Welcome, everybody. My name is Tom Blakey. I'm the Infrastructure Technology and Software Analyst here at KeyBanc. We're excited to have the CEO and CFO of ON24, Sharat and Steven, here. We have the IR lady here, Lauren, in the third row if anybody wants to bother her. I just want to jump right in here. I think everybody here kind of knows what ON24 does. It's almost a household name of sorts. You've gone through trials and tribulations, right, after post-pandemic. You saw some signs of stabilization in ARR trends, and you're talking about that continuing into the first half of 2024. Maybe walk us through not so much the past, but in the future, what are you seeing in terms of those stabilization trends, and what are you looking for into the first half of this year, Sharat? Yeah. I think, as you said, thank you. Most of you probably know ON24. But just for people who don't, we are a sales and marketing engagement platform that uses engagement and first-party data to allow thousands of B2B companies to convert millions of prospects into customers. And in this macro cycle, where marketing budgets have been under pressure for B2B companies, we have seen some pressure on the downsells and the churn. So in Q4, as we reported results, we were close to flat in ARR. Now, this was better than we expected. And if you look at it from a stabilization point of view, we believe our business is stabilizing. Why? From a gross retention point of view, we delivered the best quarter in the last three years. And when you break it down between gross churn, in-period gross churn, and downsell, from an in-period gross churn, it was the best quarter in the last three years. And even downsells, where we were impacted earlier in the year, we saw improvement. And it was the best quarter in the last six quarters. So again, overall, we feel better about our business. We feel that our business is stabilizing. And we expect that to continue into 2024. Now, we also saw in Q4, we saw good new business, better than we had seen in the whole as good or better than we had seen in the whole year. And we also saw our expansion business about the same level as we saw from a best point of view in the year. But with the marketing budget still being choppy, it's hard for us to be very enthusiastic still on that. So we have to temper our enthusiasm there. That being said, based on what we are seeing in the stability of our business and also the fact that about 50% of our ARR now, Tom, is in multi-year agreements. That was 41% at the end of 2022. It's 49% at the end of 2023. So we feel good about our business going forward, so much so that we have said, based on what we've seen, we expect that by the second half of this year, we should be ARR positive and grow from there as our customers start to invest with us. Let's maybe break those things into two pieces. I'm hearing great trends in terms of new business and stability, which we started with in terms of existing business. Where's the visibility on both of those buckets, Sharat? As we head into next year, it would seem that because you've anniversaried a lot the last few years with these customers downselling or whatnot, that's one bucket in terms of the visibility we have there. This new business seems like it's doing better than that former bucket. Is that a sign of maybe where the existing business can go when we go through the cycle here? Yeah. So first of all, coming back to the point, we believe a lot of the challenges we've had in the last 3 years have been based on the install base, the higher churn, and the higher downsell. And we feel that business is stabilizing. I gave you the number of multi-year. I gave you what we are seeing there. So we feel good about that. Okay? Now, we also launched AI-powered ACE. We launched in January. Some of you joined. The next generation of our platform, the Intelligent Engagement Platform. And in that, we launched AI-powered ACE. It's the best product we have launched in the last 5 years. And the early pipeline and some of the early orders we saw, even in Q4, were very encouraging. Okay? That being said, Tom, I think when we think about new business and even expansion business, the marketing budgets are still choppy. Okay? So that's where we have to temper our enthusiasm. But we know that our pipeline for AI-powered ACE is building. And the initial orders there were good. The one area that has been under the most pressure in the last year has been expansions. Okay? Because on one side, it's been the downsell. On the other side, how do you expand with more expansion within the installed base? But as budgets open up at some time, I think that'll help us. And of course, AI-powered ACE will also help us there. So as we put all of that stuff together, that's what gives us confidence to basically say, "Hey, listen, we believe, based on our renewal cohorts, what we see coming up for renewal, how we see the trends, we expect by second half that we should be ARR positive and then go from there. You mentioned ACE, and that was one of my questions. This is an analytics and content engine. That's what ACE stands for. Walk us through what is different this time around. Because your platform is known for having strong capabilities