ONTF's Crossroads: Can Analysts' $5.33 Target Hold Amid Mixed Results?

ON24, Inc. (NYSE:ONTF), a provider of AI-driven event and engagement software, has emerged from its latest earnings report with a stark contrast between incremental progress and persistent headwinds. Analysts now estimate a $5.33 price target for the stock, but whether this reflects optimism or resignation hinges on the company’s ability to stabilize its core metrics.

Financial Highlights: A Fragile Balance

In its Q1 2025 results, ON24 reported $34.7 million in revenue, narrowly exceeding estimates but masking a 7% year-over-year decline in core platform revenue. While the company cited a record 51% of ARR from multi-year agreements and a 39% customer adoption rate of multiple products, its Annual Recurring Revenue (ARR) has yet to recover from a 6% drop in 2024.

The financials also revealed a narrowing GAAP net loss ($0.21 per share vs. $0.26 in 2024) and positive free cash flow ($1.9 million), supported by a $50 million share repurchase program aimed at boosting investor confidence. However, non-GAAP metrics painted a murkier picture: a $2.1 million operating loss and a $1.0 million Adjusted EBITDA deficit underscored lingering profitability challenges.

Analysts Trim Estimates, Maintain “Hold”

The $5.33 average target reflects cautious consensus among analysts, with all five covering the stock rating it a “Hold.” Recent revisions highlight concerns:

• Revenue Growth: Analysts now project a 6.88% decline in full-year 2025 revenue to $137.9 million, down from prior estimates of $139.7 million.
• Margin Pressures: EPS for 2025 is expected to remain negative at $(0.75), with no path to profitability until 2026.

The most notable adjustment came from Canaccord Genuity, which cut its target from $9.00 to $5.00 on May 8, citing customer attrition risks and conservative guidance. Meanwhile, bulls like JPMorgan and Wells Fargo emphasized ON24’s AI-driven product pipeline and enterprise customer retention (77% of ARR from companies >1,000 employees) as long-term positives.

Risks and Opportunities

Bear Case:
- ARR Decline: The company aims for 1–2% ARR growth in 2025, but this follows a 6% drop in 2024. A prolonged slump could erode pricing power.
- Macroeconomic Headwinds: Tight marketing budgets and cautious enterprise spending remain a drag.

Bull Case:
- AI Innovation: ON24 IQ’s automation of event Q&A and personalization could drive cross-selling opportunities, with 299 large customers ($>100K ARR) accounting for 66% of total ARR.
- Operational Leverage: A 5th consecutive quarter of positive free cash flow ($1.9 million in Q1) suggests cost discipline, even if profitability remains distant.

Data-Driven Outlook

The stock’s $4.85 price as of May 2025 sits just below the $5.33 target, but technical indicators are bearish: the 52-week range ($4.00–$5.60) and a beta of 1.3 (signaling volatility) suggest further downside if revenue stagnates.

Conclusion: A Stock at an Inflection Point

ON24’s $5.33 target is neither a vote of confidence nor a sell signal—it’s a reflection of its precarious position. While the company has stabilized cash flows and customer retention, its inability to reverse ARR declines and achieve profitability leaves it vulnerable to sector-wide headwinds.

Investors should weigh two facts:
1. Near-Term Risks: The stock trades at a 5.4x EV/ARR multiple, below peers like Domo (DOMO) and Marketo (MRKT), but its revenue contraction justifies the discount.
2. Long-Term Potential: Its $1 billion in annual engagement minutes and enterprise focus provide a solid base for growth—if AI adoption accelerates.

For now, the $5.33 target appears realistic, but ONTF must prove it can convert AI innovation into top-line growth, not just retention. Until then, the stock remains a “Hold” for investors willing to bet on a turnaround.