TechTarget, Inc. (NASDAQ:TTGT) Q4 2019 Earnings Conference Call February 12, 2020 5:00 PM ET Company Participants Charles Rennick – Vice President and General Counsel Greg Strakosch – Executive Chairman Mike Cotoia – Chief Executive Officer Conference Call Participants Aaron Kessler – Raymond James Eric Martinuzzi – Lake Street Marco Rodriguez – Stonegate Capital Markets Operator Good day, and welcome to the TechTarget Fourth Quarter and Full Year 2019 Earnings Release Conference Call. [Operator Instruction ...

TechTarget 20 YEARS OF CLIENT SUCCESS TechTarget, Inc. November 2019 O Safe Harbor Statement This presentation is for informational purposes only and is not an offer to sell securities or a solicitation of an offer to buy any securities, and may not be relied upon in connection with the purchase or sale of any security. Sales and offers to sell TechTarget, Inc. securities will only be made in accordance with the Securities Act of 1933, as amended, and applicable Securities and Exchange Commission ("SEC") re ...

TechTarget, Inc. (NASDAQ:TTGT) Q3 2019 Earnings Conference Call November 6, 2019 5:00 PM ET Company Participants Charles Rennick - VP, General Counsel & Corporate Secretary Gregory Strakosch - Co-Founder & Executive Chairman Michael Cotoia - CEO & Director Conference Call Participants Aaron Kessler - Raymond James & Associates Marco Rodriguez - Stonegate Capital Markets Bruce Goldfarb - Lake Street Capital Markets Operator Good evening, and welcome to the TechTarget Q3 2019 Earnings Release Conference Call. ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents TechTarget, Inc.'s unaudited consolidated financial statements for Q3 and 9M 2019, including balance sheets, income, equity, cash flows, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 (Unaudited) | Dec 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $52,140 | $34,673 | | Total current assets | $81,096 | $70,118 | | Goodwill | $93,540 | $93,687 | | Operating lease assets with right-of-use | $25,518 | $— | | **Total assets** | **$214,017** | **$176,463** | | Total current liabilities | $14,841 | $14,553 | | Long-term portion of term loan | $22,784 | $23,714 | | Non-current operating lease liability | $27,614 | $— | | **Total liabilities** | **$66,246** | **$43,878** | | **Total stockholders' equity** | **$147,771** | **$132,585** | - The significant increase in **total assets and liabilities** is primarily due to the adoption of the new lease accounting standard (ASU 2016-02), which required the company to record operating lease right-of-use assets and corresponding lease liabilities on the balance sheet for the first time in 2019[7](index=7&type=chunk)[26](index=26&type=chunk)[50](index=50&type=chunk) [Consolidated Statements of Income and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Financial Performance (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | YoY Change | 9M 2019 | 9M 2018 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $33,809 | $30,742 | +10.0% | $98,067 | $89,513 | +9.6% | | Gross Profit | $25,762 | $23,297 | +10.6% | $75,056 | $68,219 | +10.0% | | Operating Income | $6,911 | $3,384 | +104.2% | $17,373 | $12,371 | +40.4% | | Net Income | $5,351 | $3,769 | +42.0% | $12,792 | $10,283 | +24.4% | | Diluted EPS | $0.19 | $0.13 | +46.2% | $0.45 | $0.36 | +25.0% | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) - Total stockholders' equity increased from **$132.6 million** at the end of 2018 to **$147.8 million** as of September 30, 2019[15](index=15&type=chunk) - The increase in equity was primarily driven by net income of **$12.8 million** for the nine-month period, partially offset by the repurchase of common stock for treasury amounting to **$4.7 million**[15](index=15&type=chunk)[68](index=68&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for the Nine Months Ended September 30 (in thousands) | Cash Flow Category | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $29,993 | $17,373 | | Net cash used in investing activities | $(4,271) | $(240) | | Net cash used in financing activities | $(8,163) | $(13,581) | | **Net increase in cash and cash equivalents** | **$17,467** | **$3,481** | - The significant increase in **cash from operations** was mainly due to higher net income and favorable changes in working capital, particularly a decrease in accounts receivable[17](index=17&type=chunk)[131](index=131&type=chunk) - Financing activities in 2019 primarily consisted of treasury stock repurchases (**$4.7 million**), tax withholdings related to net share settlements (**$2.6 million**), and term loan principal payments (**$0.9 million**)[17](index=17&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The company provides specialized online content for IT buyers and offers purchase-intent marketing and sales services to enterprise technology vendors via over **140 