ON24 Goes Public With $42 Billion TAM

As Covid Puts Webinars And Virtual Events Front And Center

I’m publishing this series to discuss a topic that I follow closely — cloud stocks, trends, strategy, acquisitions, and more. I like fundamentals-focused business building, and outline the principles of fundamentals-focused business building in my free Bootstrapping course.

According to a recent report, The Global Digital Experience Platform (DXP) market is expected to grow at 11% CAGR to $15.7 billion by 2025. San Francisco-based ON24 is a leading player within the space that recently went public.

Sharat Sharan founded ON24 in 1998. It is a superb example of one entrepreneur’s persistent effort at building out his dream. Ever since Sharat shared his vision of webinars and virtual events at scale with me some 15 years back, I have believed that the world should stop wasting money on gratuitous travel and adopt digital marketing experiences more aggressively. It took Covid to finally shake the world up and turn this obvious opportunity to be much kinder to the planet and on people’s bodies into widely adopted reality.

I have known Sharat for almost 15 years. I am so happy to see his efforts find fruition.

ON24’s Financials

ON24 was set up in 1998 as Newsource and began as a distribution center for Internet-based video press releases. The company soon shifted its focus to financial news releases and concentrated its efforts on building a robust webcasting platform. Today, it is a leading provider of cloud-based webcasting and virtual communications solutions.

ON24’s Digital Experience Platform makes it easy to create, scale, and personalize experiences that drive measurable business growth. It provides a leading, cloud-based digital experience platform that helps businesses convert customer engagement into revenue through interactive webinar experiences, virtual event experiences, and multimedia content experiences. Its portfolio of interactive, personalized, and content-rich digital experience products helps create and capture 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.

ON24 realizes that large social media platforms like Facebook have been successful at leveraging the experiences and insights of consumers on their platforms to enable B2C companies to effectively understand their potential consumers. But a similar insight is lacking within the B2B space. ON24 is focusing on ensuring that B2B companies also get access to these deep insights about prospective customers.

Traditional digital marketing models involve the use of automated solutions, such as digital advertising and email for marketing. While these methods reach scale, they don’t strike a chord with the customer. Additionally, the internet has allowed customers to conduct extensive research on their own without having to rely on marketing campaigns. To strengthen customer engagement, and for businesses to succeed, ON24 is helping organizations migrate their sales and marketing strategies from the era of automation to the era of engagement. Its platform provides an innovative way both to scale digital marketing and deepen prospective customer engagement — a service that has been much in demand since the pandemic.

ON24’s digital experience platform has powered more than 159,000 interactive, live digital experiences in the nine months ending September 2020, engaging an average of 4 million prospective customers and business professionals monthly this period. Its platform facilitated a monthly average of 12 million prospective customer interactions in the same time period, representing an annual run rate of 2.45 billion engagement minutes for an increase of 167% over the year.

As of September 30, 2020, they had over 1,900 customers in more than 40 countries, including three of the five largest global technology companies, four of the five largest US banks, three of the five largest global healthcare companies, and three of the five largest global industrial and manufacturing companies. It boasts of a highly engaged and loyal customer base that has allowed it to grow revenue over time and achieve a dollar-based net retention rate of 147%.

Recently, ON24 reported that for the nine months ended September 2020, revenues grew to $103.7 million. Net income was $11.2 million, compared with a net loss of $14.1 million a year ago.

ON24’s Expanding Offerings

The current pandemic has increased the adoption of virtual engagement technologies and ON24 is ensuring that it upgrades its product portfolio to align with these times. It recently announced the launch of RevNEXT Marketplace, a virtual marketplace that curates technologies that supports marketing’s impact on company revenue. The marketplace educates marketers on strategies and technologies to support emerging growth strategies. It also provides them with the ability to access ON24’s digital platform at any time. It features virtual booths from all categories of technology, such as content creation, customer engagement, orchestration, and social listening. The booths feature leading companies in revenue marketing that believe that marketing teams need to transform their strategies to succeed in a digital world and drive revenue growth.

ON24 also recently launched its ON24 Conversion Tools. These tools integrate the more than 20 engagement tools that have been previously available on ON24’s digital experience platform. They provide marketers with the ability to allow audiences to book meetings and request demos, thus creating a powerful source of real-time buying signals. The addition of ON24 Conversion Tools adds on to ON24’s track record of being able to empower marketers with live and actionable data.

ON24’s TAM Potential

ON24 believes that the global digital marketing software industry is expected to reach $152 billion in 2027. It estimates that the current total addressable market for its solutions is approximately $42 billion worldwide annually.

Till earlier this week, ON24 was privately held and had raised more than $72 million in VC funding. Investors included US Venture Partners, Canaan Partners, and Rho Management. Its last funding round was held in May 2016 when it raised $25 million from investors including Goldman Sachs, Rho Capital Partners, US Venture Partners, and Canaan Partners. Earlier this week, ON24 went public and began trading on the NYSE under the ticker ONTF. It raised $428 million in the IPO by selling stock at $50 apiece. The stock was trading at $77 at opening bell and ended the day at $70.82.

The MarTech space has been very active with over 8000 startups.

It is ripe for consolidation, and I expect ON24 to become an active buyer of promising companies as it broadens its portfolio of products and reaches into the full TAM potential of this industry.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

Looking For Some Hands-On Advice?

For entrepreneurs who want to discuss their specific businesses with me, I’m very happy to assess your situation during my free online 1Mby1M Roundtables, held almost every week. You can also connect with me during our Rendezvous meetups, and check out my Bootstrapping Course, our YouTube channel, podcast interviews with VCs and Founders.

Photo Credit: Gerd Altmann from Pixabay

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Sramana Mitra

Sramana Mitra

Founder of the 1M/1M global virtual incubator