ON24’s Uncertain Path: Hold Rating Amid Macroeconomic Challenges and Strategic Investments

William Blair analyst Arjun Bhatia has reiterated their neutral stance on ONTF stock, giving a Hold rating today.

Arjun Bhatia has given his Hold rating due to a combination of factors impacting ON24’s current and future performance. The company’s first-quarter core platform revenue met expectations, but the annual recurring revenue (ARR) was slightly below estimates due to a seasonally softer quarter. Despite this, ON24 recorded the highest total dollar value of ARR in the past five quarters, showing improvements in customer win-backs and new acquisitions. However, the management has lowered its full-year guidance due to macroeconomic uncertainties, which have already started affecting the company’s outlook.
Furthermore, while ON24 is optimistic about returning to ARR growth by 2025 and is making strategic investments in AI and go-to-market initiatives, the company’s revenue is still declining, and there is no immediate profitability support. The valuation of ON24 is at a significant discount compared to other software stocks, but the path to sustained growth is not yet clear and may take several quarters to materialize. As a result, Arjun Bhatia maintains a cautious stance, reiterating a Hold rating until there is more evidence of consistent top-line stabilization and growth.