	Total	$	1,931	Total	$	1,394

Note 8. ~~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 years 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):~~

~~Leases~~

~~Classification~~

~~September 30, 2022~~

~~Non-Current Assets~~

~~Finance lease assets~~

~~Property, plant and equipment, net~~

~~1,746~~

~~Operating lease assets~~

~~Operating right-of-use asset~~

~~6,011~~

~~Total leased assets~~

~~7,757~~

~~Current Liabilities~~

~~Finance~~

~~Finance lease liabilities, current~~

~~1,762~~

~~Operating~~

~~Operating lease liabilities, current~~

~~2,676~~

~~Non-Current Liabilities~~

~~Finance~~

~~Finance lease liabilities~~

~~300~~

~~Operating~~

~~Operating lease liabilities~~

~~5,628~~

~~Total leased liabilities~~

~~10,366~~

~~Table of Contents~~

~~The components of lease cost were as follows (in thousands):~~

Lease Cost Classification Three Months Ended
September 30, 2022 Nine Months Ended
September 30, 2022
Finance lease cost
Amortization of right-of-use assets Depreciation and amortization $ 438 $ 1,314
Interest on finance lease liabilities Interest expense 26 94
Operating lease cost Selling, general and administrative expenses 549 1,720
Variable lease cost Selling, general and administrative expenses 101 281
Total lease cost $ 1,114 $ 3,409

~~The undiscounted future lease payments under the lease liabilities as of September 30, 2022 were as follows (in thousands):~~

Maturity of Lease Liabilities Finance Lease Operating Lease
Remainder of 2022 $ 437 $ 775
2023 1,607 2,854
2024 80 2,803
2025 — 2,240
2026 — 97
Thereafter — 33
Total lease payments 2,124 8,802
Less imputed interest (62) (498)
Present value of lease liabilities $ 2,062 $ 8,304

~~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 Lease Operating Lease
2022 $ 1,888 $ 2,633
2023 1,607 2,844
2024 80 2,789
2025 — 2,272
Total payments 3,575 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 September 30, 2022 were as follows:~~

Finance Lease Operating Lease
Weighted-average remaining lease term 1.2 years 3.1 years
Weighted-average discount rate 4.51 % 3.89 %

~~Table of Contents~~

~~Supplemental cash flow information was as follows (in thousands):~~


	Nine Months Ended September 30, 2022
~~Cash paid for amounts included in the measurement of lease liabilities:~~
~~Operating cash flows used by operating leases~~	$	~~1,731~~
~~Financing cash used by finance leases~~	~~1,399~~
~~Right of use assets obtained in exchange for new lease liabilities:~~
~~Operating leases - adoption~~	~~7,246~~
~~Operating leases - nine months ended September 30, 2022~~	~~357~~
~~Finance leases~~	—

~~Note 9~~. 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, ~~2022,~~2023, the Company ~~did~~had not ~~draw~~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, ~~2022,~~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. 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 prime referenced rate was ~~6.25%~~8.50% as of September 30, ~~2022~~2023 and ~~3.25%~~7.50% as of ~~September 30, 2021.~~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. ~~The~~In April 2023, the Company ~~was not~~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 ~~the financial covenants as of September 30, 2022.~~certain terms and conditions.

Note 10.9. Commitment and Contingencies

Purchase Obligations

The Company has non-cancelable purchase commitments of ~~$3.7~~$4.2 million as of September 30, ~~2022,~~2023, primarily related to software license fees and co-location facilities and services, of which ~~$0.9~~$1.0 million is expected to be paid in the remainder of ~~2022, $2.6~~2023, $2.4 million in ~~2023 and $0.2~~2024, $0.6 million in ~~2024.~~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, ~~2022~~2023 and December 31, ~~2021.~~2022.

~~Table of Contents~~

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 ~~is currently pending.~~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 ~~consolidated~~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 June 2022, a shareholder derivative complaint, captioned Banks v. Sharan, et al., Case No. 3:22-cv-03861, was filed by a purported shareholder in the United States District Court for the Northern District of California. The complaint names as defendants the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and certain current and former members of the Company’s board of directors, and names the Company as a nominal defendant. The complaint purports to assert claims on the Company’s behalf against the individual defendants for breach of fiduciary duty and alleged violations of Sections 10(b) and 21D of the Securities Exchange Act of 1934. The complaint is based on allegations that are substantially similar to those in the putative class action filed in the United States District Court for the Northern District of California, described above. The complaint seeks, among other things, an award of damages on behalf of the Company, corporate governance reforms, and attorneys’ fees and costs. In September 2022, the plaintiff voluntarily dismissed the complaint without prejudice.

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 11.10. 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. ~~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 September 30, ~~2022,~~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 outstanding			~~7,957,539~~7,157,218
Restricted stock ~~units~~ outstanding			~~4,270,636~~6,763,380
Remaining shares available for future grant under 2021 Equity Incentive Plan(1)			~~6,287,782~~4,107,198
Remaining shares available for future issuance under ESPP(2)			~~1,613,045~~1,895,121
Total shares of common stock reserved as of September 30, ~~2022~~2023			~~20,129,002~~19,922,917

(1)Includes the automatic annual increase of ~~2,386,367~~2,377,740 additional shares under the Company’s 2021 Equity Incentive Plan (“2021 Plan”) on January 1, ~~2022.~~2023.

(2)Includes the automatic annual increase of ~~477,273~~475,548 additional shares under the Company’s ESPP on January 1, ~~2021.~~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.

2016

Table of Contents

The following table presents certain information regarding shares repurchased during the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Number of shares repurchased	3,416,682		—		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 ~~under the Company’s equity incentive plans~~ and related information is as follows:


		Options Outstanding							Options Outstanding
		Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)			Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Balance as of December 31, 2021		9,341,242	$	6.83
Balance as of December 31, 2022								Balance as of December 31, 2022	7,756,680	$	6.96
Granted	Granted	—	—					Granted	—	—
Anti-dilution adjustment(1)								Anti-dilution adjustment(1)	389,037	1.92
Exercised	Exercised	(1,107,959)	2.39			$	11,860	Exercised	(733,884)	1.93			$	4,415
Cancelled and forfeited	Cancelled and forfeited	(275,744)	17.75					Cancelled and forfeited	(254,615)	19.14
Balance as of September 30, 2022		7,957,539	$	7.07	6.05	$	36,203
Balance as of September 30, 2023								Balance as of September 30, 2023	7,157,218	$	5.91	5.09	$	23,721
Vested and exercisable	Vested and exercisable	5,854,734	$	5.06	5.38	$	31,614	Vested and exercisable	6,289,769	$	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 ~~under the Company’s equity incentive plans~~ and related information is as follows:


		RSUs Outstanding				RSUs Outstanding
		Number of Shares	Weighted-Average Grant Date Fair Value			Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance as of December 31, 2021		3,737,565	$	20.01
Unvested balance as of December 31, 2022					Unvested balance as of December 31, 2022	5,134,934	$	14.37
Granted	Granted	1,744,632	12.19		Granted	2,771,342	8.42
Anti-dilution adjustment(1)					Anti-dilution adjustment(1)	950,208	12.43
Vested	Vested	(722,155)	21.72		Vested	(1,727,598)	14.61
Cancelled and forfeited	Cancelled and forfeited	(489,406)	20.22		Cancelled and forfeited	(996,281)	13.47
Unvested balance as of September 30, 2022		4,270,636	$	16.51
Unvested balance as of September 30, 2023					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. ~~The total~~

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 ~~RSUs vested~~$4.2 million. The PSUs vest following three annual performance periods beginning in 2023, each in an amount equal to one-third of the ~~three and nine months ended~~ 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, ~~2021 was $0.6~~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 ~~Company also had 187,500 performance-based RSUs that were vested~~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 ~~nine months ended~~ 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, ~~2021.~~2023, none of these PSUs have vested.

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~~Stock -Based~~Stock-Based Compensation

The stock-based compensation expense by line item in the ~~accompanying~~ condensed consolidated statements of operations is summarized as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021				2023		2022		2023		2022
Cost of revenue	Cost of revenue										Cost of revenue
Subscription and other platform	Subscription and other platform	$	849	$	607	$	2,540	$	1,190		Subscription and other platform	$	638	$	849	$	2,132	$	2,540
Professional services	Professional services	165		109		505		248			Professional services	123		165		419		505
Total cost of revenue	Total cost of revenue	1,014		716		3,045		1,438			Total cost of revenue	761		1,014		2,551		3,045
Sales and marketing	Sales and marketing	3,597		2,364		10,986		5,627			Sales and marketing	3,693		3,597		10,305		10,986
Research and development	Research and development	2,019		1,235		5,925		2,879			Research and development	2,332		2,019		6,716		5,925
General and administrative	General and administrative	3,273		3,516		9,152		7,851			General and administrative	4,779		3,273		13,719		9,152
Total stock-based compensation expense	Total stock-based compensation expense	$	9,903	$	7,831	$	29,108	$	17,795		Total stock-based compensation expense	$	11,565	$	9,903	$	33,291	$	29,108

~~As of September 30, 2022,~~The following table presents the unrecognized stock-based compensation expense ~~by award type~~ and ~~their~~ weighted-average recognition periods ~~are~~ as ~~follows~~of September 30, 2023 (in thousands, except years):

Stock Option RSU ESPP
Unrecognized stock-based compensation expense $ 29,239 $ 63,209 $ 76
Weighted-average amortization period 2.16 years 2.85 years 0.13 years

~~Repurchase of Common Stock~~

In December 2021, the Company’s Board of Directors authorized a $50.0 million share repurchase program. The timing and number of shares repurchased under the program will depend on a variety of factors, including stock price, trading volume, and general business and market conditions. The share repurchase program may be modified, suspended or discontinued at any time at the Company’s discretion.

