Is ON24 (ONTF) Stock Poised for a Breakout as Earnings Revisions and Strategic AI Moves Signal a Turnaround?

The stock of ON24 (ONTF), a digital engagement platform, has recently drawn attention as a potential breakout candidate. This analysis examines whether the company's strong earnings revisions and aggressive AI-driven initiatives could catalyze a sustained turnaround. While ONTF faces challenges such as a weak return on equity (ROE), its strategic pivot toward AI-powered solutions and expanding partnerships may position it for long-term growth.

Earnings Revisions: A Surprising Bright Spot

ONTF's recent quarterly earnings have defied expectations. For Q2 2025, the company reported an EPS of $0.02, surpassing the consensus estimate of -$0.08 by 125%. This momentum continued in Q3 2025, where ONTF delivered an EPS of $0.03, beating the -$0.06 forecast by 150%. These results have prompted analysts to revise their forecasts. For 2025, the average earnings estimate stands at $2.59 million, with projections rising to $5.72 million in 2026 and $9.70 million in 2027.

Despite these positive revisions, ONTF's ROE of 6.72% remains a concern, lagging behind industry benchmarks. However, the stock's valuation appears undervalued relative to its growth trajectory. Analysts have raised price targets, with the current 12-month consensus at $6.00-a 10.09% upside from the $5.45 share price-as of late 2025. Notably, firms like Robert Baird and Canaccord Genuity increased their targets from $5 to $6, signaling cautious optimism.

AI-Driven Growth: A Strategic Pivot

ONTF's strategic focus on AI has become a cornerstone of its growth narrative. The company launched AI Propel+, an AI-powered tool that transforms virtual events into multi-channel campaigns, reducing content creation time and enhancing personalization. Additionally, AI Translate automates language localization, expanding the platform's global reach. These innovations are already gaining traction: nearly 20% of customers now pay for AI solutions, and these offerings are included in 40-50% of new deals.

A pivotal partnership with LinkedIn further amplifies ONTF's AI-driven strategy. The collaboration allows customers to promote and register for events directly on LinkedIn, with future plans for monetizable features like lookalike audience targeting. This integration is expected to drive customer acquisition and retention, particularly in regulated industries such as financial services and life sciences.

Financial Impact of AI: Quantifying the Turnaround

The financial benefits of ONTF's AI initiatives are beginning to materialize. In Q3 2025, AI solutions contributed to over 20% of growth annual recurring revenue bookings. The company reported revenue of $34.6 million for the quarter, exceeding expectations and raising full-year 2025 guidance to $138.6–$139.2 million. CEO David K. Cowan highlighted that AI tools are streamlining sales and marketing operations, reducing costs while reallocating resources to high-growth areas.

ONTF's financial stability is another positive sign. The company has generated positive free cash flow for seven consecutive quarters, demonstrating its ability to self-fund its AI transformation. Analysts project that AI will become the largest driver of expansion by 2026, with revenue contributions expected to grow significantly.

Risks and Considerations

While ONTF's AI strategy is compelling, investors should remain cautious. The company's ROE of 6.72% remains subpar, and its revenue declined 4.7% year-over-year in Q3 2025. Additionally, the stock's "Hold" rating from all analysts suggests limited near-term upside. However, the long-term potential of AI-driven engagement tools and strategic partnerships like the LinkedIn integration could mitigate these risks.

Conclusion: A Calculated Bet on AI

ONTF's recent earnings outperformance and AI-driven initiatives present a compelling case for a breakout. The company's ability to monetize AI solutions-now included in nearly half of new deals-and its expanding partnerships position it to capitalize on the growing demand for digital engagement platforms. While challenges like weak ROE persist, the financial and operational improvements driven by AI suggest that ONTF is on a path to sustainable growth. For investors with a medium-term horizon, the stock offers an intriguing opportunity to bet on the intersection of AI and digital transformation.