websites**[19](index=19&type=chunk) - Effective January 1, 2019, the company adopted ASU 2016-02, recognizing operating lease right-of-use assets of **$27.5 million** and lease liabilities of **$32.1 million** upon adoption[26](index=26&type=chunk)[50](index=50&type=chunk) Revenue by Geography (in thousands) | Region | Q3 2019 | Q3 2018 | 9M 2019 | 9M 2018 | | :--- | :--- | :--- | :--- | :--- | | North America | $22,812 | $20,947 | $66,444 | $60,983 | | International | $10,997 | $9,795 | $31,623 | $28,530 | | **Total** | **$33,809** | **$30,742** | **$98,067** | **$89,513** | - On December 24, 2018, the company entered into a **$25 million** term loan facility with Western Alliance Bank, maturing in December 2023[45](index=45&type=chunk) - During the nine months ended September 30, 2019, the company repurchased **317,724 shares** of common stock for an aggregate price of **$4.7 million** under its November 2018 stock repurchase program[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 and 9M 2019 financial performance, highlighting a 10% revenue increase, strong Priority Engine™ growth, and increasing longer-term contracts [Executive Summary](index=19&type=section&id=Executive%20Summary) - Revenues for the nine months ended September 30, 2019, increased by **10%** to **$98.1 million** compared to the same period in 2018[83](index=83&type=chunk) - The company's Priority Engine™ product revenues grew by **more than 30%** in the first nine months of 2019 compared to the prior year period[83](index=83&type=chunk) - Longer-term contracts accounted for **35%** of the company's revenue in Q3 2019, indicating a trend towards more stable, recurring revenue streams[83](index=83&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Comparison of Q3 2019 vs Q3 2018 (in thousands) | Item | Q3 2019 | Q3 2018 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $33,809 | $30,742 | $3,067 | 10% | | Gross Profit | $25,762 | $23,297 | $2,465 | 11% | | Operating Income | $6,911 | $3,384 | $3,527 | 104% | Comparison of 9M 2019 vs 9M 2018 (in thousands) | Item | 9M 2019 | 9M 2018 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $98,067 | $89,513 | $8,554 | 10% | | Gross Profit | $75,056 | $68,219 | $6,837 | 10% | | Operating Income | $17,373 | $12,371 | $5,002 | 40% | - The decrease in **General and Administrative expenses** in Q3 2019 was primarily due to lower stock-based compensation and the recovery of previously reserved accounts receivable[113](index=113&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents totaled **$52.1 million** at September 30, 2019, an increase of **$17.0 million** from December 31, 2018, driven by strong cash generation from operations[125](index=125&type=chunk) - Net cash provided by operating activities for the first nine months of 2019 was **$30.0 million**, a significant increase from **$17.4 million** in the same period of 2018[129](index=129&type=chunk)[130](index=130&type=chunk) - Days Sales Outstanding (DSO) improved to **67 days** at September 30, 2019, compared to **83 days** at December 31, 2018, indicating better management of receivables[128](index=128&type=chunk) - The company repurchased **317,724 shares** of common stock for **$4.7 million** during the first nine months of 2019[135](index=135&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency exchange rates and interest rates, stemming from international revenues and a variable-rate term loan - The company's primary market risks are **foreign currency exchange risk** and **interest rate risk**[149](index=149&type=chunk) - Approximately **25%** of Q3 2019 revenues were from international customers, exposing the company to foreign currency fluctuations, which are not currently hedged[150](index=150&type=chunk) - Interest rate risk stems from the variable-rate term loan, with **$24.0 million** outstanding at September 30, 2019, tied to the U.S. LIBOR rate[152](index=152&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2019[154](index=154&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during Q3 2019[155](index=155&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any material legal proceedings and is unaware of any pending litigation that would materially affect its business - As of the filing date, the company is **not a party to any material legal proceedings**[157](index=157&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2018 Annual Report on Form 10-K were identified as of September 30, 2019 - There have been **no material changes** to the risk factors disclosed in the company's 2018 Annual Report on Form 10-K[158](index=158&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the period and provides no information on the use of proceeds from registered securities - The company **did not have any sales of unregistered securities** during the reporting period[160](index=160&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including CEO/CFO certifications and XBRL financial data files - The exhibits filed include **certifications from the CEO and CFO** as required by Sarbanes-Oxley, and **XBRL instance documents** for financial statements[162](index=162&type=chunk) [Signatures](index=33&type=section&id=Signatures) The report was formally signed and dated November 6, 2019, by TechTarget, Inc.'s Chief Executive Officer and Chief Financial Officer - The report was signed on **November 6, 2019**, by the company's Chief Executive Officer and Chief Financial Officer[165](index=165&type=chunk)

