We recently published a list of 8 Best Video Conferencing Stocks To Buy According to Analysts. In this article, we are going to take a look at where ON24, Inc. (NYSE:ONTF) stands against other best video conferencing stocks to buy according to analysts.
An Overview of The Video Conferencing Industry
Video conferencing software connects two or more parties virtually through video and audio over an internet connection. During the COVID-19 pandemic when lockdowns shut almost everything, the video conferencing market witnessed a surge in demand. According to a report by Grand View Research, the video conferencing market was valued at around $4.21 billion in 2020 and the valuation rose significantly to around $7 billion in 2022. Moreover, as per the most recent figures. The video conferencing market was valued at $28.61 billion in 2023 and is projected to grow from $33.04 billion in 2024 to $60.17 billion by 2032, indicating a compound annual growth rate of 7.8%.
According to a BBC report published on June 3rd, 2020, during the pandemic, the usage of the video conferencing platform Zoom surged 30 times in April 2020 alone. The report further highlighted that the daily participant usage exceeded 300 million users during peak pandemic times.
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At first, the market growth was driven by the pandemic and lockdowns around the globe, which forced businesses, government organizations, and education institutes to adopt virtual modes of engagement. For instance, in May 2020, the World Health Organization (WHO) held its first-ever virtual assembly. Moreover, educational institutes used videoconferencing software to conduct graduation ceremonies.
Fast forwarding to the post-pandemic era now that the world is back to normal the video conferencing market is driven by the rise in remote jobs and e-learning. According to a report by Pew Research published on March 30, 2023, around 35% of the US workforce was working remotely in 2023. Although this figure was down from 43% recorded in January 2022 and 55% in October 2020, which is the pandemic era, the percentage of remote workers was still up 7% compared to pre-pandemic years.
Looking at the regional insights, North America held the largest market share of around 31% in 2023 as it benefits from the large organizations that are engaged in developing video conferencing software. Moreover, the region is also home to an experienced workforce capable of adopting remote work. In addition to North America, the Asia Pacific region is expected to grow at the fastest CAGR due to the growing interest in digitalization across businesses, governments, and educational institutes.
Looking ahead, the rise and recent developments in artificial intelligence, the Internet of Things, and cloud technologies are expected to further boost the video conferencing market. According to a report by the World Economic Forum, global digital jobs are estimated to grow by around 25% to reach over 95 million indicating the growth prospects for video conferencing software due to its indispensable position for remotely operating organizations.
Our Methodology
To curate the list of 8 best video conferencing stocks to buy according to analysts we used various internet rankings and our previous articles. We compiled a list of video conferencing companies that were most widely held by hedge funds, sourced from Insider Monkey’s Q2 2024 hedge funds database. Next we checked analysts upside potential for each stock from CNN and ranked our stocks in ascending order of their upside potential. Please note that the data was recorded on November 8th 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Photo by Gabriel Benois on Unsplash
ON24, Inc. (NYSE:ONTF)
Number of Hedge Fund Holders: 16
Analysts Upside Potential: 14.38%
ON24, Inc. (NYSE:ONTF) is a company that specializes in providing a cloud-based intelligent engagement platform designed to enhance how businesses interact with their audiences through digital experiences. Their primary focus is on helping sales and marketing teams engage potential customers effectively by utilizing data-driven insights and personalized content.
The core offering of the company is its Intelligent Engagement Platform, which integrates various tools for webinars, virtual events, and content marketing. The platform leverages AI technology to provide insights that help businesses understand their audience better and optimize their marketing strategies. Some of the key offerings of the platform include ON24 Elite, which is a live, interactive webinar experience that allows for real-time engagement between presenters and attendees, and ON24 Forum, which facilitates video-to-video interactions, enhancing the connection between speakers and the audience.
The company reported third-quarter results for fiscal 2024 on November 7th. Revenue for the quarter came in at $36.33 million, which was a 7.39% decrease year-over-year. Although the revenue decreased, however, it was above analysts’ expectations by $0.7 million.
Management noted that the company exceeded profitability targets for the sixth consecutive quarter, indicating consistent financial improvement. Moreover, the quarter also marked the 3rd consecutive quarter of positive free cash flow generation, with net cash from operating activities at $0.3 million.
Moreover, there was a high single-digit year-over-year improvement in gross retention rates resulting in total ARR reaching $132.2 million. Looking ahead management of ON24, Inc. (NYSE:ONTF) expects revenue between $35.4 million and $36.4 million for the fourth quarter with substantial revenue coming from its core platform.
Overall, ONTF ranks 5th on our list of best video conferencing stocks to buy according to analysts. While we acknowledge the potential of ONTF to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ONTF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.