ON24 (ONTF) Earnings Signal Resilience Amid Sector Growth – What Investors Need to Know

ON24 (ONTF), a leader in AI-powered virtual engagement platforms, reported its first-quarter 2025 earnings on May 6, 2025, delivering a beat on revenue expectations while maintaining its razor-thin margin discipline. The results, though overshadowed by sector peers’ robust growth, underscore a company navigating choppy waters with a mix of strategic focus and financial grit. Here’s what investors should take away.

Key Results: A Narrow Win Against Decline

The company reported Q1 revenue of $36.68 million, a 6.8% year-over-year decline, marking an improvement from the 12.4% drop in Q1 2024. This outperformed the consensus estimate of $34.23 million, a 2.5% beat that aligns with ON24’s two-year track record of exceeding revenue forecasts by an average of 2.7%.

Adjusted EPS came in at -$0.02, matching pre-earnings estimates and narrowing the loss from Q3 2024’s -$0.26 EPS miss. While the company continues to grapple with profitability—its trailing 12-month net loss stands at $51.79 million—the focus remains on cost management and long-term AI-driven growth.

The AI Play: Data Shows Momentum, But Can It Translate to Growth?

ON24’s earnings call emphasized its AI-driven engagement platform, which it claims is “transforming B2B marketing in the AI era.” The company highlighted its 2025 Digital Engagement Benchmarks Report, which found that:
- AI-generated content drove 7X higher audience engagement in 2024.
- Personalized experiences boosted demo requests by 4X and CTA conversion rates by 48%.
- 45% of attendees opted for on-demand content, underscoring the shift toward flexible consumption.

These metrics suggest ON24’s platform is resonating with clients. Yet, the company’s 1–2% ARR growth target for 2025 remains modest compared to peers like Zeta (ZE) and Freshworks (FRSH), which reported 35.6% and 18.9% revenue growth, respectively. The question remains: Can AI initiatives translate into top-line momentum, or is ON24 merely a “me-too” player in a fast-evolving space?

Stock Performance: Lagging Behind, but Hope Persists

Despite the Q1 beat, ON24’s stock has remained flat over the past month, closing at $4.71—far below the average analyst price target of $7.33. This disconnect reflects skepticism about its ability to recapture revenue growth. Meanwhile, the broader sales and marketing software sector has surged 15% in the same period.

Investors should note that 80% of ON24’s revenue comes from its core platform, which serves 4 of the 5 largest software companies and 3 of the top 5 asset management firms. This blue-chip client base suggests durability, but scalability is key. The company’s guidance for FY2025 EPS of $0.02–$0.05 hints at a path to profitability, though it trails consensus estimates.

Conclusion: A Buy for the AI Believers, a Hold for the Pragmatists

ON24’s Q1 results are a glass-half-full story. The narrowing revenue decline and consistent beat-and-raise pattern suggest operational stability, while its AI-driven engagement metrics hint at a product-market fit. Yet, the stock’s underperformance and the sector’s faster-growing peers leave room for skepticism.

Bulls will point to:
- AI’s transformative potential: The 7X engagement boost and 48% CTA conversion gains are hard to ignore.
- Client retention: Its roster of Fortune 500 firms signals stickiness in a competitive landscape.
- Valuation: At $4.71, ON24 trades at a 1.5x forward revenue multiple, a discount to peers.

Bears will counter with:
- Sluggish growth: Revenue declines, even if improving, are a red flag in a sector racing toward AI adoption.
- Profitability lag: A $51.79M net loss over 12 months demands patience.
- Execution risk**: Competitors are outpacing ON24’s revenue trajectory, raising questions about its moat.

For now, ON24’s story hinges on whether its AI initiatives can deliver sustainable revenue growth beyond incremental margin improvements. Investors should monitor its Q2 results and updates on ARR growth and adjusted EBITDA targets. Until then, this remains a high-risk, high-reward call for those betting on AI’s long-term dominance in B2B marketing.

In short: Hold for the steady hands, buy for the believers. The next move is ON24’s to make.