ON24 (ONTF) Q3 2025: AI Customers Rise to 20%, LinkedIn Deal Sets Up 2026 Growth Inflection
ON24’s Q3 marked a pivotal shift as AI-powered products reached nearly one in five customers and a new LinkedIn partnership set the stage for a strategic platform expansion in 2026. Despite a seasonally soft quarter and deal slippage in life sciences, enterprise engagement and multi-product adoption hit new highs, positioning ON24 for improved ARR and profitability next year. The company’s AI momentum and tighter go-to-market focus are now central to its growth narrative, with monetizable integrations and operational efficiency gains in clear focus for investors.
Summary
- AI Penetration Accelerates: Nearly 20% of customers now pay for AI solutions, driving expansion and retention.
- Enterprise and Regulated Verticals Deepen: Multi-year, multi-product contracts and regulated industry wins underpin stability.
- LinkedIn Partnership Unlocks Upside: Monetizable integration phases target new revenue streams and audience reach in 2026.
Performance Analysis
ON24’s Q3 results outperformed guidance on both revenue and profitability, even as total ARR landed at $124.5 million after a seasonally soft period and deal slippage concentrated in new business and life sciences. Core platform revenue and services comprised the overwhelming majority of the business, with professional services contributing a stable 8% of total revenue. Gross margin remained robust at 76%, consistent with year-to-date performance, underscoring disciplined cost structure and operational leverage.
Enterprise customer metrics set new records: Average core ARR per customer surpassed $80,000, and the share of ARR in multi-year contracts reached its highest ever, now exceeding half of total ARR. The $100,000-plus customer cohort represented about two-thirds of ARR, with 294 customers in this tier. AI products emerged as a clear growth vector, with adoption climbing every quarter for nearly two years and close to 40–50% of new deals now including AI offerings. Sales and marketing expenses, a key focus, dropped to 42% of revenue, reflecting ongoing efficiency gains from internal AI deployment.
- AI Solutions Drive Expansion: AI products are now the second-largest driver of expansion, with expectations to become the top contributor in 2026.
- Win-Backs and Multi-Product Adoption: Boomerang customer returns, especially in regulated industries, and increased use of two or more products per customer support stickier, higher-value relationships.
- Cash Flow and Buybacks: Free cash flow was positive for the seventh consecutive quarter, and $13.8 million has been returned to shareholders under the current buyback program.
While short-term softness in life sciences and deal timing affected Q3 ARR, the company expects a meaningful ARR rebound in Q4, underpinned by AI adoption, tighter enterprise focus, and the early phases of the LinkedIn integration.
Executive Commentary
"Close to one in five of our customers is paying for our AI offerings. And we expect this number to increase into Q4 and future quarters, especially with the launch of two new packages, AI Translate and AI Propel Plus... our collaboration [with LinkedIn] will completely transform digital events by providing customers with seamless workflows that push ON24 events directly into LinkedIn events."
Sharad Charan, Co-Founder & CEO
"Our continued focus on larger enterprise customers has resulted in improvements in a number of our customer metrics... Our strategy of moving customers to longer-term commitments has resulted in the percentage of our ARR multi-year agreements hitting another all-time high at the end of Q3."
Steve Gattamoni, Chief Financial Officer
Strategic Positioning
1. AI-First Product Expansion
ON24 is aggressively embedding AI across its product suite, with AI Propel Plus and AI Translate enabling customers to automate content creation, campaign localization, and multi-channel distribution. Management highlighted that AI solutions are now the second-largest expansion driver and are expected to surpass content marketing in 2026. The company’s focus on leveraging first-party engagement data—over a billion annual engagement minutes—provides a defensible moat as AI and content become critical differentiators in digital engagement platforms.
2. LinkedIn Partnership as Growth Catalyst
The new LinkedIn integration is positioned as a multi-phase, game-changing partnership, enabling seamless event promotion, registration, and audience targeting. Phase one, focused on workflow and audience reach, is rolling out now, with monetizable features such as lookalike audience targeting expected by Q1 2026. ON24 is the only digital event platform with this level of LinkedIn integration, providing a unique channel and potential top-line growth lever as the integration deepens.
3. Enterprise and Regulated Industry Focus
ON24’s go-to-market realignment has prioritized larger enterprise and regulated verticals (financial services, professional services, and life sciences), now comprising half of total business. These segments deliver higher gross retention (close to 90% in financial and professional services) and multi-year contract penetration. The company’s win-back momentum in regulated industries, where customers seek automation and compliance, further validates this vertical focus.