When the Company has repurchased shares under the program, it reduced the common stock component of stockholder’s equity by the par value of the repurchased shares. The excess of the repurchase price over par value of the shares was charged to additional paid in capital as the Company is in an accumulated deficit position. All repurchased shares were retired and became authorized and unissued shares.

As of September 30, 2022, the Company had $21.0 million available for future share buybacks under the repurchase program. The following table presents certain information regarding shares repurchased under the program during the period presented:

Nine Months Ended
September 30, 2022

~~Number of shares repurchased~~

~~1,531,209~~

~~Average price per share (including commissions)~~

~~14.24~~

~~Total repurchase costs (in millions)~~

~~21.8~~

~~The Company did not repurchase shares during the three months ended September 30, 2022.~~


	Stock Option		Restricted Stock		ESPP
Unrecognized stock-based compensation expense	$	14,427	$	58,991	$	46
Weighted-average amortization period	1.47 years		2.24 years		0.13 years

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~~12.~~Note 11. Other ~~(Income) Expense,~~Income, Net

Other ~~(income) expense,~~income, net consisted of the following for the periods presented (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Interest income	Interest income	$	(477)	$	(215)	$	(1,236)	$	(272)	Interest income	$	(694)	$	(477)	$	(3,191)	$	(1,236)
Amortization (accretion) on marketable securities		(447)		165		(117)		190
Accretion on marketable securities										Accretion on marketable securities	(2,142)		(447)		(5,853)		(117)
Foreign currency losses	Foreign currency losses	555		160		1,322		606		Foreign currency losses	119		555		610		1,322
Other	Other	(94)		(4)		(152)		(91)		Other	(1)		(94)		(49)		(152)
Other (income) expense, net		$	(463)	$	106	$	(183)	$	433
Other income, net										Other income, net	$	(2,718)	$	(463)	$	(8,483)	$	(183)

Note 13.12. Income Taxes

The Company’s provision for ~~(benefit from)~~ income taxes were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Provision for (benefit from) income taxes $ 40 $ (32) $ 163 $ (65)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Provision for income taxes	$	109	$	40	$	535	$	163

The Company’s provision for ~~(benefit from)~~ 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 ~~(benefit from)~~ income taxes for the three and nine months ended September 30, ~~2022 changed by~~2023 increased $0.1 million and ~~$0.2~~$0.4 million, ~~respectively,~~ compared to the three and nine months ended September 30, ~~2021. The change~~2022. These changes in provision for ~~(benefit from)~~ income taxes ~~was~~were primarily driven by the increased activity and higher tax ~~shortfalls associated with stock-based compensation benefit~~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, ~~2022,~~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.

In August 2022, the Inflation Reduction Act of 2022 was signed into the U.S. law, which implements a new alternative minimum tax for some large corporations, an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, among other provisions. The Company does not expect the Inflation Reduction Act to have a material impact on its consolidated financial statements.

Note ~~14.~~13. Net Loss Per Share ~~Attributable to Common Stockholders~~

The following tables set forth the computation of basic and diluted net loss per share ~~attributable to common stockholders~~ for the periods presented (in thousands, except share and per share data):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net loss $ (14,387) $ (9,400) $ (46,078) $ (14,747)
Cumulative preferred dividends allocated to preferred stockholders — — — (558)
Net loss attributable to common stockholders $ (14,387) $ (9,400) $ (46,078) $ (15,305)
Net loss per share of common stock, basic and diluted $ (0.30) $ (0.20) $ (0.97) $ (0.36)
Weighted-average common stock outstanding, basic and diluted 47,640,200 47,101,200 47,357,711 42,149,108

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(11,474)	$	(14,387)	$	(41,911)	$	(46,078)




Net loss per share of common stock, basic and diluted	$	(0.26)	$	(0.30)	$	(0.92)	$	(0.97)
Weighted-average common stock outstanding, basic and diluted	43,832,475		47,640,200		45,655,106		47,357,711

The following table sets forth the potential shares of common stock that were excluded from the computation of diluted net loss per share ~~attributable to common stockholders~~ for the periods presented because including them would have been antidilutive:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2022	2021	2022	2021		2023	2022	2023	2022
Stock options	Stock options	7,957,539	10,269,096	7,957,539	10,269,096	Stock options	7,157,218	7,957,539	7,157,218	7,957,539
Restricted stock units	Restricted stock units	4,270,636	1,655,511	4,270,636	1,655,511	Restricted stock units	6,132,605	4,270,636	6,132,605	4,270,636
Performance stock units						Performance stock units	630,775	—	630,775	—
ESPP purchase rights	ESPP purchase rights	126,708	96,628	126,708	96,628	ESPP purchase rights	110,887	126,708	110,887	126,708
Total antidilutive securities	Total antidilutive securities	12,354,883	12,021,235	12,354,883	12,021,235	Total antidilutive securities	14,031,485	12,354,883	14,031,485	12,354,883

Note ~~15.~~14. Related Party Transactions

The Company incurred engineering and quality assurance costs from a third-party vendor in the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022. The chief executive officer of the third-party vendor is considered an immediate family member of the Company’s chief technology officer. The Company recorded $0.7 million and $2.1 million in the three and nine months ended September 30, 2023, respectively, and $0.8 million and $2.2 million in the three and nine months ended September 30, 2022, ~~respectively, and $0.7 million and $1.8 million in the three and nine months ended September 30, 2021,~~ respectively, in research and development expense relating to this third-party vendor on the condensed consolidated statements of operations. ~~The~~As of September 30, 2023 and December 31, 2022, the Company recorded ~~$0.5~~$0.2 million and $0.7 million, respectively, in accounts payable and accrued liabilities ~~as of September 30, 2022 and $0.3 million in accounts payable as of December 31, 2021~~ on the condensed consolidated balance sheets for the amount owed to this third-party vendor.

~~16.~~

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Note 15. Restructuring

In the third quarter of 2022, the Company initiated a strategic cost reduction plan ~~which included a reduction of the Company’s global full-time employee headcount as of June 30, 2022 through~~to reduce its cost structure and lower its net loss, including voluntary and involuntary global headcount ~~reductions. As~~reductions as well as reductions in spending with various vendors. This plan was substantially completed in the first quarter of 2023, and the Company has pursued additional reductions in its workforce in the first nine months of 2023 to further reduce its cost structure.

The following table summarizes the restructuring costs and lease impairment charges under both plans in our condensed consolidated statements of operations for the three and nine months ended September 30, ~~2022, the Company’s full-time headcount decreased by approximately 6% from June 30, 2022. Additionally, the Company incurred restructuring costs of $1.1 million during the third quarter of 2022,~~2023 (in thousands):


	Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
	Severance and Related Charges(1)		Lease Impairment Charge(2)		Total		Severance and Related Charges(1)		Lease Impairment Charge(2)		Total
Cost of revenue
Subscription and other platform	$	629	$	19	$	648	$	2,134	$	108	$	2,242
Professional services	39		18		57		143		119		262
Total cost of revenue	668		37		705		2,277		227		2,504
Sales and marketing	150		48		198		1,958		256		2,214
Research and development	174		97		271		1,287		569		1,856
General and administrative	21		70		91		303		409		712
Total restructuring costs	$	1,013	$	252	$	1,265	$	5,825	$	1,461	$	7,286

(1)Severance and related charges primarily ~~related to~~include severance and one-time termination benefits. ~~The Company expects to incur additional restructuring costs of $1.0 million to $1.3 million in~~

(2)Lease impairment charge represents the ~~fourth quarter of 2022 for such activities.~~underutilized real estate charge on the Company’s headquarters lease.

The following table summarizes the restructuring costs in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022 (in thousands):


	Three and Nine Months Ended September 30, 2022
	Severance and Related Charges(1)
Cost of revenue
Subscription and other platform	$	363
Professional services	27
Total cost of revenue	390
Sales and marketing	582
Research and development	61
General and administrative	37
Total restructuring costs	$	1,070

(1)Severance and related charges primarily include severance and one-time termination benefits.