already in terms of driving you mentioned it in terms of your 30-second explanation of your company, taking billions of data points, hundreds of millions of data points, and transforming them into better prospects and leads for sales folks. What incrementally will ACE bring to your platform? I think that's a great question. Let me just provide people a perspective. First of all, AI is going to fundamentally change sales and marketing, especially sales and marketing engagement. It started changing it. Going forward, that'll happen even more aggressively. The important thing is, we start here with a position of strength. Why do I say that? Because we start with a position where our strengths are in first-party data. What does that mean? We have a lot of it. In a typical ON24 webinar experience, there are over 200 people who spend 50 minutes on per webinar experience. They engage with about 20 different data points. Then we do hundreds of thousands of these experiences per year. For our customers, we do many, many of these experiences per year. So from a prospect point of view, there are a lot more data points. And so we start from a position of strength. And now what we are being able to do, when we talk about AI-powered ACE, let me talk about two or three things that we have done there that are different. Okay? First of all, we've launched a completely new capability called hyper-personalization and segmentation. What does that mean? Now, within one live webinar experience, you can literally do four. If you have health care customers, if you've got technology customers, manufacturing customers, you can have different webinar experiences live in just one experience. They can have different surveys. They can have different call to actions. They can see different content. So the effectiveness is pretty significant. Second, what we call AI-driven derivative content. You've got 60 minutes of a webinar presentation. Very quickly after that, you can create e-books and blogs and takeaways. Now, you can do that. You were able to do that before. But you had to start those from scratch. Now, you can take that raw material and create that and then edit that and publish that. So you're saving more time. So these are just two examples of the capabilities that we are bringing in. And we are monetizing that by making this a premium offering for our customers. And we can talk more about that. So that's what AI is doing. And essentially, what this allows us to do is to really take a very intelligent and differentiated offering to our customers from ON24. I think you were alluding to maybe my question that you and I talked about prior. But what kind of bump would you expect, for lack of a better word, to a customer who's all else equal is now taking ACE? Are we talking about I don't know what percent? I have no idea what the customer has to pay for this. And I think the street would be interested to hear. Yeah. I'd love to talk about it. When we launched in January, when we launched the Intelligent Engagement Platform with AI-powered ACE, it gave us the time to also streamline our pricing and packaging. Now, when you're a new customer, we have three core packages. Two of them include AI-powered ACE. It's got standard and advanced. Standard is where we expect people to land and includes AI-powered ACE. Both of them have AI-powered ACE. Those are premium offerings. Okay? If you're an existing customer, we provide you an upgrade package using AI-powered ACE as part of that. That SKU is also available. When you think about how we do the monetization, generally, we price on a per-workspace basis. It's about 10%-20% uplift. That's the way to think about it. We expect generally to land in kind of about 15%. That's where we expect to land with it. The early pipeline and the early wins that we have seen make me quite optimistic about this offering as we move forward. Now, the other question that you'll ask is, hey, how much ACE is in the guidance? Right? We just launched it at the end of January. We are seeing good early traction. We expect it to ramp this year and provide tailwinds into 2025. So it's not in the guidance. Maybe, Steve, let me pull you in here in terms of the go-to-market. Sharat talks often and ON24 talks often about the double-digit returning to double-digit growth. When you look at your infrastructure that you've done a good job at in terms of bringing in line here, what changes do you think need to be made in terms of returning to double-digit growth in terms of the infrastructure you have today in terms of go-to-market, sales and marketing, et cetera? Well, let me first talk a little about what we've done in terms of profitability, where we've been, and then kind of our view of where we're at. So we've actually been adjusted EBITDA and EPS positive, profitable for the last three quarters of 2023. So we've definitely moved the company to a more profitable operating model. In fact, our gross margins, they were 73% in Q1 of 2023. And those were 77% in Q4 of 2023. So going into 2024, we've definitely got a more streamlined organization. We got leverage in the business. And we're positioning ourselves to inflect the bottom line once we start seeing some inflection on the