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Indaba Capital Discloses 8.8% ON24 Stake And Plans To Discuss Ways To Improve Share Price With The Board

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Discusses the activists plans it intends to discuss with management and provides some analysis on the company

Fintel reports that today, activist hedge fund Indaba Capital Management, L.P. filed a 13D form with the SEC disclosing ownership of 4,240,256 shares in online virtual events platform, ON24 Inc (NYSE:ONTF). This represents an 8.8% stake in the company and makes Indaba the second largest shareholder on the register after Lynrock Lake LP.

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ONTF shares moved +1.4% higher in after hours trading on the news.

In their previous filing dated February 14, 2022 they reported 3,500,000 shares and 7.40% of the company, an increase in shares of 21.15% and an increase in total ownership of 1.40% (calculated as current - previous percent ownership).

Managing Partner and Chief Investment Officer of Indaba Capital, Derek Schrier, in the 13D filing called out management to urgently take proactive measures to improve the issuers stock price, balance sheet and valuation.

Schrier believes the Board should explore bold capital allocation measures and intends to actively discuss ways that can unlock shareholder value. 

Indaba Capital has urged the independent directors of the board to improve their oversight of management and to engage directly with shareholders with better responsiveness to their input.

ONTF shares are down -55% over 2022 and have declined almost -90% since listing in early 2021. The stock now has a market cap of $380 million.

In early November, ON24 reported a -4% decline in total revenue over the year to $47.6 million in the third quarter. 

Annual recurring revenue at the 30th of September was $165.6 million, representing a -1% decline over the year. Net losses widened from -1.6% million in 2021 to -$3.3 million in 2022.

During the result, ON24 management told investors that they expect to return to top-line growth in 2023 and aims to report a break-even EPS result by the fourth quarter.

After the result, analyst Noah Herman from JP Morgan lowered his ‘neutral’ rating target price on the stock from $14 to $12 given the tough macroeconomic conditions. 

Fintel’s consensus forecast target of $9.94 for ONTF suggests analysts see marginal upside for the year ahead in the stock.

ON24 provides a leading, cloud-based digital experience platform that enables businesses to convert customer engagement into revenue through interactive webinar experiences, virtual event experiences and multimedia content experiences.

The ON24 platform’s portfolio of interactive, personalized and content-rich digital experience products creates and captures actionable, real-time data at scale from millions of professionals every month to provide businesses with buying signals and behavioral insights to efficiently convert prospects into customers.


What Are Other Large Shareholders Doing?

Lynrock Lake LP holds 6,666,666 shares representing 13.88% ownership of the company. In it's prior filing, the firm reported owning 6,204,188 shares, representing an increase of 6.94%. The firm decreased its portfolio allocation in ONTF by 9.19% over the last quarter.

Goldman Sachs Group Inc holds 2,397,243 shares representing 4.99% ownership of the company. In it's prior filing, the firm reported owning 3,327,345 shares, representing a decrease of 38.80%. The firm decreased its portfolio allocation in ONTF by 79.49% over the last quarter.

Hawk Ridge Capital Management Lp holds 2,319,068 shares representing 4.83% ownership of the company. No change in the last quarter.

Greenhouse Funds LLLP holds 2,233,049 shares representing 4.65% ownership of the company. In it's prior filing, the firm reported owning 1,727,027 shares, representing an increase of 22.66%. The firm increased its portfolio allocation in ONTF by 24.21% over the last quarter.

What Is The Overall Fund Sentiment?

There are 236 funds or institutions reporting positions in ON24 Inc. This is a decrease of 0 owner(s) or 0.00%.

Average portfolio weight of all funds dedicated to ON24 Inc is 0.1247%, a decrease of 15.3592%. Total shares owned by institutions increased in the last three months by 1.46% to 39,408,623 shares.

Fintel's Fund Sentiment Score is a quantitative model that ranks companies from zero to 100 based on Fund Sentiment. Fund Sentiment is important because it tells you if funds are buying or selling - and in particular how the company ranks compared to other companies in the investing universe.

Click to see the Fintel Fund Sentiment Score for ONTF / ON24 Inc.

Article by Ben Ward, Fintel