The Company paid restructuring costs of $1.3 million and $5.4 million during the three and nine months ended September 30, 2023, respectively, and $0.5 million during the three and nine months ended September 30, 2022. As of September 30, 2023 and December 31, 2022, the restructuring liability was $0.6 million and $0.2 million, respectively, and is included in accrued and other current liabilities on the condensed consolidated balance sheets.

The Company expects to incur additional restructuring costs of $0.4 million to $0.8 million in the fourth quarter of 2023 and may incur additional costs in future periods for restructuring activities.

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Item 7.2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this ~~Report on Form 10-Q.~~Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “Risk Factors” and in other parts of this ~~Report on Form 10-Q.~~Report.

Overview

We provide 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. Our platform’s portfolio of interactive, personalized and content-rich digital experience products 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.

Similar to what has taken place in the ~~business-to-consumer (B2C)~~B2C market, our platform for digital engagement empowers ~~business-to-business (B2B)~~B2B companies with insights to better personalize their engagement. Large social media platforms have been successful at leveraging experiences and insights of consumers on their platforms to enable B2C companies to effectively understand their potential consumers. While these have been effective in the B2C market, B2B companies often lack deep insights about prospective customers to effectively understand and engage them.

Businesses today primarily use automated solutions, such as digital advertising and email, for marketing. While these automated solutions reach large numbers of prospective customers, they have generally failed to deepen customer engagement because they were designed with the simple purpose of pushing marketing messages in one direction—from the business to the prospective customer. For businesses to succeed, we believe their sales and marketing strategies must evolve from the era of automation to the era of engagement. Our platform provides an innovative way both to scale digital marketing and deepen prospective customer engagement. We believe our opportunity to help businesses convert digital engagement into revenue will continue to grow as industries modernize their sales and marketing processes.

We sell subscriptions to our platform’s experience products that are backed by analytics and our ecosystem of third-party integrations. Before 2013, we offered services and licensed software for managing webinars and virtual events primarily on a per event basis. In 2013, we transitioned to be a software-as-a-service company with the release of ON24 Elite ~~and~~as our self-service cloud-based subscription product. ON24 Virtual Conference, which we are now de-emphasizing, was also launched as a managed-service cloud-based subscription ~~products.~~product. Substantially all of our customers subscribe to ON24 Elite, which is our Core Platform’s flagship product, and enables customers to seamlessly broadcast video-based content and drive real-time interactivity in a single immersive experience. ~~Our customers can host multiple tracks of their webinar experiences as a large-scale virtual event~~We have since added five other experience ~~using ON24 Virtual Conference.~~products to our Core Platform.

In 2018, we launched two complementary experience products, ON24 Engagement Hub and ON24 Target, to provide our customers with a system for digital engagement, offering customers the ability to curate and disseminate rich, multimedia content experiences. In addition to our products, we also provide professional services such as experience management, monitoring and premium support services, which provide the opportunity for recurring revenue, as well as implementation and other services.

In 2021, we launched ON24 Breakouts, which expanded the functionality and interactivity of webinars built with ON24 Elite. For example, breakouts enable attendees and presenters to network with each other face-to-face, sales teams to connect immediately with prospects and subject matter experts to offer two-way communication to support customer education and training.

In 2021, we also launched ON24 Go Live, which provides a new self-service virtual event solution for companies to stand up live-streaming video events faster and easier. Organizations can build a complete end-to-end external or internal event ranging from roadshows, customer conferences, virtual pop-ups, town halls, and company meetings, using pre-built templates and an easy-to-use and engaging interface.

~~We recently~~In 2022, we launched ON24 Forums that joins our portfolio of experience products and unifies engagement and data. ON24 Forums provides a new way to moderate interactive discussions and drive immediate action with audiences. For example, it enables audiences to participate in face-to-face, two-way video discussions.

In April 2022, we acquired Vibbio AS (Vibbio), a video software company in Norway. 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.

We deliver our platform products as cloud-based subscriptions that are easy to use and purpose-built for sales and marketing professionals. As of September 30, ~~2022,~~2023, we had ~~2,053~~1,804 customers.

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Prior to developing our current cloud-based subscription model, we generated revenue from our Legacy offering, which primarily consisted of fully managed events and associated services. In connection with shifting to our current data-driven, cloud-based subscription model, we stopped selling our Legacy offering to new customers in 2018 and stopped selling it to all customers in 2020.

Our revenue ~~was $47.6 million and $144.3 million~~ for the third quarter and first nine months of ~~2022,~~2023 was $39.2 million and $124.4 million, respectively, compared to ~~$49.4~~$47.6 million and ~~$151.6~~$144.3 million for the same periods of ~~2021,~~2022, representing a period-over-period decrease of 4%18% and 5%14%. We had a net loss of $11.5 million and $41.9 million for the third quarter and nine months of 2023, respectively, compared to $14.4 million and $46.1 million for ~~the third quarter and first nine months of 2022, respectively, compared to $9.4 million and $14.7 million for the~~ same periods of ~~2021.~~2022.

COVID-19 Update

The continued spread of COVID-19, any future variants that may be more transmissible and have more severe symptoms than current variants, may extend the impact of COVID-19 on our business. The impact of these variants cannot be predicted at this time and could depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against emerging variants, and any new measures that may be introduced by governments or other parties in response to an increase in COVID-19 cases.

During the COVID-19 pandemic, ~~digital became the primary way for people to connect, work, learn and be entertained, and for businesses to engage with customers. The imperative to optimize~~optimizing digital sales and marketing investments to drive revenue conversion ~~has become~~became increasingly important ~~as businesses have accelerated digital transformation initiatives~~to businesses. This resulted in ~~response to the COVID-19 pandemic, resulting in~~ increased subscriptions and usage of our ~~subscription and other platforms,~~platform, especially during ~~the height of the COVID-19 pandemic in~~ 2020 and early 2021.

~~There is no assurance that we will~~ We may not experience such growth in future ~~periods the same level of accelerated growth we experienced in 2020, and to a lesser extent in 2021.~~periods. For example, our revenue ~~recently~~ decreased ~~by 4%~~18% and 5%14% in the third quarter and first nine months of ~~2022, respectively,~~2023 compared to the same periods in ~~2021. Our revenue growth rate also declined in 2021 compared to 2020.~~2022. We may continue to face declines in our revenue ~~in future periods as the impact of COVID-19 continues to lessen. If the effects of the COVID-19 pandemic continue to subside,~~if our customers and their users ~~may~~ increasingly ~~resume~~ opt for in-person marketing activities in a way that decreases usage of our platform. The extent of the impact of COVID-19 on our business and financial performance may be influenced by a number of factors, many of which we cannot control, including the emergence of recent and any future variants of the virus, future spikes of COVID-19 infections resulting in additional preventative and mitigative measures, the severity of the economic decline attributable to or influenced by the COVID-19 pandemic, the timing and nature of a potential economic recovery, the impact on our customers and our sales cycles, and our ability to generate new business leads. For additional details, seeSee the section titled “Risk Factors.”

Key Factors Affecting Our Performance

Cost Management

We initiated a number of cost control measures in the latter part of 2022 to reduce our cost structure and lower our net loss, including voluntary and involuntary global headcount reductions as well as reductions in spending with various vendors. We have pursued additional reductions in our workforce in 2023 to further reduce our cost structure.

Acquiring New Customers

We are focused on ~~continuing to grow~~growing the number of customers that use our platform. We define a customer as a unique organization, including its subsidiaries and affiliates, that has entered into an agreement for paid access to our platform. A single customer may have multiple agreements with us for separate divisions, subsidiaries or affiliates. Our operating results and growth prospects will depend in part on our ability to attract new customers. While we believe we have a significant market opportunity that our platform addresses, it is difficult to predict customer adoption rates or the future growth rate and size of the market for our platform. We will need to continue to invest in our sales and marketing functions over time in order to address this opportunity by hiring, developing and retaining talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time while we actively manage costs given the current macro-economic environment.

We believe our market is still relatively underpenetrated and, as a result, we see significant opportunity to market our solutions globally. We intend to pursue new customers through specialized and aligned sales teams focused on Enterprise customers, which includes companies with more than 2,000 employees, and Commercial customers, which includes companies with less than 2,000 employees, which we further divide into Mid-Market companies with 200-1,999 employees, and small and midsize, or SMB, companies with 1-199 employees.

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Retention and Expansion of ON24 Across Existing Customers

We believe we can achieve ~~significant~~ growth in our business by retaining and further penetrating our existing customer base with the addition of new users and new products, and through upsell and cross sell. Our multi-dimensional land and expand model drives onboarding and allows us to acquire customers via free trials, live demos and continuous engagement with an efficient sales and marketing investment. As we continue to drive more actionable revenue generating marketing insights, we believe that we have a significant opportunity to further increase sales among existing customers across different functional and geographic departments within each respective organization. Our ability to pursue this opportunity will require us to ~~continue to~~ retain our customers, scale our sales and marketing organization and otherwise increase our operating expenses, and we may not be successful on the timetable we anticipate, or at all, for any number of reasons, which may cause our results to vary from period to period.