TechTarget, Inc. (NASDAQ:TTGT) Q2 2019 Earnings Conference Call August 7, 2019 5:00 PM ET Company Participants Charles Rennick - VP, General Counsel & Corporate Secretary Gregory Strakosch - Co-Founder & Executive Chairman Michael Cotoia - CEO & Director Conference Call Participants Aaron Kessler - Raymond James & Associates Michael Malouf - Craig-Hallum Capital Group Marco Rodriguez - Stonegate Capital Markets Ryan Meyers - Lake Street Capital Markets Operator Good afternoon, and welcome to the TechTarget ...

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR Commission File Number: 1-33472 TECHTARGET, INC. (Exact name of registrant as specified in its charter) Delaware 04-3483216 (State or other jurisdiction of in ...

Financial Data and Key Metrics Changes - Q1 2019 revenue grew by 10% compared to the previous year [7] - Adjusted EBITDA increased by 53% year-over-year [7] - Gross margin improved to 77% in Q1 from 75% last year [7] - Adjusted EBITDA margin rose to 27% in Q1 from 19% last year [7] - Adjusted cash flow reached $7.1 million, up 492% year-over-year, representing 89% of adjusted EBITDA [7] - Long-term contracts accounted for 33% of revenue in the quarter [7] - Annual adjusted EBITDA guidance was raised from a range of $36 million to $37 million to a new range of $37 million to $39 million [7] Business Line Data and Key Metrics Changes - Priority Engine, a key product, grew by 37% [15] - Overall business growth was reported at 10% [15] Market Data and Key Metrics Changes - International markets saw strong growth of 15% year-over-year [25] - EMEA region experienced significant growth in Priority Engine and core business [25] - APJ region showed growth exceeding 37% for Priority Engine, although some core components were down slightly [28] - Latin America, having launched Priority Engine last year, showed significant growth despite small numbers [29] Company Strategy and Development Direction - The company is focusing on product development and enhancements, particularly for Priority Engine [18] - Investments are being made in sales enablement and customer success teams to improve client onboarding and success measurement [19][20] - The company aims to maintain strong gross margins between 75% and 80% and incremental EBITDA margins between 50% and 70% while making strategic investments [35] Management's Comments on Operating Environment and Future Outlook - Management noted that the international regions are lagging behind the U.S. in data adoption and new technologies [27] - The company is optimistic about growth opportunities in Latin America and expects the international business to remain about one-third of overall business [31] Other Important Information - A soft launch of Priority Engine Express, a lower-cost version for smaller entities, is underway, targeting companies with fewer than 100 employees [36][38] - The company is optimistic about the potential for this new offering to attract a new customer segment [39] Q&A Session Summary Question: How is IT Deal Alert performing relative to the traditional online business? - Management combined the numbers for IT Deal Alert and reported that Priority Engine grew by 37% while overall business grew by 10% [15] Question: What are the focus areas for the increased investments? - Investments are focused on product development, sales enablement, and customer success teams [18][19] Question: What is driving the different growth rates in international regions? - Growth in international regions is driven by the demand for purchase intent data, with Priority Engine being a catalyst for growth [27] Question: What are the expectations for North America and international revenue growth? - The international business is expected to maintain its proportion of overall business and growth patterns similar to Q1 [31] Question: Where will the uptick in operating expenses be seen? - Increased investments will be reflected in sales and marketing, product development, and customer success initiatives [32] Question: Can you provide details on Priority Engine Express? - Priority Engine Express is aimed at smaller companies, with a soft launch currently in progress, and is expected to generate revenue growth opportunities in 2020 [36][38]

