For joining us for day two of Baird's Global Consumer Technology and Services Conference. I'm Rob Oliver. I follow the SaaS and application software space here at Baird. It's my pleasure to have the management of ON24 here. Sharat Sharan, who's the founder and CEO, and Steve Vattuone, who's the Chief Financial Officer here. ON24 is a leader in online marketing, and they're one of the great sources of digital lead gen for many of the top companies that we know and follow, which has always been a real attractive part of the story for us. We think that persists, and there's a lot of value in the business. So I think it's a good time to have them here, and, Sharat, I know you have a few slides to start, and then since it's a small room, we can make it interactive, if there's questions. Also, if you'd like to be anonymous, you can email me one here at the email in front of you, and I'll make sure we get it. But, Sharat, great to see you, and thanks for joining us today. Yeah, you're welcome, Rob. Thank you for having us. As Rob said, with me is Steve Vattuone, our CFO. So I'm gonna spend about five, you know, about five minutes, give you a quick overview of the company. ON24 is an intelligent engagement platform for sales and marketing, and what that means is we have thousands of customers that deliver millions of experiences to their prospects and customers. They use our platform to engage with those customers and prospects at scale, and then we provide them first-party data and insights that they convert to revenue. So millions of experiences that drive engagement at scale that delivers first-party data and insights to drive revenue, and with the launch of AI-powered ACE and our innovation in using AI, we are now making our platform a lot more personalized and intelligent. $133.3 million in ARR at the end of Q1. The company has been EBITDA positive for the last four quarters, and 77% gross margin. We, you know, we have a large TAM. Overall, the company is focused on the enterprise category, over close to 1,700 customers. Now, when you look at the customers that we focus a lot of our energy on, it's the customers over 100K ARR. That's about two-thirds of our ARR, 324 customers, and at the end of Q1, that was the highest ever. Also, one of the other areas of focus for us is customers that sign multi-year agreements with ON24. These numbers are at the end of Q4. At the end of Q1, it was it crossed 50%, the highest ever. Our customer list is a who's who. We focus on six or seven core verticals. If you look at technology, you'll see Salesforce, Microsoft, SAP, ServiceNow, Adobe, NVIDIA. Manufacturing, three of the five largest manufacturing companies, three of the five largest asset managers, Vanguard, Morgan Stanley, Charles Schwab. We do well in life sciences and pharma. If you look at AbbVie, Novo Nordisk, Merck, professional services, and B2B information services. Why do these customers work with us? Because we help them deliver revenue and engagement with their customers. So if you look at ServiceNow, we are the number 2 pipeline driving channel for ServiceNow. AbbVie, 200% increase in healthcare professional engagement. If you look at 40% more sales since they moved to ON24, using that channel, and Vanguard, 15% conversion meetings. So a lot of our focus is on the top-line growth for these companies. And with the launch of AI-powered ACE, and I'll talk about this in a second. Now, the foundation of our platform are these best-in-class experiences. It starts with webinar experiences, then we broadened it to content hubs and landing pages and hybrid and virtual events. I talked about how thousands of our customers use these experiences to engage with their prospects at scale. What that does is delivers first-party data, which then we integrate in real time to their sales and marketing ecosystem. So all those buying signals are available through Salesforce, through Adobe, through Eloqua, those kinds of systems. And with AI now, we have made the platform a lot more personalized and intelligent. Some of you will ask, "What are we doing in AI?" There are three core components of our AI-powered solution. One is offering customers personalization at scale. Within the same webinar experience, you can have different experience, different service, different others for somebody who is a customer or somebody who's a prospect, for multiple customers, all different experiences. Second, as you know, webinar experiences are long-form content. Within the click of a button, we're able to provide companies transcripts, e-books, blogs, videos, right out of the platform. And also, the final thing is about key moments and nurtures. So three core components about AI-powered ACE. Again, the foundation of our business is this first-party data. No other marketing channel allows you the kind of data and first-party data that ON24 does. Every experience that we deliver has over 20 different data points, from event analytics, to session analytics, to buying signals. Last year, we delivered over 1 billion engagement minutes. Every month, we have over 2 million B2B professionals who are on the ON24 platform. And when you compare that with a physical event or email marketing, there's very minimal engagement in those particular tactics. So that's the foundation of first-party data. And just to give you an example, this is the kind of analytics we provide our customers. Now, this prospect starts with a blank slate with a company, but after engaging with the ON24 offerings, our customers are able to learn so much more about their prospects. 