Innovation and Expansion of Our Platform

We plan to continually develop new products that enhance the functionality of our platform, improve our user experiences and drive customer engagement in order to further capitalize on new ~~opportunities.~~opportunities, which includes building artificial intelligence (AI) powered capabilities into our product offerings to drive the next generation of our platform. For example, our new AI-powered analytics and content engine is currently in the beta phase and we plan to make it available across our platform once it is ready to go live. We intend to sell these new solutions to both existing and new customers, ~~to drive~~with the goal of driving an increase in revenue as the breadth and depth of our solutions and use cases expands. We also intend to continue investing in our platform and related infrastructure over time to improve capacity, security and scalability. These development efforts will require significant investments, some of which may be episodic or otherwise cause our expenses to vary from period to period.

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International Expansion

We believe the expansion of real-time, revenue-generating marketing intelligence in international markets is a significant opportunity. For the ~~three~~third quarter and first nine months ~~ended September 30, 2022,~~of 2023, approximately 23% ~~and 24%~~ of our revenue came from outside the United States, compared to ~~25%~~23% and ~~26% for the same periods~~24% of ~~2021~~.each respective period in 2022. We believe there is a compelling opportunity to ~~expand~~continue to elevate expansion opportunities for our solutions internationally, both in countries where we currently operate and countries where we do not yet sell subscriptions to our solutions. ~~Continuing to expand~~Expanding our international operations will require considerable management attention and other resources and may present challenges associated with complying with local expectations, customs, laws and regulations, and geopolitical disputes (including the Ukraine-Russia ~~war)~~war and Gaza-Israel conflict), which may impact our ability to sell subscriptions to our solutions and otherwise cause our results to vary from period to period.

Key Business Metrics

We review the following key business metrics to measure our performance, identify trends, formulate financial projections and make strategic decisions. Our methods for calculating these metrics may differ from similarly titled metrics at other companies, which may hinder comparability with other companies. The following table sets forth our number of customers, our annual recurring revenue (ARR) and our customers contributing at least $100,000 in ARR ($100k Customers) as of the dates ~~indicated:~~indicated (dollars in thousands):


		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Dec 31, 2021		Sep 30, 2021		Jun 30, 2021		Mar 31, 2021			Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022
Customers	Customers	2,053		2,101		2,145		2,122		2,054		2,078		2,062		Customers	1,804		1,826		1,916		1,990		2,053		2,101		2,145
ARR (in thousands)		$	165,598	$	167,832	$	167,657	$	171,384	$	167,194	$	164,130	$	163,051

ARR																ARR	$	140,245	$	144,792	$	155,584	$	159,570	$	165,598	$	167,832	$	167,657
ARR - Core Platform(1)																ARR - Core Platform(1)	$	136,505	$	140,619	$	149,242	$	152,554	$	155,948	$	156,424	$	155,535
$100k Customers	$100k Customers	351		349		367		366		359		345		325		$100k Customers	317		323		333		345		351		349		367

(1)ARR for Core Platform excludes Virtual Conference product.

Number of Customers

Increasing awareness of our platform and its broad range of capabilities has enabled us to substantially expand our customer base over the years. We define a customer as a unique organization, including its subsidiaries and affiliates, that has entered into an agreement for paid access to our platform. We serve customers of all sizes, ranging from small businesses to global Fortune 100 organizations across a diverse set of industries, including technology, financial services, healthcare, industrial and manufacturing, professional services and B2B information services companies. ~~Our~~We had a diverse customer base ~~has grown from 760 customers as~~ of ~~December 31, 2015 to 2,053~~1,804 customers as of September 30, ~~2022. Our~~2023. We have seen a decrease in our customer count in recent quarters, and our net customers decreased by 4822 in the third quarter of ~~2022~~2023 compared to the second quarter of ~~2022~~2023, primarily due to ~~less customer acquisition and~~ customer churn partially offset by fewer new customers acquired during the ~~majority of which was in our SMB and Commercial customer base.~~quarter. While we believe the change in our net customer numbers reflect the ~~uncertainty of~~current budget pressures in marketing departments in some organizations, ~~regarding their own digital marketing strategies,~~ our platform is designed with a long-term view toward our customer relationships and to grow with customers as their needs expand.

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Annual Recurring Revenue

We believe that ARR is a key metric to measure our business because it is driven by our ability to acquire new subscription customers and to maintain and expand our relationship with existing subscription customers. ARR is calculated as the sum of the annualized value of our subscription contracts as of the measurement date, including existing customers with expired contracts that we expect to be renewed. Our ARR amounts exclude professional services, overages from subscription customers and Legacy revenue. ~~Our ARR as~~As of September 30, ~~2022,~~2023, December 31, ~~2021~~2022 and September 30, ~~2021~~2022, our ARR was $140.2 million, $159.6 million and $165.6 million, ~~$171.4~~respectively, and our ARR for Core Platform, which excludes Virtual Conference product, was $136.5 million, $152.6 million and ~~$167.2~~$155.9 million, respectively. The decrease in ARR from December 31, ~~2021~~2022 was primarily ~~driven by~~due to rationalizing of contractual entitlements, customer churn and ~~downsell, partially~~decreased demand for our Virtual Conference product, offset in part by new ~~ARR~~customer contracts and contract expansions ~~from new and~~within existing customers during the period. Our ARR also reflects a decrease in demand for our ON24 Virtual Conference product primarily due to the return of large-scale, in-person events. A portion of our ARR is denominated in foreign currencies, and the strengthening US dollar also impacted our ARR in the quarter ended September 30, 2022.customers.

Customers Contributing $100,000 or More to ARR

~~We track the number of $100k Customers, many of whom are larger organizations using our platform.~~ As of September 30, ~~2022,~~2023, December 31, ~~2021~~2022 and September 30, ~~2021,~~2022, we had ~~351, 366~~317, 345 and ~~359~~351 $100k Customers, respectively, demonstrating our penetration of larger organizations. The decrease in ARR contribution from the $100k customers from December 31, ~~2021~~2022 was primarily driven by ~~slower~~lower value contract renewals as some customers adjusted to the macro-economic environment as well as.fewer new customer acquisitions in ~~2022 as well as certain customers renewing their agreements for a lesser value~~the period. The decrease in ~~2022 as a result~~ARR

Table of ~~the macro-economic environment. The ARR~~ Contents

contribution from the $100k customers from June 30, 2023 was primarily due to some customers reducing their spend under the $100K threshold in ~~the third quarter~~light of ~~2022 was consistent with the second quarter of 2022.~~budget pressure in their organizations.

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Results of Operations

We manage and operate as one reportable segment. The discussion below summarizes our results of operations for the periods presented, which we derived from the condensed consolidated financial statements included elsewhere in this Report.

The following tables set forth selected condensed consolidated statements of operations data for each of the periods presented:


		Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021				2023		2022		2023		2022

		(in thousands)								(in thousands)
Revenue:	Revenue:										Revenue:
Subscription and other platform	Subscription and other platform	$	43,271	$	43,601	$	129,812	$	130,888		Subscription and other platform	$	36,430	$	43,271	$	114,130	$	129,812
Professional services	Professional services	4,304		5,761		14,493		20,691			Professional services	2,792		4,304		10,241		14,493
Total revenue	Total revenue	47,575		49,362		144,305		151,579			Total revenue	39,222		47,575		124,371		144,305
Cost of revenue:	Cost of revenue:										Cost of revenue:
Subscription and other platform ~~(3)~~(4)	Subscription and other platform ~~(3)~~(4)	10,120		8,718		29,680		24,382			Subscription and other platform ~~(3)~~(4)	8,390		10,120		27,345		29,680
Professional services ~~(3)~~(4)	Professional services ~~(3)~~(4)	3,182		3,349		9,867		10,252			Professional services ~~(3)~~(4)	2,457		3,182		8,908		9,867
Total cost of revenue	Total cost of revenue	13,302		12,067		39,547		34,634			Total cost of revenue	10,847		13,302		36,253		39,547
Gross profit	Gross profit	34,273		37,295		104,758		116,945			Gross profit	28,375		34,273		88,118		104,758
Operating expenses:	Operating expenses:										Operating expenses:
Sales and marketing ~~(3)~~(4)	Sales and marketing ~~(3)~~(4)	26,553		26,591		84,596		75,981			Sales and marketing ~~(3)~~(4)	21,510		26,553		68,555		84,596
Research and development ~~(3)~~(4)	Research and development ~~(3)~~(4)	11,324		9,114		32,916		25,222			Research and development ~~(3)~~(4)	9,730		11,324		31,759		32,916
General and administrative ~~(3)~~(4)	General and administrative ~~(3)~~(4)	11,164		10,851		33,199		29,719			General and administrative ~~(3)~~(4)	11,200		11,164		37,583		33,199
Total operating expenses	Total operating expenses	49,041		46,556		150,711		130,922			Total operating expenses	42,440		49,041		137,897		150,711
Loss from operations	Loss from operations	(14,768)		(9,261)		(45,953)		(13,977)			Loss from operations	(14,065)		(14,768)		(49,779)		(45,953)
Interest expense	Interest expense	42		65		145		402			Interest expense	18		42		80		145
Other (income) expense, net		(463)		106		(183)		433
Loss before provision for (benefit from) income taxes		(14,347)		(9,432)		(45,915)		(14,812)
Provision for (benefit from) income taxes		40		(32)		163		(65)
Other income, net											Other income, net	(2,718)		(463)		(8,483)		(183)
Loss before provision for income taxes											Loss before provision for income taxes	(11,365)		(14,347)		(41,376)		(45,915)
Provision for income taxes											Provision for income taxes	109		40		535		163
Net loss	Net loss	$	(14,387)	$	(9,400)	$	(46,078)	$	(14,747)		Net loss	$	(11,474)	$	(14,387)	$	(41,911)	$	(46,078)