PART I. FINANCIAL INFORMATION This section presents TechTarget's unaudited consolidated financial statements and management's discussion and analysis for the company [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents TechTarget's unaudited consolidated financial statements, including balance sheets, income statements, equity statements, and cash flows, with detailed accounting notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202019%20and%20December%2031%2C%202018) The Consolidated Balance Sheets present the company's financial position, detailing assets, liabilities, and equity as of March 31, 2019, and December 31, 2018 | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total assets | $202,612 | $176,463 | | Total liabilities | $67,487 | $43,878 | | Total stockholders' equity | $135,125 | $132,585 | [Consolidated Statements of Income and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) This statement outlines the company's financial performance for the three months ended March 31, 2019 and 2018, detailing revenues, expenses, and net income | Metric | Three Months Ended March 31, 2019 (in thousands) | Three Months Ended March 31, 2018 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------ | :------------- | | Revenues | $29,972 | $27,299 | $2,673 | 9.8% | | Gross profit | $22,960 | $20,574 | $2,386 | 11.6% | | Operating income | $4,375 | $2,594 | $1,781 | 68.7% | | Net income | $3,290 | $2,094 | $1,196 | 57.1% | | Basic Net income per common share | $0.12 | $0.08 | $0.04 | 50.0% | | Diluted Net income per common share | $0.12 | $0.07 | $0.05 | 71.4% | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) This statement details changes in stockholders' equity for the three months ended March 31, 2019 and 2018, including common stock, treasury stock, and retained earnings | Metric | Balance, December 31, 2018 (in thousands) | Balance, March 31, 2019 (in thousands) | | :-------------------------------- | :---------------------------------------- | :--------------------------------------- | | Total Stockholders' Equity | $132,585 | $135,125 | | Treasury Stock Cost | $(177,905) | $(181,030) | | Additional Paid-In Capital | $307,014 | $309,348 | | Retained Earnings | $3,637 | $6,927 | - The company purchased **220,297 shares** of common stock through stock buyback for **$3,125 thousand** during the three months ended March 31, 2019[15](index=15&type=chunk) - Stock-based compensation expense contributed **$3,179 thousand** to additional paid-in capital for the three months ended March 31, 2019[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) This statement presents cash flows from operating, investing, and financing activities for the three months ended March 31, 2019 and 2018 | Metric | Three Months Ended March 31, 2019 (in thousands) | Three Months Ended March 31, 2018 (in thousands) | YoY Change (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------ | | Net cash provided by operating activities | $9,804 | $3,795 | $6,009 | | Net cash used in investing activities | $(1,333) | $(98) | $(1,235) | | Net cash used in financing activities | $(4,283) | $(4,229) | $(54) | | Net increase (decrease) in cash and cash equivalents | $4,178 | $(544) | $4,722 | | Cash and cash equivalents at end of period | $38,851 | $25,422 | $13,429 | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed information on accounting policies, financial statement components, and disclosures, covering revenue, fair value, goodwill, leases, and stock compensation [Note 1. Organization and Operations](index=7&type=section&id=Note%201.%20Organization%20and%20Operations) TechTarget, Inc. provides specialized online content and purchase-intent marketing services for IT buyers and enterprise technology vendors - TechTarget, Inc. is a leading provider of specialized online content for enterprise IT product and service buyers, and purchase-intent marketing and sales services for enterprise technology vendors[20](index=20&type=chunk) - The company operates a network of over **140 websites**, each focusing on a specific IT sector (e.g., storage, security, networking) to support IT and business professionals' purchasing decisions[20](index=20&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=7&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note details significant accounting policies, including consolidation, estimates, revenue recognition, and the Q1 2019 adoption of new lease accounting guidance - The company adopted ASU No. 2016-02, Leases (Topic 842), in the first quarter of 2019 using a modified retrospective approach, resulting in the recording of operating lease assets (right-of-use) of **$27.5 million** and operating lease liabilities of **$32.1 million** as of January 1, 2019[27](index=27&type=chunk)[28](index=28&type=chunk)[49](index=49&type=chunk) - Revenue is recognized when performance obligations are satisfied by transferring promised goods or services to customers, following a five-step process[26](index=26&type=chunk) - **No material changes** to critical accounting policies and estimates occurred during the first three months of 2019, other than those related to leases[21](index=21&type=chunk) [Note 3. Revenues](index=9&type=section&id=Note%203.