The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Northern District of California on behalf of investors who acquired ON24, Inc. (“ON24” or the “Company”) (NYSE: ONTF) securities pursuant and traceable to the registration statement and prospectus (“Registration Statement”) issued in connection with the Company’s February 3, 2021, Initial Public Offering (“IPO”). Investors have until January 3, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
ON24 purports to be 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 or about 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.
On August 10, 2021, after the markets closed and in connection with announcing the Company’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 Q3 and $204.2 million for fiscal year 2021, missing analyst consensus by $2.7 million and $4.5 million, respectively. During the Company’s analyst call held that same day, ON24’s President and CEO, defendant Sharat Sharan, 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, “[t]his higher churn was primarily in the first-time renewal cohort, customers who signed  one-year contracts last year and who were up for renewal.” On this news, ON24’s stock declined by $10.00 per share, or approximately 31%, from $32.31 per share to close at $22.31 per share on August 11, 2021
By the commencement of the action, ON24’s shares were trading as low as $18.70 per share, a decline of approximately 62.6% from the IPO Offering Price.
The lawsuit alleges that the representations made in the Registration Statement used to effectuate the Company’s IPO were materially inaccurate, misleading, and/or incomplete because they failed to disclose, among other things, that the surge in COVID-19 customers 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. After the IPO, as the true facts emerged, the value of the Company’s shares declined sharply.