top line. And we've already talked to people about our view that we would get back to sequential ARR growth by the second half of the year. Now, in terms of what we need to do. The headcount is where we want it to be at the moment. That's something we're always looking at, obviously. We've made adjustments in the past. We'll continue to look at that and make adjustments in the future as we need to. In terms of sales headcount, that's really driven by the top line and where we see that at and sales productivity. As we find ourselves needing to add more sales capacity to drive the top line, we'll certainly do so. But at this point, we feel that we've got adequate sales capacity to drive growth. Now, in terms of profitability, we're always balancing growth and profitability. The focus is always to get the top line back to growth. We expect that to happen pretty quickly here. But we're balancing that with profitability. We're still making some investments and selected investments and being disciplined about our cost structure, things like AI. Specific use cases are our regulated industries. We're still investing there. And we're looking forward to driving inflection on both the top and the bottom line. Now, our long-term model we put out there, gross margins of 78%-80% and operating margins of 20%. And we're looking to get there over time. I'll just add one thing on the top line to what Steve just said. Our focus has been about controlling what we can control in this environment where marketing budgets have been choppy. So we've talked about stabilizing our install base or that stabilizing there. We've talked about AI-powered ACE really fueling more pipeline for new business and enhancing the expansion. And as Steve just talked about, also, our focus in use cases related to regulated industries, that's about 25% of our total. Even in the last year, we saw some pressure. But that business grew year-over-year and sequentially. That's 25% of. That's 25%, things like health care professional engagement for life sciences. We've talked about member enrollment and broker enablement for financial services and life professional certification. So as I put all this together, but Steve talks about profitability and what enhancements we have made on the top line, with a little assist from the market, we feel optimistic about getting the company back to double-digit revenue growth and double-digit EBITDA margin. Did you say that grew year-over-year and quarter-over-quarter? Yes. OK. What areas are you experiencing the biggest pressure? I think. That must be offsetting. Yeah. I think we've basically talked about that technology and manufacturing are our largest vertical. Technology has been our largest vertical. Those have seen the maximum pressure, both from a churn and a downsell point of view. Now, some of you may have looked at our investor presentation. You will see, if you compare at the end of 2019 versus at the end of 2023, you will see that technology I mean, it's more diversified based on what we can control. Technology vertical is now only 32% compared to 39% before. Manufacturing is also down from 17%-13%. Okay? Categories that have improved are life sciences, which is pharmaceuticals, major part of our focus. Also, financial services, where we do well in asset management and insurance. So those categories have, as a percentage overall of ARR, improved. Excellent. Well, sooner or later, this TMT thing doesn't surround. There's a lot of companies experiencing pressure there, Sharat. Regarding the sales and marketing budget pressure that you've called out and called out for even going into calendar 2024 here, there's another theme that we've seen across different technologies is vendor consolidation. I think you're doing a great job in customer churn. I don't think that that's an issue here. You can correct me if I'm wrong. So are there certain functions that vendor consolidation would benefit ON 24? Yeah. Something that you can consolidate on your platform? I think so. As I've talked about what we do, we are really focused on being a sales and marketing engagement platform to help our customers convert prospects to customers, and really based on the foundation of first-party data. Tom, if you were to ask Gartner, they would say to you that by 2025, 80% of B2B sales and marketing interactions will happen over digital channels. That is going to provide even more tailwinds to ON24 once we come off the pressure of this environment. So our focus now is to really be in the engagement and data content, is to really be the consolidator. So when we look at that, we look at how can we consolidate engagement use cases. So for technology, demand generation, partner enablement, one of the largest technology software companies in the world, top three, started with demand generation on a global basis, now also uses us for partner enablement across the world. How do you look at life sciences, the health care engagement from both the commercial and medical side? If you're financial services, how do you do demand generation? How do you do broker enablement? How do you do life certification? So more and more so, our approach has been, how do we leverage our first-party data advantage and