(1)Includes stock-based compensation as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021				2023		2022		2023		2022

		(in thousands)								(in thousands)
Cost of revenue	Cost of revenue										Cost of revenue
Subscription and other platform	Subscription and other platform	$	849	$	607	$	2,540	$	1,190		Subscription and other platform	$	638	$	849	$	2,132	$	2,540
Professional services	Professional services	165		109		505		248			Professional services	123		165		419		505
Total cost of revenue	Total cost of revenue	1,014		716		3,045		1,438			Total cost of revenue	761		1,014		2,551		3,045
Sales and marketing	Sales and marketing	3,597		2,364		10,986		5,627			Sales and marketing	3,693		3,597		10,305		10,986
Research and development	Research and development	2,019		1,235		5,925		2,879			Research and development	2,332		2,019		6,716		5,925
General and administrative	General and administrative	3,273		3,516		9,152		7,851			General and administrative	4,779		3,273		13,719		9,152
Total stock-based compensation expense	Total stock-based compensation expense	$	9,903	$	7,831	$	29,108	$	17,795		Total stock-based compensation expense	$	11,565	$	9,903	$	33,291	$	29,108

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(2)~~Includes~~Research and development expense includes amortization of acquired intangible asset of $142 thousand and $419 thousand for the three and nine months ended September 30, 2023, respectively, and $148 thousand and $285 thousand for the three and nine months ended September 30, 2022.

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(3)~~Includes~~General and administrative expense for the three and nine months ended September 30, 2023 includes professional advisory expenses associated with activism defense and related costs of nil and $2,656 thousand, respectively.

(4)The results of operations for the three and nine months ended September 30, 2023 include restructuring costs, which primarily represent severance and related expense due to restructuring activities, and impairment charges on our headquarters lease, as follows. See Note 1615 for additional information.

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(in thousands)
Cost of revenue
Subscription and other platform $ 363 $ — $ 363 $ —
Professional services 27 — 27 —
Total cost of revenue 390 — 390 —
Sales and marketing 582 — 582 —
Research and development 61 — 61 —
General and administrative 37 — 37 —
Total stock-based compensation expense $ 1,070 $ — $ 1,070 $ —


	Three Months Ended September 30, 2023						Nine months ended September 30, 2023
	Severance and Related Charges(1)		Lease Impairment Charge		Total		Severance and Related Charges		Lease Impairment Charge		Total

	(in thousands)
Cost of revenue
Subscription and other platform	$	629	$	19	$	648	$	2,134	$	108	$	2,242
Professional services	39		18		57		143		119		262
Total cost of revenue	668		37		705		2,277		227		2,504
Sales and marketing	150		48		198		1,958		256		2,214
Research and development	174		97		271		1,287		569		1,856
General and administrative	21		70		91		303		409		712
Total restructuring costs	$	1,013	$	252	$	1,265	$	5,825	$	1,461	$	7,286

The results of operations for the three and nine months ended September 30, 2022 includes restructuring costs, which primarily represent severance and related expenses due to restructuring activities (in thousands):


	Three and Nine Months Ended September 30, 2022
	Severance and Related Charges

Cost of revenue
Subscription and other platform	$	363
Professional services	27
Total cost of revenue	390
Sales and marketing	582
Research and development	61
General and administrative	37
Total restructuring costs	$	1,070

Comparison of the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

Revenue


		Three Months Ended September 30,										Three Months Ended September 30,
		2022		As a % of Total Revenue	2021		As a % of Total Revenue	$ Change		% Change		2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

		(in thousands, except percentages)										(in thousands, except percentages)
Subscription and other platform	Subscription and other platform	$	43,271	91%	$	43,601	88%	$	(330)	(1)%	Subscription and other platform	$	36,430	93%	$	43,271	91%	$	(6,841)	(16)%
Professional services	Professional services	4,304		9%	5,761		12%	(1,457)		(25)%	Professional services	2,792		7%	4,304		9%	(1,512)		(35)%
Total revenue	Total revenue	$	47,575	100%	$	49,362	100%	$	(1,787)	(4)%	Total revenue	$	39,222	100%	$	47,575	100%	$	(8,353)	(18)%

Nine Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Subscription and other platform $ 129,812 90% $ 130,888 86% $ (1,076) (1)%
Professional services 14,493 10% 20,691 14% (6,198) (30)%
Total revenue $ 144,305 100% $ 151,579 100% $ (7,274) (5)%

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	Nine Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Subscription and other platform	$	114,130	92%	$	129,812	90%	$	(15,682)	(12)%
Professional services	10,241		8%	14,493		10%	(4,252)		(29)%
Total revenue	$	124,371	100%	$	144,305	100%	$	(19,934)	(14)%


	Three Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Core Platform
Subscription and other platform	$	35,505	91%	$	40,723	86%	$	(5,218)	(13)%
Professional services	2,644		6%	3,765		8%	(1,121)		(30)%
Total core platform revenue	38,149		97%	44,488		94%	(6,339)		(14)%
Virtual Conference
Subscription and other platform	925		2%	2,548		5%	(1,623)		(64)%
Professional service	148		1%	539		1%	(391)		(73)%
Total virtual conference revenue	1,073		3%	3,087		6%	(2,014)		(65)%
Total revenue	$	39,222	100%	$	47,575	100%	$	(8,353)	(18)%


	Nine Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Core Platform
Subscription and other platform	$	110,316	89%	$	120,820	84%	$	(10,504)	(9)%
Professional services	9,499		7%	12,806		9%	(3,307)		(26)%
Total core platform revenue	119,815		96%	133,626		93%	(13,811)		(10)%
Virtual Conference
Subscription and other platform	3,814		3%	8,992		6%	(5,178)		(58)%
Professional service	742		1%	1,687		1%	(945)		(56)%
Total virtual conference revenue	4,556		4%	10,679		7%	(6,123)		(57)%
Total revenue	$	124,371	100%	$	144,305	100%	$	(19,934)	(14)%

Total revenue decreased ~~$1.8~~$8.4 million, or ~~4% for~~18%, in the third quarter of ~~2022~~2023 and decreased ~~$7.3~~$19.9 million, or ~~5% for~~14%, in the first nine months of ~~2022,~~2023, compared to the same periods of ~~2021.~~ 2022. Revenue excluding our Virtual Conference product decreased $6.3 million, or 14%, in the third quarter of 2023 and decreased $13.8 million, or 10%, in the first nine months of 2023, compared to the same periods of 2022. We continue to see less demand for our Virtual Conference product and we have deemphasized this product.

Subscription and other platform revenue decreased ~~$0.3~~$6.8 million ~~for~~in the third quarter of ~~2022~~2023 and ~~$1.1~~$15.7 million ~~for~~in the first nine monthsof ~~2022,~~2023, compared to the same periods of ~~2021, primarily due to customer churn~~2022. Subscription and ~~downsell from existing customers, offset~~other platform revenue excluding our Virtual Conference product decreased $5.2 million in ~~part by new customer contracts and contract expansions from existing customers during the periods.~~

~~The decrease in professional services revenue of $1.5 million for~~ the third quarter of ~~2022~~2023 and ~~$6.2~~$10.5 million ~~for~~in the first nine months of ~~2022,~~2023, compared to the same periods of ~~2021,~~2022. These decreases were primarily due to ~~more~~lower net customers ~~electing to be “self-service.” The decrease~~and reduced ARR as discussed in ~~professional~~the section titled “Key Business Metrics.”

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Professional services revenue ~~for~~decreased $1.5 million in the ~~nine-month period also reflected a higher demand for our implementation~~third quarter and ~~deployment services~~$4.3 million in ~~2020 that continued into~~ the first ~~quarter~~nine months of ~~2021. The decline in professional~~2023 compared to the same periods of 2022. Professional services revenue ~~as a percentage~~excluding our Virtual Conference product decreased $1.1 million in the third quarter and $3.3 million in the first nine months of ~~total revenue was~~2023, compared to the same periods of 2022. These decreases were primarily due to more ~~of our~~ customers electing to be “self-service” and not utilize our professional ~~service~~services offerings.