8 hours and 17 minutes of engagement, lifetime activities is high. She's done three meetings and one free trial, conversion. Using AI and machine learning, we're able to determine through our platform what her business interests are, so that what kind of content is gonna be more applicable to her to continue that journey? That's the level of data, and we provide this integrated within Salesforce. Finally, ladies and gentlemen, are the use cases that we support. These are mission-critical use cases. On the left, you see Rob talked about marketing and pipeline-driven use cases, demand generation, partner enablement, customer and product marketing. All the technology companies I showed you really focus with ON24 on that. But in the last two, three, four years, we have diversified our business to even focus more on the right. These are mission-critical digital transformation use cases for healthcare professional engagement, for life sciences, for life professional certification, for auditors, legal, financial services, for member enrollment and broker enablement, for insurance and health insurance companies. That's, that's a quick overview about the company. Great. Thanks, Sharat, appreciate it. So, you know, I wanna start just given what's going on in the macro, with a macro question, as you've been around marketing budgets and marketing dollars for a long time. So I'd be curious just to hear your take on, you know, where we are today within marketing spend, what you're seeing on the ground, what your sales force is seeing. So I think one of the things I want to kind of reiterate, what we've been able to do. First of all, what we've been able to do, we've been able to diversify our business in the last few years. So, it was a lot more focused on marketing technology, and manufacturing. Four years back, those were over 50% of our business. But what we've been able to do in the last 2-4 years is, now life sciences and financial services, and I talked to you about those use cases. In 2019, were about 20% of our business, and now is about a third of our business. So one, we've been able to diversify that. Now, when you're thinking in terms of sales and marketing, what are companies thinking today on that subject? They're thinking in terms of, "How do I consolidate the use cases while consolidating the number of vendors?" They're looking at how first-party data that I'm learning about my prospects works in this time of AI, okay? And they're also thinking about, "How do I use AI to do some resource-intensive things, like content creation?" Now, all these things, Rob, help us, and I know there are some headwinds right now, but if, you know, if you were to ask Forrester, they will tell you that sales and marketing technologies are supposed to grow over 13% a year from 2023 to 2027, to be over $200 billion in overall. So we've got some secular tailwinds behind us. How do we do this from an ON24 point of view? We focus on three core things. One is, you know, we've been able to stabilize our business. Our gross retention in Q1 was five points better than the gross retention last year, both in Q1 last year and both for the whole year, so that's good. Second is, from an expansion point of view, we now have exciting new products with AI-powered ACE. In the first quarter when we launched this, the growth ARR for that reached double-digit as a percentage of total growth ARR. So that's been good. And also, like I talked about, we have really honed in our go-to-market with focus on these mission-critical use cases for life sciences, for financial services, and asset management and insurance. Got it. There's a bunch to dive into there. First, let's talk about the expansion into new products for you guys, AI-powered ACE. You know, there's a bunch of different elements to it, and I know it's early. We saw the demo with you on your event, very impressive technology. Talk about where we are in terms of investor interest adoption, and is there an additional monetization path for you? How should we think about that? Yeah, I think so. Let me first talk about what AI-powered ACE is allowing us across. It's got a retention element, it's got an expansion element, and it also helps in our new business side. So from a retention point of view, you know, when you have something as exciting as that and something so topical that all the sales and marketing people are interested in, their leadership is also very interested in a product like that, right? So it allows us to basically engage with those customers at a more strategic level, and that is one of the core reasons things also that is helping the retention profile improve. The more exciting thing is, the expansion profile. This gives us an opportunity to expand these customers. I talked about how in the first quarter, as we launched this, the ARR for that reached double digits. We expect that ARR to continue ramping this year and provide tailwinds into 2025, okay? Just to give you a perspective, from the number of users who've been on the platform, used the platform on AI and tested it, about 15% of our customer base has really used and tested the platform. So, and then on the new business side, you know, when you think about the business. A lot of this depends upon the maturity of the customer. So, ON24 ACE is also important for new customers. That being said, their maturity is probably a little lower compared to existing customers. So we clearly are seeing more traction in the existing