ON24 (NYSE:ONTF) Posts Better-Than-Expected Sales In Q4

Kayode Omotosho /
2024/02/22 4:22 pm EST

Virtual events software company (NYSE:ONTF) reported Q4 FY2023 results topping analysts' expectations, with revenue down 15.5% year on year to $39.34 million. The company also expects next quarter's revenue to be around $37 million, coming in 2.3% above analysts' estimates. It made a non-GAAP profit of $0.06 per share, improving from its loss of $0.04 per share in the same quarter last year.

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ON24 (ONTF) Q4 FY2023 Highlights:

  • Revenue: $39.34 million vs analyst estimates of $37.26 million (5.6% beat)
  • EPS (non-GAAP): $0.06 vs analyst estimates of $0.02 ($0.05 beat)
  • Revenue Guidance for Q1 2024 is $37 million at the midpoint, above analyst estimates of $36.18 million
  • Management's revenue guidance for the upcoming financial year 2024 is $145 million at the midpoint, missing analyst estimates by 1.6% and implying 11.4% decline (vs -14.3% in FY2023)
  • Free Cash Flow was -$1.97 million compared to -$3.20 million in the previous quarter
  • Gross Margin (GAAP): 74.6%, up from 71.6% in the same quarter last year
  • Market Capitalization: $323.7 million

“In Q4, we were pleased to deliver an improvement in sequential Core Platform ARR performance, which was approximately flat sequentially, and to beat our profitability targets, achieving positive non-GAAP EPS and positive adjusted EBITDA,” said Sharat Sharan, co-founder and CEO of ON24.

Started in 1998 as a platform to broadcast press conferences, ON24’s (NYSE:ONTF) software helps organizations organize online webinars and other virtual events and convert prospects into customers.

Virtual Events Software

Online marketing and sales are expanding at a rapid pace. Compared to the offline advertising market, which has been affected by the Covid pandemic and is challenging to measure and improve, more organizations are expected to adopt data-driven digital engagement platforms to better engage their customers online.

Sales Growth

As you can see below, ON24's revenue has been declining over the last two years, shrinking from $52.03 million in Q4 FY2021 to $39.34 million this quarter.

ON24 Total Revenue

ON24's revenue was down again this quarter, falling 15.5% year on year.

Next quarter, ON24 is guiding for a 14.1% year-on-year revenue decline to $37 million, a further deceleration from the 11.2% year-on-year decrease it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $145 million at the midpoint, declining 11.4% year on year compared to 14.2% drop in FY2023.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. ON24 burned through $1.97 million of cash in Q4, reducing its cash burn by 77.8% year on year.

ON24 Free Cash Flow

ON24 has burned through $14.39 million of cash over the last 12 months, resulting in a negative 8.8% free cash flow margin. This low FCF margin stems from ON24's constant need to reinvest in its business to stay competitive.

Key Takeaways from ON24's Q4 Results

ON24's revenue continues to shrink, while the company keeps burning cash. But it was good to see that the cash burn is slowing down, on the other hand, its full-year revenue guidance was below expectations. Zooming out, we think this was still mixed quarter. The stock is flat after reporting and currently trades at $7.7 per share.

So should you invest in ON24 right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.