~~Table of Contents~~

Cost of Revenue and Gross Margin


		Three Months Ended September 30,												Three Months Ended September 30,
		2022			As a % of Total Revenue	2021			As a % of Total Revenue	$ Change		% Change		2023			As a % of Total Revenue	2022			As a % of Total Revenue	$ Change		% Change

		(in thousands, except percentages)												(in thousands, except percentages)
Subscription and other platform	Subscription and other platform	$	10,120		21%	$	8,718		18%	$	1,402	16%	Subscription and other platform	$	8,390		21%	$	10,120		21%	$	(1,730)	(17)%
Professional services	Professional services	3,182			7%	3,349			7%	(167)		(5)%	Professional services	2,457			6%	3,182			7%	(725)		(23)%
Total cost of revenue	Total cost of revenue	$	13,302		28%	$	12,067		24%	$	1,235	10%	Total cost of revenue	$	10,847		28%	$	13,302		28%	(2,455)		(18)%
Gross profit	Gross profit	$	34,273		72%	$	37,295		76%	$	(3,022)	(8)%	Gross profit	$	28,375		72%	$	34,273		72%	(5,898)		(17)%
Gross margin	Gross margin	72		%		76		%					Gross margin	72		%		72		%


		Nine Months Ended September 30,												Nine Months Ended September 30,
		2022			As a % of Total Revenue	2021			As a % of Total Revenue	$ Change		% Change		2023			As a % of Total Revenue	2022			As a % of Total Revenue	$ Change		% Change

		(in thousands, except percentages)												(in thousands, except percentages)
Subscription and other platform	Subscription and other platform	$	29,680		21%	$	24,382		16%	$	5,298	22%	Subscription and other platform	$	27,345		22%	$	29,680		21%	$	(2,335)	(8)%
Professional services	Professional services	9,867			7%	10,252			7%	(385)		(4)%	Professional services	8,908			7%	9,867			7%	(959)		(10)%
Total cost of revenue	Total cost of revenue	$	39,547		27%	$	34,634		23%	$	4,913	14%	Total cost of revenue	$	36,253		29%	$	39,547		27%	(3,294)		(8)%
Gross profit	Gross profit	$	104,758		73%	$	116,945		77%	$	(12,187)	(10)%	Gross profit	$	88,118		71%	$	104,758		73%	(16,640)		(16)%
Gross margin	Gross margin	73		%		77		%					Gross margin	71		%		73		%

Cost of Revenue

Cost of revenue decreased $2.5 million, or 18%, for the third quarter of 2023 and decreased $3.3 million, or 8%, for the first nine months of ~~2022 increased $1.2 million, or 10%, and $4.9 million, or 14%,~~2023, compared to the same periods of ~~2021. The increase in each respective period was~~2022, primarily attributable to the increase in subscription and other platform cost of revenue of $1.4 and $5.3 million, due primarily to an increase in personnel-related expenses of $1.0 million and $3.9 million. The increase in personnel-related expense for subscription and other platform cost of revenue was mainly driven by the increased stock-based compensation expense of $0.3 million and $1.4 million in each respective period, increased average headcount to support our platform and higher salaries reflecting the ~~impact~~result of ~~inflation on compensation. The increase in~~our active cost ~~of revenue~~management and headcount reduction related to our restructuring activities that began in the ~~first nine months~~second half of ~~2022 also reflects an increase~~2022. We anticipate the restructuring activities to continue in the fourth quarter of ~~$1.3 million in bandwidth and software cost.~~2023.

Gross Margin

Gross margin for the third quarter of ~~2022 was 72%~~2023 remained flat compared to ~~76%~~the same period of 2022. Gross margin for the first nine months of 2023 was 71% compared to 73% for the same period of ~~2021. Gross margin for~~2022. The decrease was primarily attributable to the ~~first~~ ~~nine months~~ ~~of 2022 was 73%~~$2.5 million restructuring costs incurred in 2023 compared to ~~77% for~~$0.4 million in the same period of ~~2021. The decrease~~2022. In addition, while we made cost reductions across our business starting in ~~each respective period was primarily attributable~~the second half of 2022, we continued to ~~an increase in total cost of revenue, which increased 10% and 14%, compared to total revenue, which decreased 4% and 5%. We are investing~~invest in our cloud infrastructure ~~capabilities to enable future growth and have grown our customer success teams to drive improved retention and customer experience.~~capabilities.

We expect gross margin ~~to decrease in~~for the remainder of ~~2022 as we~~2023 to be relatively consistent with 2022. We have ~~invested in our infrastructure and customer success function. We also continue~~continued to increase our utilization of the public cloud for our newer product offerings while we actively manage costs given the current macro-economic environment.

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Operating Expenses

Sales and Marketing

Three Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Sales and marketing $ 26,553 56% $ 26,591 54% $ (38) —%


	Three Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Sales and marketing	$	21,510	55%	$	26,553	56%	$	(5,043)	(19)%

Nine Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Sales and marketing $ 84,596 59% $ 75,981 50% $ 8,615 11%


	Nine Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Sales and marketing	$	68,555	55%	$	84,596	59%	$	(16,041)	(19)%

Sales and marketing expense decreased $5.0 million, or 19%, for the third quarter of ~~2022 remained relatively flat compared to the same period of 2021. We have been actively managing our costs given the current macro-economic environment.~~

~~Sales~~2023 and ~~marketing expense increased $8.6~~decreased $16.0 million, or ~~11%~~19%, ~~for~~in the first nine months of ~~2022~~2023, compared to the same ~~period~~periods of ~~2021.~~2022. The ~~increase~~decrease in each respective period was primarily attributable to ~~an increase~~a decrease in personnel-related expenses of ~~$8.5~~$3.6 million ~~which was driven by increased stock-based compensation expense~~and $10.4 million due to headcount reduction related to our restructuring activities that began in the second half of ~~$5.4 million, higher salaries reflecting~~2022. The remainder of the ~~impact of inflation on compensation and higher sales commissions. The increase in sales and marketing expense as a percentage of total revenue for the nine month period~~decrease was primarily driven by our ~~targeted investments in our go-to-market strategy to drive efficient growth, including sales enablement, partner ecosystem and selective sales hires.~~active cost management given the current macro-economic environment.

We expect our sales and marketing expense to decrease in absolute dollars in the remainder of ~~2022~~2023 as we continue to support demand for our digital experiences while tightening our sales and marketing spend given the current macro-economic environment.

Research and Development

Three Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Research and development $ 11,324 24% $ 9,114 18% $ 2,210 24%


	Three Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Research and development	$	9,730	25%	$	11,324	24%	$	(1,594)	(14)%

Nine Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Research and development $ 32,916 23% $ 25,222 17% $ 7,694 31%


	Nine Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Research and development	$	31,759	26%	$	32,916	23%	$	(1,157)	(4)%

Research and development expense ~~increased $2.2~~decreased $1.6 million, or ~~24%~~14%, for the third quarter of ~~2022~~2023 and ~~$7.7~~decreased $1.2 million, or ~~31%~~4%, ~~for~~in the first nine months of ~~2022,~~2023, compared to the same periods of ~~2021.~~2022. The ~~increase~~decrease in each respective period was primarily attributable to ~~an increase~~our active cost management and headcount reduction related to our restructuring activities that began in the second half of ~~$1.3 million and $4.8 million~~2022, offset in ~~personnel-related expenses, which was driven~~part by the increased ~~stock based~~stock-based compensation expense of ~~$0.7~~$0.3 million and ~~$3.0~~$0.8 million as well as by the increased average headcount to support the development of our solutions and higher salaries reflecting the impact of inflation on compensation. The increase in research and development expense in each respective period also reflects increases of $0.6 million and $1.5 million in facilities and other related expenses. The increase in the research and development expense in the nine months period was also driven by an increase in contractor costs of $1.4 million to assist with platform development.period. We have been applying a disciplined approach to focus our investments on research and development areas that offer the greatest opportunities, including our investments in generative AI capabilities for our product offering such as our new AI-powered analytics and content engine that is currently in the beta phase, as we attempt to expand our platform and bring new products to the market.

~~Table of Contents~~

We expect our research and development expense to ~~increase~~decrease moderately in absolute dollars in the remainder of ~~2022~~2023 as we focus on further developing our platform and infrastructure while we actively manage costs given the current macro-economic environment.