customers, and you'd expect that. That 15% is likely more skewed towards long-time ON24 power users who know the platform and product. And new ones, too. Okay. And new ones, too. Because suddenly what we are telling them is, "Listen, you can do more with less. Yeah. You can, you know, both in the terms of you're trying to talk to prospects or customers or multiple customers, you can just do that in one experience. And on the other side, we are telling them, "After this, you know, all your content teams can basically have e-books and transcripts and everything else, right? With a click of a button." So that's very helpful to them. Got it. The other thing I wanted to touch on that you mentioned is the diversification of the business. You know, clearly, I mean, as a software analyst, you know, it. I don't have to go far to find checks on you guys, and those checks are overwhelmingly good, right? I mean, Salesforce has said tremendous lead gen from you guys. You mentioned ServiceNow, number two source of lead gen. And I think part of what we've seen from you guys is a move to not just those digital native companies, if you will, but outside into other industries, and I think that's two-pronged. One is going after other verticals, and the other is productizing other opportunities. So maybe talk about those two. You alluded to them in your presentation. Yeah, you know, our focus in the last 2-3 years, really, because, you know, we've gone through some of the macro headwinds in the last couple of years, and before that, the post-COVID normalization, has been to really improve our business. And part of that has been the... Again, I'll repeat that. Tech and manufacturing, four years back was 52% of our business. Now, it's about 40%, and life sciences and financial services is a third of our business. So we feel good about that because it's also category of acquiring new customers there across the world, and also expansion is an important thing. So we've been able to diversify our business. Second, I feel good that we've been able to stabilize our business more. You know, the mid-single digits improvement in retention in Q1, and we expect that to continue as we move forward. So that is another important thing. And we've got exciting new products with the ON24 ACE, which are allowing us to have conversations with these customers, and that's just the beginning. So on top of that, Rob, we have mid-seventies gross margins. We've delivered EBITDA profitability four quarters in a row, so we are right size, and we've got a strong balance sheet. So, you know, as these headwinds abate, we feel we are well positioned to get a proportionate share as companies start investing in revenue-generating activities. Got it. So then, specifically on those verticals, I know you mentioned healthcare and a few others, what are the verticals that you've had the kind of most traction with? 'Cause I would think coming to businesses, new verticals, pharma, whatever it be, and saying: "Hey, you know, some very sophisticated digital lead gen companies like ServiceNow and Salesforce are seeing this impact. Here's what we can do for you." So I know you've been putting dedicated teams in place to go after that for now, for a couple of years, and those logos are increasingly showing up in your reference points. So talk about that diversification and what that can do for your business over the next few years. Yeah, so first of all, coming back to the diversification, I talked about how life sciences and financial services is about a third, which includes asset management and insurance, is about a third of our business now, okay? From 20% about four years back. But when you look at the use cases that we are focused on, these are mission-critical digital transformation use cases, and early on in the cycle. Like, how do pharma companies engage with healthcare professionals? Okay, both on the commercial team and the medical affairs team. Okay, when you have examples of companies I showed you, Merck and Novo Nordisk, you know, it's a big name these days, and AbbVie, then we take the best practices to the other companies. Similarly, on the life professional certification, when you have traction with some of the largest audit firms and financial services firms, you can take those examples to the other companies. And the other category that we've also done well is member and enrollment and broker enablement, okay? For financial services. So again, and we've got some of the biggest names in each of these categories, so referencing that, talking about the case studies that are really focused on that, and not only case studies that's focused on that in North America and in EMEA. That really helps us as we go into that. It helps both our new business acquisition, but it also helps us in expanding within those customers because we know we can start with the commercial part of the pharma business and then go into medical affairs. Okay? So that cadence really helps us, and having the vertical focus is quite important for that. Got it. Got it. Okay, let's pivot over to talk a little bit about the partner channel, which I know is a relatively newer motion for you guys, but it's been more emphasized a bit lately. Who, who are some of the key partners that you guys are gonna be working with, and how important is the channel to your go-to-market strategy? Does it play a role in this diversification move? How should we think about it? Yeah, I think the partner channel is important. In the last 12 months, our partner sourced