ON24 investors may receive additional information about the case by clicking the link "Submit Your Information" above. If you are a member of the class described below, you may no later than January 3, 2022 move the Court to serve as lead plaintiff of the class, if you so choose.
A class action lawsuit has been filed on behalf of those who purchased or acquired ON24, Inc. (“ON24”) (NYSE: ONTF) common stock pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with ON24’s February 2021 initial public offering (“IPO”).
ON24 is 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. On February 3, 2021, ON24 conducted its IPO, offering 8,560,930 shares of its common stock to the public at a price of $50 per share (the “Offering Price”) for anticipated proceeds of approximately $428,046,500.
According to the Registration Statement, including all amendments thereto, ON24’s cloud-based platform, developed to enable “enterprise-grade” scalability, affords customers, namely large enterprise customers (“$100K Customers”), representing a “substantial portion of [ON24’s] business,” the ability to make privacy and compliance choices that align to their needs as well as integrations with a broad ecosystem to third-party applications. As of December 31, 2019, ON24 had 1,401 customers, of which, 144 were $100k Customers. As of September 30, 2020, ON24 had 1,918 customers, of which, 271 were $100k Customers. This increase resulted in ON24 “experience[ing] significant revenue growth during 2020,” and was driven by “increase[ed] demand for [ON24’s] platform and products following the onset of the COVID-19 pandemic and resulting precautionary measures.” ON24’s effort to acquire new customers and “retain and expand” the use of ON24’s solutions “across [its] existing customer” base, were both also credited for driving ON24’s growth.
The truth regarding ON24’s customers emerged on August 10, 2021. After the markets closed and in connection with announcing ON24’s second quarter 2021 financial results, ON24 offered guidance for the remainder of the year. Specifically, ON24 guided to revenue of no more than $48.5 million in the third quarter and $204.5 million for fiscal year 2021, missing analyst consensus by $2.7 million and $4.5 million, respectively. During ON24’s analyst call held that same day, Sharat Sharan, ON24’s President and Chief Executive Officer, admitted that ON24 “experienced higher-than-expected churn and down-sell from customers [it] signed up in the second quarter of last year during the peak of COVID.” He then added, “this higher churn was primarily in the first-time renewal cohort, customers who signed [] [one]-year contracts last year and who were up for renewal.”
Following this news, ON24’s stock declined nearly 31%, falling from $32.31 per share on August 10, 2021 to close at $22.31 per share on August 11, 2021. At the time the complaint was filed, ON24’s stock traded as low as $18.66 per share, a nearly 63% decline from the $50 per share IPO price.
The complaint alleges that the Registration Statement was materially false and misleading and failed to disclose, inter alia, that the surge in COVID-19 customers ON24 observed in the lead up to the IPO consisted of a significant number that did not fit ON24’s traditional customer profile and, as a result, were significantly less likely to renew their contracts.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453; toll-free at (844) 887-9500; or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.