continue to consolidate more of these customer use cases on our platform? We believe the TAM for our solutions is very large. The runway for us is also quite large. So it's about consolidating more sales and marketing use cases? Sales, marketing, I would say more engagement and data-oriented use cases. It doesn't have to be just sales and marketing. It could be customer success. It could be others, wherever first-party data is important. Any questions? I'll just pause for a second. Any questions from the audience? No? OK. I had a question on that first-party data. So perfect segue, Sharat. The company itself, in a world of AI and GenAI, we've been talking about since Thanksgiving of 2022, it seems, nonstop. You have hundreds of millions of people and experiences on your platform creating billions of data points. Is there a way for ON24 to monetize that data more so than selling seats to existing clients? Is this something that you've thought about or the board has thought about? We continuously think about that. Okay? And in the future, there may be some. But our current approach is, how do we take that data, really enable that for you, and charge a premium on the platform? That's the approach that we have seen. Again, we've got more engagement data for our customers than almost any other company that does marketing and sales tactics. So our approach is, in this particular case I talked about, for new customers, now, two of the three packages we are taking out to the market include AI-powered ACE. And our hope is that there's a premium of about 15%, right, on that. Similarly, existing customers, we are going out to them focusing on getting them on AI-powered ACE. So that's the approach that we are taking right now. At some stage, we may look at it differently. Maybe in 6-9 months, we may add additional capabilities that we may take directly to the marketplace. But that's the current approach that we have taken. From a pricing perspective, that 10%-20%, that's very descriptive and helpful. You said that you're also seeing some early success at the end of last quarter and even now. What is the feedback? Are you charging too much? Could you charge more? I mean, you've got to be talking to your sales team daily here. Yeah. You joined that event in January. I think our customers are extremely enthusiastic of what we are doing. Okay? They are seeing a company that's driving the future, providing them a more personalized, more intelligent experience. That's very helpful. We have two kinds of customers. We've got the enterprise customers. We've got the commercial customers. We are actually seeing that the commercial customers, mid-market customers, are moving faster in adoption. Enterprises are tending to take us through a little more reviews, more like security reviews, AI reviews, data reviews. Some of that is happening as we see it. We also have things like trials working with our customers. We are working very closely with them. About 10% of our customers are in trials right now, 10% of the total number of customers are currently. If you look at our customer count, about 10% are running through trials. So a lot of excitement from our customers. It's helping us in retention also. It's helping us alleviate downsell. And again, the early results on upgrading customers and new businesses makes me a little optimistic for this. Steve, maybe one for you there. Sounds like this could be bigger than maybe I originally thought. What does this do, especially that commercial comment, Sharat? I mean, walk us through, from an infrastructure again perspective, the costs here to address this commercial opportunity. Is it margin accretive? Walk me through what you expect in terms of the model impact for the success with ACE. Sure. So obviously, it's already factored into our guidance. And I think you're asking me about, well, what's it going to do to the margins? Well, we talked about this isn't in the existing guidance for this year for driving top line growth. But just going forth, this is successful. What kind of margins, especially the commercial things, would jog the question? Yeah. I mean, when we look at our products and we design the products, it's always with the view of both increasing the top line over time and also increasing the margins over time. We're not going to do anything in terms of how we go to market or how we design the products that aren't going to ultimately, we believe, ultimately lead to an increase in margins. So we do believe this is going to be accretive, grow the top line, and also ultimately be accretive to both the gross margins and the bottom line. We've done a lot with the cost structure over the last 18 months. And we exited the year with 77% gross margins. And for the year, it was 75%. And we just gave guidance. And we said we expect our margins to be in the mid-70s again for 2024. To answer your question, we believe ultimately, this will lead to an inflection of revenue and ultimately help the margins and the bottom line. Excellent. I think that's it for me. If there's no more questions from the audience, I think we have a lot weighing on ACE and this TMT segment to finally turn around. Thank you for your time, Sharat. Thank you, Steve. Tom, thank you.