ON24, Inc.

ONTF Details

ON24, Inc. (NYSE: ONTF) is a cloud-based digital experience platform that enables companies to turn customer engagement into revenue through interactive webinars, virtual events, and multimedia content experiences. Subscription agreements for access to the platform and other connected services are how the corporation makes money. ONTF was listed on the NYSE on February 03, 2021, at an IPO price of USD 50.00 per share.

Latest News:

• Availability of ON24 Go Live: On January 19, 2022, ONTF has made ON24 Go Live available to let marketers stream live video events more quickly and easily. ON24 Go Live is a self-service tool for creating digital events and providing audiences with an interactive, engaging experience. According to a recent Forrester survey of B2B organizations, 63% plan to hold "same or more" virtual events in the coming year. ON24 enables customers several options to execute the virtual event they want, from multisession, live-streamed digital events to interactive webinars and massive custom virtual conferences, as marketers continue to rely on digital events.
• Integration with Drift Platform: On January 04, 2022, ONTF announced new Drift platform integrations. Customers who use ON24's digital experiences can now effortlessly link real-time Drift activity and conversational data with attendance and first-person engagement data. Companies may better track engagement across marketing and sales operations, and their customer pipelines will grow due to the connection.

9MFY21 Results:

• Surge in Revenues: ONTF reported YoY growth of 46.23% in 9MFY21 (ended September 30, 2021) to USD 151.58 million compared to USD 103.66 million in 9MFY20, attributable to an overall increase in digital experience platform revenue.
• Reported Losses: ONTF witnessed a net loss of USD 14.75 million during 9MFY21 from a net income of USD 11.25 million reported during 9MFY20 due to an increase in operating expenses.
• Healthy Balance Sheet: As of September 30, 2021, the company's cash and cash equivalents (including marketing investments) stood at USD 399.68 million, with a total debt of USD 4.67 million.

Key Risk:

• Dependence on Third Parties: ONTF uses third-party data center hosting providers for computing, storage, processing, application integration, and other services. Third-party companies can also provide content delivery networks (CDNs) and integration services. As a result, any service interruptions or facility damage caused by these third parties could significantly impact ONTF's operations.

Outlook:

• Q4FY21 Estimates: As of Q3FY21, ONTF expects to clock revenue in the range of USD 51.0 – 52.0 million for Q4FY21, with a non-GAAP operating loss of USD 4.7 – 3.7 million. It also estimates non-GAAP EPS of USD (0.10) – (0.08), based on 48.2 million basic and diluted shares outstanding.
• FY21 Estimates: In FY21, ONTF expects USD 202.6–203.6 million in revenue, with non-GAAP operating losses of USD 0.9 million and non-GAAP operating profits of USD 0.1 million. Based on 43.6 million basic and diluted shares outstanding, it forecasts non-GAAP EPS of USD (0.04) to (0.02).

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

ONTF's stock price has fallen 55.64% in the past nine months and is currently close to the lower end of its 52-week range of USD 14.95 to USD 70.83. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 19.40.

Considering the significant correction in the stock price, strong balance sheet, integration with Drift Platform, availability of ON24 Go Live, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 15.61, down 2.38% as of February 11, 2022, 02:29 PM ET.

Three-Year Technical Price Chart (as on February 11, 2022, at 02:29 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.