and influenced bookings were in the high single digits. Now we will, as our business improves, continue to invest in that, but with our target of getting that number to about 20%. We work with a variety of strategic partners, both on the tech and marketing use cases. These are companies like Salesforce and HubSpot, et cetera, and also on the digital transformation use cases, companies like Veeva and others on the life sciences side. Got it. Got it, okay. Steve, let's work you into the conversation here. Let's talk a little bit about ARR. So where are we right now in the ARR trajectory, and what gives you the confidence that ARR is gonna return to sequential growth in the second half of 2024? Let me take that, and Steve, Steve can kind of join in. So firstly, Rob, in Q1, we had a solid quarter, and we delivered ARR in line with expectations, okay? On top of that, you know, we've talked about that our business is stabilizing. I talked about gross retention, was mid-single digits, better than last year. Now, as we look at... In this current macro environment, still as we look at the new business and expansion, there are some challenges there with the marketing budget that our customers have. That being said, from an expansion point of view, we've got great new products that leverage AI, and we are seeing good traction. I gave you some numbers on that. We've also honed our new business acquisition with this focus on digital transformation use cases. So, we're moving in the right direction, and based on all of this, we feel good that we should be able to drive sequential ARR growth in the second half, absent more macro deterioration, okay? So that's where we believe we are. And look, we've focused on controlling what we can control. It's the diversification, it's stabilizing the business, it's the go-to-market focus. It's. So we feel we are well positioned, with a little help from macro, you know, as the headwinds abate, to drive double-digit revenue growth and double-digit EBITDA margins. Anything you want to add? Yeah, I'm just gonna add a couple things to what Sharat said and emphasize a couple things again. There's really four things. Stabilization of our business, which we've talked about. The retention is getting better, less frenetic behavior we're seeing in the renewal conversations in the customer base compared to last year. We've got a lot more of our ARR in multi-year agreements, so the cohorts for renewals are getting much better. In fact, in the end of 2022, multi-year ARR was 41% of our ARR. At the end of 2023, that was 49%, so an 800 basis point increase in 12 months. We don't disclose it quarterly, but we did say it broke 50% at the end of Q1, so it's officially the majority of our ARR now is in multi-year agreements. So that is gonna help on the stabilization front. More product to sell. We've got some exciting new products out that Sharat's covered in detail. That's helping the renewal discussions as well, as well as the upsell discussions. You know, in addition to that, you know, like many front-end software companies are selling into, you know, marketing, we are seeing some challenges right now as the budgets have been tight. That's not gonna last forever. You know, these cycles always come to an end, and we're positioning ourselves to be ready when that happens. And lastly, diversification. Sharat talked about the diversification. You know, life sciences and financial services, up from 20% of our business four years ago to almost a third now, and that diversification does continue. Again, we don't, you know, disclose that quarterly, but I can tell you as a percentage of our ARR, collectively, those two groups did increase from the end of 2023 to Q1 of 2024, as a percentage of our ARR. So those are kind of the four pillars of what we're seeing in terms of, you know, what we believe will drive sequential ARR growth, and we've talked about that. We expect that to happen in the, in the latter part, the second half of, 2024 at this point, so. And just so I'm clear on kinda what the macro assumption is there, it doesn't sound like, Sharat, I think you said, like, the no deterioration, obviously, but does it imply, like, any big return in macro? No. Right now, I mean, we expect to be. Our current expectation is to be sequential ARR growth in the second half. Got it. Yeah. And of course, if the macro does get better, that'll be an uplift to kinda what we've assumed, so. Got it. We're all certainly hoping that happens, so. Steve, can you just help us understand. By the way, you guys have done a tremendous job in improving profitability, and I wanna talk about that a little bit, but can you help us understand where the, what in, what investments are the priority for you now within the business when you look at, where you're investing? Yeah, just, before I do that, let me give a quick recap on, Please Y ou know, what we've done in terms of profitability. So we've been EBITDA profitable and EPS profitable four quarters in a row. In addition to that, we are free cash flow positive in Q1 of this year. On the gross margin front, in the last 12 months, we've increased the gross margins from 73% in Q1 of 2023, to 77% in Q1 of 2024, so that's a 400 basis point improvement in 12 months. So, you know, at this point, I think the cost structure is where we want it to be. You know, our view of. We take a balanced approach to profitability. The view is to always grow the top line, and we're working to do that. We talked about getting back to sequential ARR growth