%20Revenues) This note disaggregates revenue by geographic area and details contract liabilities, including deferral and recognition of unearned revenue | Geographic Area | Three Months Ended March 31, 2019 (in thousands) | Three Months Ended March 31, 2018 (in thousands) | | :---------------- | :--------------------------------------------- | :--------------------------------------------- | | North America | $20,278 | $18,850 | | International | $9,694 | $8,449 | | Total Revenues | $29,972 | $27,299 | | Contract Liabilities Activity | Amount (in thousands) | | :---------------------------- | :-------------------- | | Balance at December 31, 2018 | $5,573 | | Deferral of revenue | $1,946 | | Recognition of previously unearned revenue | $(1,925) | | Balance at March 31, 2019 | $5,594 | [Note 4. Fair Value Measurements](index=10&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note describes fair value measurements of financial assets, categorizing them into Level 1, Level 2, and Level 3 inputs | Asset (December 31, 2018) | Fair Value (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :------------------------ | :------------------------ | :--------------------- | :--------------------- | :--------------------- | | Money market funds | $15,070 | $15,070 | - | - | | Short-term investments | $500 | - | $500 | - | | Total assets | $15,570 | $15,070 | $500 | - | - As of March 31, 2019, there are **no investments measured at fair value** as remaining short-term investments matured in Q1 2019, and money market accounts are now considered cash[36](index=36&type=chunk) [Note 5. Cash, Cash Equivalents, and Investments](index=10&type=section&id=Note%205.%20Cash%2C%20Cash%

PART I [Business](index=3&type=section&id=Item%201.%20Business) TechTarget is a global leader in purchase intent-driven marketing and sales services for enterprise technology vendors - The company operates a network of over **140 websites** focused on specific IT sectors, serving as a key resource for IT and business professionals[13](index=13&type=chunk) - Key Operational Metrics (as of Dec 31, 2018) | Metric | Value | | :--- | :--- | | Registered Members | ~20.0 million | | Customers in 2018 | ~1,300 | - The company's core strategy includes continuing innovation in data-enabled marketing services (like IT Deal Alert™), expanding long-term subscription contracts, growing its international presence (**32% of 2018 revenues from international programs**), and selectively acquiring complementary businesses[27](index=27&type=chunk)[29](index=29&type=chunk) - TechTarget's main product suites are IT Deal Alert™ (data-driven services like Priority Engine™), Demand Solutions (lead generation through content like white papers and webcasts), and Brand Solutions (display advertising and microsites)[36](index=36&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - Primary competitors include media companies like J2 Global, Madison Logic, QuinStreet, and International Data Group, as well as data-oriented businesses such as 6sense and Bombora[49](index=49&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to its business operations, data privacy, and financial condition - The business is heavily dependent on advertising spending from the IT industry, which is cyclical and can fluctuate significantly, impacting revenues[61](index=61&type=chunk)[62](index=62&type=chunk) - A significant portion of revenue comes from short-term contracts (typically six months or less), which may not be renewed, creating revenue uncertainty[66](index=66&type=chunk) - International operations, which accounted for **32% of online revenues from geo-targeted campaigns in 2018**, face risks from currency fluctuations, regulatory changes, and economic uncertainty like Brexit, with approximately **12% of revenues from UK-based customers**[72](index=72&type=chunk)[74](index=74&type=chunk) - The company faces significant risks from evolving data privacy laws, particularly the EU's General Data Protection Regulation (GDPR), which imposes stringent requirements and substantial penalties for non-compliance[92](index=92&type=chunk) - As of December 31, 2018, the company had **$93.7 million of goodwill** on its balance sheet, which is subject to impairment risk that could negatively impact earnings[112](index=112&type=chunk) - A limited number of stockholders, including directors and executive officers, beneficially own approximately **42% of outstanding common stock**, giving them substantial influence over corporate matters[118](index=118&type=chunk) [Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments[119](index=119&type=chunk) [Properties](index=29&type=section&id=Item%202.