William Blair analyst Arjun Bhatia has reiterated their neutral stance on ONTF stock, giving a Hold rating today.
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Arjun Bhatia has given his Hold rating due to a combination of factors impacting ON24’s current financial performance and future outlook. The company’s second-quarter core platform revenue exceeded expectations, driven by strong enterprise momentum and customer acquisition. However, despite these positive indicators, the annual recurring revenue (ARR) is still on a decline, albeit at a slower pace, and is expected to decrease further in the third quarter before potentially increasing slightly by the end of the year.
ON24’s management is optimistic about the company’s AI capabilities and new product launches, which could drive future growth. Yet, the company continues to spend a significant portion of its revenue on sales and marketing, without clear profitability support. Additionally, while ON24’s stock trades at a discount compared to other software companies, the path to sustained growth remains uncertain and could take several quarters to materialize. These factors contribute to the decision to maintain a Hold rating, as further evidence of stabilization and growth is needed.
Based on the recent corporate insider activity of 118 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of ONTF in relation to earlier this year.