in the second half of this year, but we do balance profitability with that. So some of the investments that we're making are in things like AI, that's an important project and initiative of the company, as well as diversifying the product, you know, the customer base, into some of these other use cases that Sharat talked about, particularly in, you know, pharma, healthcare, and financial services. So those are some of the areas that we're investing. Now, in terms of profitability, you know, if the growth assumptions don't happen, you know, we will continue to evaluate that, and we can always make adjustments as needed. On the sales front, when we look at adding sales capacity, that's always based on the top line and our assumptions there, and that's something we're gonna continue to evaluate, so. I would assume on the sales capacity side, though, that you are adding ahead of, you know, that particularly in some of these new verticals, you've gotta put some investment into that kinda sales ahead of, you know, projections and stuff. We do, and that's one of the areas we talked about the investments that we're making. Yeah A nd that's one of the areas that we've, you know, we've invested in. You know, in terms of the operating model, one thing I do wanna mention, you know, we've taken a little over $63 million out of annual cost, out of the business in the last little less than two years. So we're setting up the company to have operating leverage as the top line returns. The goal is to grow the top line in the future faster than the middle line and increase the bottom line faster than the top line. That's our goal, and that's what we're working towards. You also just completed a capital return program. Can you talk a little bit about that, and then also what your current approach is to capital allocation? Yeah, so we did just complete a $125 million capital return program. There were two parts to that. There was a $50 million special dividend, which was paid, you know, in, you know, Q2 of last year. There was also a $75 million share repurchase program, which just wrapped up in Q1 of this year. One thing I do wanna mention, in addition to that $125 million capital return program, we had a $41 million capital return program we had completed prior to that. So between the two of those, we've returned $166 million to our shareholders in about two years, and we just announced, in March, another $25 million capital return program. We just kicked it off. We hadn't made any purchases or repurchases under that as of Q1. In terms of the progress on that, we'll be providing an update on that when we report our results next quarter. Now, despite these capital return programs, our balance sheet does remain strong. We had just under $200 million of cash and investments on the balance sheet at the end of Q1, and no debt, and as I mentioned, we were cashflow positive in Q1. So our balance sheet remains strong, and it gives us the ability to invest in our strategic priorities, despite even with the large capital return program we're doing. Got it. Super helpful, Steve. Sharat, we only have a couple minutes left, so I wanna come back and finish with you. I mean, you guys have come through a lot since your IPO. I mean, you saw tremendous growth during the COVID period, obviously, which was really a testament to the fact that you guys had the best product, the best solution out there. Of course, as we anniversaried that and people went back to you know, traveling and coming out of the home, and there was, you know, we saw, like a hangover from that that you guys have had the opportunity to work through. Behind the scenes now, you have diversified the business effectively. So maybe talk about how you think about the setup now over the next few years and, and, and sort of the key things that you'd like to see for ON24. Yeah, you know, you know, the thing that I will just basically highlight again, the last three years since we took the company public, have been a little difficult for us, right? The post-COVID thing, you know, when you grow 100% a year, there's always a little hell on the other side. So we've had to normalize that. Then we've had the macro impact on others. But again, I'm just gonna. We've taken that time to improve our business. That's the most important part that I want. You know, we've been able to diversify our business. We've been able to get the gross retention improving and stabilize our business, and we are seeing increased stability. And the thing that we do really well, we have been innovative on the product side. You talked about our AI innovations. So we've got exciting new products to talk to our customers about. With Steve's help, I mean, we focused on getting our gross margins, our profitability position, others in the right place, maintaining a very strong balance sheet. So we believe now, we've got a diversified business, so when we get a little more uplift, both the marketing and tech part of the business that is focused on tech, manufacturing, other verticals, the digital transformation use cases, all is gonna grow on a global basis. So that gives me confidence to say that we have positioned the company to drive double-digit revenue growth and double-digit EBITDA margins down the line. Great. Great. Sharat, Steve, thanks so much for sharing the story with us for ON24. We really appreciate it. Much to be excited about, and I know you guys will be here for some meetings today. So excited, and everybody have a great day here today. Thanks so much.