Table of Contents

General and Administrative

Three Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
General and administrative $ 11,164 23% $ 10,851 22% $ 313 3%


	Three Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
General and administrative	$	11,200	29%	$	11,164	23%	$	36	—%

Nine Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
General and administrative $ 33,199 23% $ 29,719 20% $ 3,480 12%


	Nine Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
General and administrative	$	37,583	30%	$	33,199	23%	$	4,384	13%

General and administrative expense ~~for~~remained relatively flat in the third quarter of ~~2022 remained relatively flat~~2023 and increased $4.4 million, or 13%, in the first nine months of 2023, compared to the same periods of 2022. Excluding the $1.5 million and $4.6 million increase of stock-based compensation expense in each respective period, ~~of 2021. We have been actively managing our costs given the current macro-economic environment.~~

~~General~~general and administrative expense ~~increased $3.5~~decreased $1.5 million ~~or 12%,~~and $0.2 million compared to the same periods of 2022. These decreases were primarily attributable to the decrease in other overhead costs due to active cost management and headcount reduction related to our restructuring activities that began in the second half of 2022. The decrease in general and administrative expense for the first nine months of ~~2022, compared to the same periods of 2021. The increase~~2023 was ~~primarily attributable to an increase of $2.5 million in personnel-related expenses, which was driven~~partially offset by the ~~increased stock-based compensation expense of $1.3~~$2.7 million ~~increased average headcount, and higher salaries reflecting the impact of inflation on compensation. The increase~~professional advisory expenses associated with activism defense we incurred in the ~~general and administrative expense for the nine months period also reflects an increase~~first half of ~~$0.8 million in facilities and other expenses.~~2023.

We expect our general and administrative expense to fluctuate in absolute dollars in the remainder of ~~2022~~2023 as we ~~enhance our general and administrative function~~continue to ~~support the needs of a public company while we~~ actively manage costs given the current macro-economic environment.

Interest Expense

Three Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Interest expense $ 42 —% $ 65 —% $ (23) (35%)


	Three Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Interest expense	$	18	—%	$	42	—%	$	(24)	(57%)

Nine Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Interest expense $ 145 —% $ 402 —% $ (257) (64%)


	Nine Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Interest expense	$	80	—%	$	145	—%	$	(65)	(45%)

Interest expense for the third quarter and first nine months of ~~2022~~2023 remained relatively flat in absolute dollars compared to the same ~~period~~periods of 2021. Interest expense for the first nine months of 2022 decreased $0.3 million compared to the same period of 2021. We repaid in full in the first quarter of 2021 the $22.4 million aggregate then outstanding principal balance of our line of credit under the revolving credit facility.2022.

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Other ~~(Income) Expense,~~Income, Net

Three Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Other (income) expense, net $ (463) (1)% $ 106 —% $ 569 537%


	Three Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Other income, net	$	(2,718)	(7)%	$	(463)	(1)%	$	2,255	487%

Nine Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Other (income) expense, net $ (183) —% $ 433 —% $ 616 142%


	Nine Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Other income, net	$	(8,483)	(7)%	$	(183)	—%	$	8,300	4536%

The change in other ~~(income) expense,~~income, net for the third quarter and first nine months of ~~2022~~2023 compared to the same periods of ~~2021~~2022 was primarily driven by the increase in investment ~~income offset by the increase in foreign currency losses.~~income. See Note 1211 for additional information.

Provision for ~~(Benefit from)~~ Income Taxes

Three Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Provision for (benefit from) income taxes $ 40 —% $ (32) —% $ 72 225%


	Three Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Provision for income taxes	$	109	—%	$	40	—%	$	69	173%

Nine Months Ended September 30,
2022 As a % of
Total Revenue 2021 As a % of
Total Revenue $ Change % Change
(in thousands, except percentages)
Provision for (benefit from) income taxes $ 163 —% $ (65) —% $ 228 351%


	Nine Months Ended September 30,
	2023		As a % of Total Revenue	2022		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Provision for income taxes	$	535	—%	$	163	—%	$	372	228%

The change in provision for income taxes for the third quarter and first nine months of ~~2022~~2023 compared to the same periods of ~~2021~~2022 was primarily driven by the increased activity and higher tax ~~impacts associated with stock-based compensation~~rates in a foreign jurisdiction.

Liquidity and Capital Resources

As of September 30, ~~2022,~~2023, we had cash, cash equivalents and marketable securities of ~~$341.8~~$213.7 million. Our investments generally consist of money market mutual funds, certificates of deposit, U.S. Treasury securities, U.S. Agency securities and debt securities, all of which are available for use in our current operations. Our liquidity requirements arise primarily from our working capital needs, capital expenditures and debt service requirements. We have historically funded our liquidity requirements through sales of convertible preferred stock, cash generated from our operations, borrowings and availability under our revolving credit facility, and most recently through our IPO in February 2021.

In ~~December 2021,~~the first quarter of 2023, our board of directors authorized a $125.0 million capital return program which replaced the prior share repurchase program. Pursuant to the capital return program, ~~allowing us~~on May 8, 2023, our 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 ~~periodically repurchase up to $50.0~~the stockholders of record as of the close of business on May 22, 2023 (the “Special Dividend”). We expect the remaining $75.0 million of ~~our common stock over~~capital return being effected through a combination of an ~~18-month period~~accelerated share repurchase (“ASR”) program and/or open market purchases with the possibility of an additional special dividend if this $75.0 million threshold is not reached by March 2024. We expect to complete this program in the ~~open market or in privately negotiated transactions. The program may be modified, suspended, or discontinued at any time.~~next six months. In the third quarter and first nine months of ~~2022,~~2023, we spent ~~$21.8~~a total of $25.0 million and $59.2 million, respectively, on share repurchases (including commissions). In the fourth quarter of 2023 through October 31, 2023, we spent $7.8 million on share ~~repurchases. We did not repurchase shares in the third quarter of 2022. As of September 30, 2022, we had $21.0 million remaining for future share buybacks under the repurchase program.~~

~~In April 2022, we acquired Vibbio for approximately $3.0 million in cash.~~repurchases (including commissions).

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We ~~initiated a strategic~~substantially completed our 2022 cost reduction plan ~~starting~~during the first quarter of 2023. In an ongoing effort to streamline our organization, we have pursued additional reductions in our workforce and other charges in the ~~third quarter~~first nine months of ~~2022~~2023 to further reduce our ~~global full-time employee workforce as of June 30, 2022 through voluntary and involuntary headcount reductions.~~cost structure. As of September 30, ~~2022, the Company’s~~2023, our full-time headcount decreased by approximately 6%25% from ~~June 30,~~December 31, 2022. Additionally, we incurred aggregate restructuring costs of ~~$1.1~~$1.3 million ~~during~~and $7.3 million in the third quarter and first nine months of ~~2022,~~2023, respectively, primarily related to severance and one-time termination ~~benefits.~~benefits and impairment charges on our headquarters lease. See Note 15 to the condensed consolidated financial statements for further information. We expect to incur additional restructuring costs of ~~$1.0~~$0.4 million to ~~$1.3~~$0.8 million in the fourth quarter of ~~2022~~2023 related to ~~such~~our ongoing cost reduction efforts and may incur additional costs in future periods for restructuring activities.

Our principal uses of cash in recent periods have been to fund our operations, invest in research and development, purchase investments and ~~repurchase shares of our common stock.~~to a lesser extent share repurchases and strategic transactions.

We believe our existing cash, cash equivalents and marketable securities will be sufficient to meet our needs for at least the next 12 months. Our future capital requirements will depend on many factors including our revenue growth rate, subscription renewal activity, billing frequency, the timing and extent of spending to support further sales and marketing and research and development efforts and the timing and extent of additional capital expenditures to invest in existing office spaces. We may in the future enter into arrangements to acquire or invest in complementary businesses, products, services and technologies, and we may need to seek additional equity or debt financing. In the event that additional financing is needed from outside sources, we may not be able to raise the necessary capital or raise the capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition could be materially and adversely affected.

The following table summarizes our cash flows for the periods presented (in thousands):

Nine Months Ended September 30,
2022 2021
Net cash (used in) provided by operating activities $ (12,893) $ 9,681
Net cash used in investing activities $ (94,240) $ (198,078)
Net cash (used in) provided by financing activities $ (21,864) $ 327,780


	Nine Months Ended September 30,
	2023		2022
Net cash used in operating activities	$	(11,343)	$	(12,893)
Net cash provided by (used in) investing activities	$	103,625	$	(94,240)
Net cash used in financing activities	$	(108,726)	$	(21,864)

Operating Activities

Our largest source of operating cash is cash collections from our customers for subscriptions to use our platform. Our primary uses of cash from operating activities are from personnel-related expenditures, costs related to hosting our platform and marketing expenses. Our cash flow from operating activities will continue to be influenced principally by the extent to which we increase spending on our business and our working capital requirements.

Net cash ~~(used in) provided by~~used in operating activities is primarily impacted by our net loss adjusted for certain non-cash items such as stock-based compensation, depreciation and amortization, amortization of deferred contract acquisition costs, amortization (accretion) on marketable securities, as well as the effect of changes in operating assets and liabilities. Our cash flows from operating activities used net cash of ~~$12.9~~$11.3 million for the nine months ended ~~September 30, 2022~~2023 compared to ~~provided cash of $9.7~~$12.9 million for the same period of ~~2021,~~2022, resulting in a decrease of cash ~~inflow~~outflow of ~~$22.6~~$1.6 million. The decrease was primarily attributable to the ~~$31.3~~$4.2 million ~~increase~~decrease in net loss and ~~$4.8~~$0.9 million increase in non-cash expenses, partially reduced by the $3.5 million unfavorable changes in operating assets and liabilities between the ~~periods, partially reduced by an increase in non-cash expenses of $13.6 million.~~periods. In addition, we ~~paid $0.5~~made total restructuring related payments of $5.4 million in ~~severance and related costs in~~ the ~~third quarter~~first nine months of ~~2022 due to restructuring activities.~~2023. See Note 1615 for additional information.

