Virtual events software company (NYSE: ONTF) announced better-than-expected revenue in Q1 CY2025, but sales fell by 7.9% year on year to $34.73 million. On the other hand, next quarter’s revenue guidance of $34.8 million was less impressive, coming in 0.7% below analysts’ estimates. Its non-GAAP loss of $0.01 per share was $0.01 above analysts’ consensus estimates.
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ON24 (ONTF) Q1 CY2025 Highlights:
- Revenue: $34.73 million vs analyst estimates of $34.23 million (7.9% year-on-year decline, 1.5% beat)
- Adjusted EPS: -$0.01 vs analyst estimates of -$0.02 ($0.01 beat)
- Adjusted Operating Income: -$2.12 million vs analyst estimates of -$2.88 million (-6.1% margin, relatively in line)
- The company dropped its revenue guidance for the full year to $137.5 million at the midpoint from $140.1 million, a 1.9% decrease
- Management reiterated its full-year Adjusted EPS guidance of $0.04 at the midpoint
- Operating Margin: -30.1%, up from -33.1% in the same quarter last year
- Free Cash Flow Margin: 5.6%, up from 1.2% in the previous quarter
- Market Capitalization: $200.5 million
Company Overview
Started in 1998 as a platform to broadcast press conferences, ON24’s (NYSE: ONTF) software helps organizations organize online webinars and other virtual events and convert prospects into customers.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. ON24’s demand was weak over the last three years as its sales fell at a 10.4% annual rate. This wasn’t a great result and is a sign of poor business quality.
This quarter, ON24’s revenue fell by 7.9% year on year to $34.73 million but beat Wall Street’s estimates by 1.5%. Company management is currently guiding for a 6.8% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 4% over the next 12 months. While this projection is better than its three-year trend, it's hard to get excited about a company that is struggling with demand.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
ON24’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between ON24’s products and its peers.
Key Takeaways from ON24’s Q1 Results
We were impressed by how significantly ON24 blew past analysts’ EBITDA expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance missed significantly and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock remained flat at $4.72 immediately following the results.
Should you buy the stock or not? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
