ON24 (NYSE:ONTF) Reports Q4 In Line With Expectations

Adam Hejl /
2023/02/28 4:29 pm EST

Virtual events software company (NYSE:ONTF) reported results in line with analyst expectations in Q4 FY2022 quarter, with revenue down 10.5% year on year to $46.6 million. However, guidance for the next quarter was less impressive, coming in at $42.5 million at the midpoint, being 8.33% below analyst estimates. ON24 made a GAAP loss of $12.1 million, down on its loss of $9.51 million, in the same quarter last year.

Is now the time to buy ON24? Access our full analysis of the earnings results here, it's free.

ON24 (ONTF) Q4 FY2022 Highlights:

  • Revenue: $46.6 million vs analyst estimates of $46.2 million (0.9% beat)
  • EPS (non-GAAP): -$0.04 vs analyst estimates of -$0.08
  • Revenue guidance for Q1 2023 is $42.5 million at the midpoint, below analyst estimates of $46.4 million
  • Management's revenue guidance for upcoming financial year 2023 is $167.5 million at the midpoint, missing analyst estimates by 12.3% and predicting a 12.2% decline (vs 6.19% decline in FY2022)
  • Free cash flow was negative $8.87 million, compared to negative free cash flow of $4.18 million in previous quarter
  • Gross Margin (GAAP): 71.6%, down from 75.5% same quarter last year

“In Q4 we were pleased to deliver improvement in our Core Platform’s in-period gross dollar retention metrics and ARR growth in the life sciences and professional services verticals, however, we were impacted in the technology and manufacturing verticals given the current macroeconomic environment, which had a larger impact on our ARR results,” 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.

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

ON24 Total Revenue

This quarter ON24's revenue was down 10.5% year on year, which might be a disappointment to some shareholders.

ON24 is guiding for revenue to decline next quarter 12.4% year on year to $42.5 million, a further deceleration on the 3.21% year-over-year decrease in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $167.5 million at the midpoint, declining 12.2% compared to 6.26% decline in FY2022.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. ON24's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 71.6% in Q4.

ON24 Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.72 left to spend on developing new products, marketing & sales and the general administrative overhead. Despite it going down over the last year, this is still around the lower average of what we typically see in SaaS businesses. Gross margin has a major impact on a company’s ability to invest in developing new products and sales & marketing, which may ultimately determine the winner in a competitive market so it is important to track.

Key Takeaways from ON24's Q4 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on ON24’s balance sheet, but we note that with a market capitalization of $463.7 million and more than $328.1 million in cash, the company has the capacity to continue to prioritise growth over profitability.

This was a difficult quarter for ONTF. Revenue declined and guidance for the full year indicates further decline, even faster than analysts were expecting. The company is flat on the results and currently trades at $9.64 per share.

ON24 may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.