The total non-cash adjustments for the nine months ~~ended September 30, 2022~~of 2023 was ~~$47.6~~$48.5 million compared to ~~$34.0~~$47.6 million for the same period of ~~2021. The $13.6~~2022, reflecting a $0.9 million favorable change of non-cash ~~adjustment was primarily driven by an increase in stock-based compensation expense of $11.3 million.~~adjustment.

Working capital used cash of ~~$14.4~~$17.9 million for the nine months ended ~~September 30, 2022~~2023 compared to ~~provided cash of $9.6~~$14.4 million for the same period of ~~2021,~~2022, an increase of cash outflow of ~~$4.8~~$3.5 million. The unfavorable change in working capital in the comparative periods were impacted by, among other items, the timing of vendor payments and prepayments, timing of cash receipts from customers, and increased business activities.

Investing Activities

Net cash ~~used in~~provided by investing activities for the nine months ended ~~September 30, 2022~~2023 was ~~$94.2~~$103.6 million compared to ~~$198.1~~used cash of $94.2 million for the same period of ~~2021.~~2022. The ~~decrease~~favorable change was primarily driven by an increase in proceeds from maturities and ~~paydowns~~sales of marketable securities of ~~$110.6~~$215.2 million, partially offset by an increase in purchases of marketable securities of ~~$4.3 million and the cash consideration, net of cash acquired, on our Vibbio acquisition of $2.5~~$21.2 million.

Our most significant capital expenditures have been investments in our equipment to support ongoing operations. We expect our capital investment to continue in the future.

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Financing Activities

Net cash used in financing activities for the nine months ended ~~September 30, 2022~~2023 was ~~$21.9~~$108.7 million compared to ~~provided cash of $327.8~~$21.9 million for the same period ~~in 2021.~~of 2022. The ~~decrease~~increase in cash ~~inflow~~outflow was primarily driven by the ~~$21.8~~$49.9 million payment of the special one-time dividend in the second quarter of 2023 and $37.4 million of increased spending on our share repurchases induring the first half of 2022 and the proceeds of $349.9 million, net of underwriting discounts and offering costs, we received from our IPO last year, offset in part by a decrease in principal repayments of $22.3 million on our line of credit.period.

Debt Obligations

Revolving Credit Facility

In September 2021, we amended our revolving credit facility with Comerica Bank with an effective date of August 31, 2021, which increases our 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 us to borrow up to $50.0 million if we maintain at least $100.0 million on deposit with Comerica Bank. If such deposit is less than $100.0 million, we may borrow up to the lesser of $50.0 million or an amount determined by our trailing five months of recurring revenue, annualized renewal rate and annualized monthly churn rate. 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 our assets. We are required to pay a quarterly commitment fee of 0.15% per annum on the undrawn portion available under the revolving line of credit. In April 2023, we further amended our 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.

Outstanding principal amounts on the revolving credit facility incur interest at a rate equal to Comerica Bank’s prime referenced rate, as defined in the loan agreement. ~~Prior to August 31, 2021, interest on the revolving line of credit was the prime rate, as published by the Wall Street Journal, plus 0.75% effective July 31, 2020.~~ The referenced prime rate was ~~6.25%~~8.50% as of September 30, ~~2022~~2023 and ~~3.25%~~7.50% as of ~~September 30, 2021.~~December 31, 2022.

As of September 30, ~~2022,~~2023, we had not drawn down on our line of credit under the revolving credit facility.

Commitments and Contractual Obligations

The following table summarizes our non-cancelable contractual obligations as of September 30, ~~2022~~2023 (in thousands):


		Payments Due By Period											Payments Due by Period
		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years			Total		Remainder of 2023		2024 to 2025		2026 to 2027		2028 and Thereafter
Operating lease obligations	Operating lease obligations	$	8,802	$	775	$	5,657	$	2,370	$	—	Operating lease obligations	$	6,129	$	699	$	5,250	$	180	$	—
Finance lease obligations	Finance lease obligations	2,124		437		1,687		—		—		Finance lease obligations	349		269		80		—		—
Equipment loans	Equipment loans	377		69		308		—		—		Equipment loans	121		49		72		—		—
Other (1)	Other (1)	3,654		893		2,761		—		—		Other (1)	4,220		948		3,042		230		—
Total	Total	$	14,957	$	2,174	$	10,413	$	2,370	$	—	Total	$	10,819	$	1,965	$	8,444	$	410	$	—

(1)Amounts primarily represent our commitment under various software license and co-location facilities and services agreements. See Note 109 to condensed consolidated financial statements for additional information.

Critical Accounting Policies and Estimates

There has been no significant change during this quarter to our critical accounting policies and estimates as discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There has been no material change in our exposure to market risks from that discussed in Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Interest Rate Risk

Our exposure to changes in interest rates relates primarily to our investment portfolio. Changes in U.S. interest rates affect the interest earned on our cash, cash equivalents and investments and the fair value of those investments.

Our cash equivalents primarily consist of money market mutual funds, which are not significantly exposed to interest rate risk. Our marketable securities are subject to interest rate risk because these securities primarily include a fixed interest rate. As a result, the market values of these securities are affected by changes in prevailing interest rates. We attempt to limit our exposure to interest rate risk and credit risk by investing our investment portfolio in instruments that meet the minimum credit quality, liquidity, diversification and other requirements of our investment policy. Our marketable securities consist of liquid, investment-grade securities. We do not enter into investments for trading or speculative purposes.

The following table presents the hypothetical fair values of our marketable securities assuming immediate parallel shifts in the yield curve of 50 basis points (BPS), 100 BPS and 150 BPS as of September 30, ~~2022~~2023 (in thousands):

(150 BPS) (100 BPS) (50 BPS)
Fair Value as of
September 30, 2022
50 BPS 100 BPS 150 BPS
Marketable securities $ 307,040 $ 306,513 $ 305,985 $ 305,457 $ 304,931 $ 304,404 $ 303,877


	(150 BPS)		(100 BPS)		(50 BPS)		Fair Value as of September 30, 2023		50 BPS		100 BPS		150 BPS
Marketable securities	$	204,067	$	203,690	$	203,312	$	202,935	$	202,558	$	202,181	$	201,804

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934,as amended (the “Exchange Act”) as of September 30, ~~2022.~~2023. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, ~~2022,~~2023, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended September 30, ~~2022,~~2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 3.1. Legal Proceedings.

We, our Chief Executive Officer, our Chief Financial Officer, certain current and former members of our board of directors, and the underwriters that participated in our ~~IPO~~initial public offering (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, our common stock issued in connection with our IPO. The complaint alleges that our registration statement and prospectus contained untrue statements of material fact and/or omitted material facts about ON24’s growth and customer base. ~~Plaintiff~~The 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 ~~is currently pending.~~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. We believe that the allegations in the ~~consolidated~~amended complaint are without merit.

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In June 2022, a shareholder derivative complaint, captioned Banks v. Sharan, et al., Case No. 3:22-cv-03861, was filed by a purported shareholder in the United States District Court for the Northern District of California. The complaint names as defendants our Chief Executive Officer, our Chief Financial Officer, and certain current and former members of our board of directors, and names ON24 as a nominal defendant. The complaint purports to assert claims on ON24’s behalf against the individual defendants for breach of fiduciary duty and alleged violations of Sections 10(b) and 21D of the Securities Exchange Act of 1934. The complaint is based on allegations that are substantially similar to those in the putative class action filed in the United States District Court for the Northern District of California, described above. The complaint seeks, among other things, an award of damages on behalf of ON24, corporate governance reforms, and attorneys’ fees and costs. In September 2022, the plaintiff voluntarily dismissed the complaint without prejudice.

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Except as set forth in the prior paragraph, we are not presently a party to any legal proceedings that we believe, if determined adversely to us, would have a material adverse effect on our business, financial condition, operating results, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this report, including our condensed consolidated financial statements and related notes, as well as in our other filings with the SEC, in evaluating our business and before investing in our common stock. The occurrence of any of the events or developments described below could materially and adversely affect our business, financial condition, results of operations, and growth prospects. In such an event, the market price of our common stock could decline, and our stockholders may lose all or part of their investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

Summary of Risk Factors

Our business is subject to a number of risks and uncertainties, including those risks discussed at-length below. You should read these risks before you invest in our common stock. ~~Some of these risks are occurring and may continue~~

•our ability to ~~occur in the future. To the extent any of these risks occur,~~grow our ~~business, financial condition or results of operations would likely be materially and adversely affected. These risks include, but are not limited to, risks relating to:~~revenue;

•our ability to attract new customers and expand sales to existing customers;