What Happened?
Shares of virtual events software company (NYSE: ONTF) jumped 5.6% in the afternoon session after the company reported second-quarter results that beat Wall Street's top and bottom-line estimates, but the report also highlighted continued struggles with revenue growth. The company posted revenue of $35.33 million and adjusted earnings per share of $0.02, surpassing analyst expectations of $34.66 million and $0.01, respectively. However, the positive surprise was tempered by underlying weakness, as revenue still declined 5.4% year-on-year. Furthermore, billings, a key indicator of future revenue, fell 14.3% year-on-year to $25.93 million, signaling persistent demand issues. For the full year, ON24 slightly raised its revenue guidance to $138.2 million at the midpoint but only reiterated its adjusted EPS forecast of $0.04, reflecting a mixed outlook for the company.
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What Is The Market Telling Us
ON24’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 4.1% on the news that the White House announced a new round of steep global tariffs, sparking concerns of a trade war and its impact on the U.S. and global economies. This move creates significant uncertainty for businesses and investors. The new tariffs, with rates of up to 41% on imports from 68 countries and the European Union, prompted a broad market sell-off, with the tech-heavy Nasdaq index showing notable weakness. Adding to the bearish sentiment was a weaker-than-expected July jobs report, which revealed that employers created only 73,000 jobs, far below economists' expectations. This combination of trade fears and signs of a slowing labor market has created a "risk-off" environment, leading investors to pull back from growth-oriented sectors like software and technology.
ON24 is down 22.8% since the beginning of the year, and at $5.02 per share, it is trading 28.4% below its 52-week high of $7.01 from February 2025. Investors who bought $1,000 worth of ON24’s shares at the IPO in February 2021 would now be looking at an investment worth $70.88.
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