%20Properties) The company's global headquarters is a leased 74,000 sq ft office in Newton, MA, with smaller leased offices worldwide - As of December 31, 2018, the company leases approximately **74,000 square feet** for its global headquarters in Newton, Massachusetts, with the lease term running through December 31, 2029, and an option to extend for an additional five years[120](index=120&type=chunk) [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company is not a party to any material legal proceedings or aware of any materially impactful pending litigation - The company is not currently a party to any material legal proceedings[121](index=121&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TechTarget's common stock trades on Nasdaq under 'TTGT', with no dividends paid and a **$25.0 million** stock repurchase program - The company's common stock is listed on the Nasdaq Global Market under the trading symbol **\"TTGT\"**[123](index=123&type=chunk) - The company has not paid any cash dividends in the last three fiscal years and does not anticipate paying them in the foreseeable future, intending to retain earnings for business development[125](index=125&type=chunk) - Issuer Purchases of Equity Securities (Q4 2018) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Value (Approx.) | | :--- | :--- | :--- | :--- | | Nov 2018 | 30,316 | $15.13 | $458,700 | | Dec 2018 | 213,109 | $12.49 | $2,661,700 | | **Total Q4** | **243,425** | **$12.82** | **$3,120,400** | - In November 2018, the Board of Directors approved a new stock repurchase program authorizing the purchase of up to **$25.0 million** of its common stock, which expires in December 2020, with approximately **$21.9 million** remaining available as of December 31, 2018[132](index=132&type=chunk) [Selected Financial Data](index=33&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of key financial data, including revenues, net income, and Adjusted EBITDA - Selected Financial Data (2014-2018) | Metric (in thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$121,333** | **$108,556** | **$106,625** | **$111,826** | **$106,203** | | Operating Income | $16,621 | $10,410 | $6,791 | $12,170 | $7,459 | | **Net Income** | **$12,955** | **$6,803** | **$2,419** | **$7,186** | **$4,081** | | Diluted EPS | $0.45 | $0.24 | $0.08 | $0.21 | $0.12 | | **Adjusted EBITDA** | **$30,282** | **$21,958** | **$18,536** | **$24,499** | **$21,459** | | Total Assets | $176,463 | $173,169 | $170,077 | $177,859 | $177,484 | | Total Stockholders' Equity | $132,585 | $120,747 | $117,563 | $160,001 | $155,846 | - Reconciliation of Net Income to Adjusted EBITDA (2018) | Line Item (in thousands) | Amount | | :--- | :--- | | Net income | $12,955 | | Interest expense, net | $1,300 | | Provision for income taxes | $1,888 | | Depreciation and amortization | $4,548 | | **EBITDA** | **$20,691** | | Stock-based compensation | $9,113 | | Other expense, net | $478 | | **Adjusted EBITDA** | **$30,282** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, revenue growth, shift to longer-term contracts, and liquidity position - Financial Performance Summary (2018 vs. 2017) | Metric (in thousands) | 2018 | 2017 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $121,333 | $108,556 | 12% | | Gross Profit | $92,374 | $80,220 | 15% | | Operating Income | $16,621 | $10,410 | 60% | | Net Income | $12,955 | $6,803 | 90% | - Online Revenue Breakdown (2018 vs. 2017) | Revenue Stream (in thousands) | 2018 | 2017 | % Change | | :--- | :--- | :--- | :--- | | **Total IT Deal Alert** | **$59,049** | **$49,529** | **19%** | | Total Core Online | $62,284 | $58,859 | 6% | | **Total International Online** | **$38,673** | **$35,180** | **10%** | | Total North America Online | $82,660 | $73,208 | 13% | - The company phased out its events product line in 2017 to focus on its data-driven online offerings, with events revenue at **zero in 2018**, down from **$0.2 million in 2017** and **$4.8 million in 2016**[151](index=151&type=chunk)[159](index=159&type=chunk) - Cash flow from operations increased to **$23.9 million in 2018** from **$18.6 million in 2017**, primarily due to higher net income[217](index=217&type=chunk)[219](index=219&type=chunk) - In December 2018, the company entered into a new five-year, **$25.0 million term loan agreement** with Western Alliance Bank, replacing its previous credit facility[228](index=228&type=chunk)[235](index=235&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency exchange fluctuations and interest rate changes, with quantified impacts - The company is exposed to foreign currency risk as **26% of its 2018 revenues** were from customers with billing addresses outside the U.S., where a hypothetical **10% unfavorable