4. Operational Efficiency and AI-Driven Cost Reduction
Internal AI deployment is materially reducing sales and marketing costs, with a targeted reduction from low 40s to low 30s percent of revenue over two years. ON24 is using its own AI tools to streamline go-to-market functions, reallocate resources to high-growth verticals, and maintain innovation velocity while improving profitability. This operational discipline is expected to yield double-digit margin improvement and support a return to ARR growth in 2026.
5. Monetization and Platform Stickiness
Multi-product adoption and contract length are rising, with more customers using two or more products and over half of ARR in multi-year agreements. These metrics point to increased platform stickiness and higher average contract values, creating a more resilient recurring revenue base as ON24 transitions toward AI-led growth.
Key Considerations
ON24’s Q3 set the foundation for a strategic pivot toward AI-led engagement and monetizable platform partnerships, but the transition comes amid end-market headwinds and evolving enterprise demand patterns. Investors should weigh the sustainability of AI-driven expansion, the execution risk in monetizing new partnerships, and the degree to which operational efficiencies translate to bottom-line gains in a competitive SaaS environment.
Key Considerations:
- AI Adoption Curve: The pace at which AI offerings move from 20% to a majority of customers will determine ON24’s expansion trajectory and pricing power.
- LinkedIn Integration Ramp: The speed and effectiveness of LinkedIn monetization phases will be a critical watchpoint for new business and cross-sell.
- Enterprise Retention and Upsell: Continued growth in multi-year, multi-product contracts underpins ARR stability but depends on maintaining differentiated value in regulated verticals.
- Sales and Marketing Leverage: Execution on AI-driven cost reduction targets is essential for achieving double-digit margin improvement and supporting ARR growth in 2026.
Risks
ON24 faces several risks as it pivots to AI-led growth: macroeconomic pressure in key verticals (especially life sciences), competitive threats in the digital engagement and webinar market, and execution risk around the LinkedIn integration timeline. The company’s reliance on large enterprise and regulated customers increases exposure to longer deal cycles and procurement delays, while the success of AI monetization depends on sustained customer adoption and differentiated product innovation.
Forward Outlook
For Q4, ON24 guided to:
- Total revenue of $33.9 million to $34.5 million
- Core platform revenue of $33.3 million to $33.9 million
- Gross margin of 76–77%
- Non-GAAP operating loss of $0.8 million to $0.2 million
For full-year 2025, management maintained guidance:
- Total revenue of $138.6 million to $139.2 million
- Core platform revenue of $136 million to $136.6 million
- Gross margin of 76–77%
Management emphasized a meaningful improvement in ARR performance in Q4, driven by stronger growth retention, continued AI penetration, and the early impact of the LinkedIn partnership. They highlighted that Q4 is typically back-end loaded, so guidance reflects a wider range of possible outcomes. Cost reductions and operational efficiency gains are expected to flow to the bottom line in 2026 and beyond.
- ARR growth and profitability are targeted for 2026, with AI and LinkedIn as key levers.
- Sales and marketing as a percent of revenue expected to fall to mid-30s in 12 months, low 30s in two years.
Takeaways
ON24’s Q3 call revealed a business at an inflection point, with AI adoption and a unique LinkedIn integration positioning the company for a return to ARR growth and improved profitability in 2026. The enterprise and regulated industry focus is yielding higher retention and contract values, while internal AI deployment is driving tangible cost reductions.
- AI and Platform Partnerships Are Now Core Growth Levers: The path to monetizing AI and LinkedIn integration is clear, but execution and adoption rates will determine the pace of top-line reacceleration.
- Enterprise Stickiness and Efficiency Gains Buffer Near-Term Volatility: Multi-year contracts and operational discipline provide stability as ON24 navigates end-market headwinds.
- 2026 Is the Pivotal Year for ARR Growth and Margin Expansion: Investors should watch for sustained AI penetration, LinkedIn monetization, and continued cost leverage as signals of durable growth.
Conclusion
ON24’s Q3 2025 results highlight a company in strategic transition, leveraging AI innovation and a new LinkedIn partnership to reshape its growth profile. While near-term softness persists in select verticals, rising enterprise engagement, platform stickiness, and operational efficiencies position ON24 for improved ARR and profitability as it enters 2026.
Industry Read-Through
ON24’s results and strategy signal a broader shift in B2B digital engagement platforms, where AI-powered automation and integrated channel partnerships are becoming critical differentiators. The company’s move to monetize LinkedIn integration and embed AI across the customer lifecycle is a template for SaaS peers seeking to drive expansion and operational leverage. For the broader SaaS and marketing tech sector, ON24’s focus on regulated verticals, multi-product adoption, and first-party data underscores the importance of verticalization and data-driven differentiation as AI commoditizes core platform functions. Investors in adjacent sectors should watch for similar moves toward ecosystem partnerships and AI-led efficiency gains as margin and growth pressures persist.