movement** in foreign exchange rates would have decreased operating income by approximately **$125,000** for the year[249](index=249&type=chunk) - Interest rate risk stems from the **$25.0 million variable-rate term loan**, where a **200 basis point (2%) increase** in interest rates would increase annual interest expense by approximately **$0.5 million**[252](index=252&type=chunk) [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for 2018, including the independent auditor's report - Consolidated Balance Sheet Highlights (as of Dec 31) | Metric (in thousands) | 2018 | 2017 | | :--- | :--- | :--- | | Cash and cash equivalents | $34,673 | $25,966 | | Total Current Assets | $70,118 | $67,608 | | Goodwill | $93,687 | $93,793 | | **Total Assets** | **$176,463** | **$173,169** | | Total Current Liabilities | $14,553 | $23,986 | | Long-term portion of term loan | $23,714 | $22,339 | | **Total Liabilities** | **$43,878** | **$52,422** | | **Total Stockholders' Equity** | **$132,585** | **$120,747** | - Consolidated Statement of Income (Year Ended Dec 31) | Metric (in thousands) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Total Revenues | $121,333 | $108,556 | $106,625 | | Gross Profit | $92,374 | $80,220 | $76,408 | | Operating Income | $16,621 | $10,410 | $6,791 | | **Net Income** | **$12,955** | **$6,803** | **$2,419** | - The company adopted the new revenue recognition standard, ASC 606, on January 1, 2018, using the modified retrospective method, resulting in a one-time reduction of deferred revenue by **$3.5 million**[274](index=274&type=chunk)[308](index=308&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=80&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting principles or financial disclosure - None reported[365](index=365&type=chunk) [Controls and Procedures](index=80&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2018 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2018[367](index=367&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2018 that materially affected, or are reasonably likely to materially affect, internal controls[368](index=368&type=chunk) - The independent registered public accounting firm, BDO USA, LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2018[372](index=372&type=chunk)[373](index=373&type=chunk) [Other Information](index=82&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[380](index=380&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=82&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2019 Proxy Statement - The required information for this item is incorporated by reference from the company's 2019 Proxy Statement[382](index=382&type=chunk) - The company has adopted a Code of Business Conduct and Ethics, which is available on its investor relations website[384](index=384&type=chunk) [Executive Compensation](index=82&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's 2019 Proxy Statement - The required information for this item is incorporated by reference from the company's 2019 Proxy Statement[385](index=385&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=82&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and related stockholder matters is incorporated by reference from the company's 2019 Proxy Statement - The required information for this item is incorporated by reference from the company's 2019 Proxy Statement[386](index=386&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=82&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2019 Proxy Statement - The required information for this item is incorporated by reference from the company's 2019 Proxy Statement[387](index=387&type=chunk) [Principal Accountant Fees and Services](index=82&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2019 Proxy Statement - The required information for this item is incorporated by reference from the company's 2019 Proxy Statement[388](index=388&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=83&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and exhibits filed with the Form 10-K, with financial statement schedules omitted - This item lists the financial statements and exhibits filed with the Form 10-K, with financial statement schedules omitted[391](index=391&type=chunk) [Form 10-K Summary](index=86&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for this item - None[398](index=398&type=chunk)

TechTarget, Inc. (NASDAQ:TTGT) Q4 2018 Earnings Conference Call February 6, 2019 5:00 PM ET Company Participants Charles Rennick - General Counsel Greg Strakosch - Executive Chairman Mike Cotoia - Chief Executive Officer Dan Noreck - Chief Financial Officer Conference Call Participants Eric Martinuzzi - Lake Street Mike Malouf - Craig-Hallum Capital Group Marco Rodriguez - Stonegate Capital Aaron Kessler - Raymond James Operator Good afternoon and welcome to the TechTarget Incorporated Fourth Quarter and Fu ...