Technology media company TechTarget, Inc. (NASDAQ: TTGT)
today announced financial results for the three months and year
ended December 31, 2013.
“I am proud that 2013 is TechTarget’s 10th consecutive year of
both positive adjusted EBITDA and cash flow” said Greg Strakosch,
TechTarget CEO. “Despite the continued softness in IT spending, we
are forecasting a return to double-digit revenue growth in 2014,
based on the positive momentum of our new data analytics suite of
products, IT Deal AlertTM and the continued 20% plus online revenue
growth of our international operations.”
Q4 2013 online revenue decreased by 3% to $22.0 million compared
to Q4 2012. Online revenues represented 93% of total Q4 2013
revenues. Q4 2013 events revenue decreased by 37% to $1.7 million
compared to Q4 2012 and represented 7% of total Q4 2013 revenues.
Total Q4 2013 revenues decreased 6% to $23.7 million compared to Q4
2012. Total 2013 online revenue decreased by 10% to $79.7 million
compared to 2012. Online revenues represented 90% of total 2013
revenues. Total 2013 events revenue decreased by 26% to $8.8
million compared to 2012 and represented 10% of total 2013
revenues. Total 2013 revenues decreased 11% to $88.4 million
compared to 2012.
Adjusted EBITDA (earnings before interest, other income and
expense, income taxes, depreciation and amortization, as further
adjusted to eliminate stock-based compensation) for Q4 2013
decreased 37% to $3.6 million compared to $5.8 million for Q4
2012.
Total gross profit margin for Q4 2013 was 72%, compared to 74%
for Q4 2012. Online gross profit margin decreased slightly to 74%
in Q4 2013, as compared to 75% in Q4 2012. Events gross profit
margin decreased to 54% for Q4 2013, as compared to 63% for Q4
2012. Total gross profit margin for full year 2013 was 69%,
compared to 72% for full year 2012. Online gross profit margin
decreased to 71% in full year 2013 compared to 73% in full year
2012. Events gross profit margin decreased to 57% for full year
2013, as compared to 64% for full year 2012.
Q4 2013 was slightly below break-even, compared to net income of
$1.0 million in Q4 2012. Adjusted net income (net income adjusted
to eliminate amortization, stock-based compensation expense and the
related income tax impact of these charges) for Q4 2013 was $1.4
million compared to $3.1 million for Q4 2012. Net loss per basic
share was $0.00 for Q4 of 2013 compared with net income per basic
share of $0.03 for Q4 of 2012. Adjusted net income per share
(adjusted net income divided by adjusted weighted average diluted
shares outstanding) for Q4 2013 was $0.04 compared to $0.08 for Q4
2012. Net loss was $1.8 million for full year 2013 compared to net
income of $4.0 million for full year 2012. Adjusted net income (net
income adjusted to eliminate amortization, stock-based compensation
expense and the related income tax impact of these charges) for
full year 2013 was $3.4 million compared to $10.1 million for the
full year 2012. Net loss per basic share was $0.05 for full year
2013 compared with net income per basic share of $0.10 for the full
year 2012. Adjusted net income per share (adjusted net income
divided by adjusted weighted average diluted shares outstanding)
for the full year 2013 was $0.09 compared to $0.25 for the full
year 2012.
The Company’s balance sheet and financial position remain
strong. As of December 31, 2013, the Company’s cash, cash
equivalents and investments totaled $33.8 million, and the Company
had no outstanding bank debt. In the quarter, the Company used
approximately $35.5 million to buy shares of its common stock in a
tender offer that was completed on October 25, 2013.
Recent Company Highlights
- 2013 was TechTarget’s 10th consecutive
year of posting both positive adjusted EBITDA and cash flow. In
2013, the Company used its healthy cash flow to re-purchase 9.7
million shares for $48 million. In the past 3 years, the company
has re-purchased 15.7 million shares returning $84 million to
shareholders. The Company has $34 million in cash and investments
and no debt.
- IT Deal Alert continues to gain
traction in the market with over 100 customers using the service in
Q4, generating approximately $2.8 million in revenue in the quarter
and $4 million in 2013. The Company forecasts that IT Deal Alert
revenue will grow at least 20% sequentially in Q1 and at least
triple in 2014.
- International online revenue grew over
20% in 2013, which is the 5th consecutive year of international
online revenue growth over 20%, since the company commenced its
strategy of migrating from a partnership model to international
direct operations. The Company is forecasting international online
revenue growth of 20% to 25% in 2014.
Financial Guidance
In Q1 2014, we are forecasting our return to growth. We expect
online revenues will be up between 5% and 10% versus the same
period a year ago. For 2014, we expect online revenues will grow in
the double-digits. Due to the inherent operating leverage in our
business model, we forecast that this revenue growth will translate
into at least 50% growth in adjusted EBITDA.
We expect overall revenues in Q1 of 2014 to be between $20.1 and
$21.2 million. We expect online revenues to be between $19.3 and
$20.3 million. We expect event revenues to be between $0.8 and $0.9
million. We expect adjusted EBITDA to be between break-even and
$1.0 million.
Conference Call and Webcast
TechTarget will discuss these financial results in a conference
call at 5:00 p.m. (Eastern Time) today (February 12, 2014).
Supplemental financial information and our Chief Executive
Officer’s Letter to Shareholders will be posted to the Investor
Information section of our website simultaneously with this press
release.
NOTE: Our Chief Executive
Officer’s Letter to Shareholders will not be read on the conference
call. The conference call will include only brief remarks
followed by questions and answers.
The public is invited to listen to a live webcast of
TechTarget’s conference call, which can be accessed on the Investor
Information section of our website at
http://investor.techtarget.com. The conference call can also be
heard via telephone by dialing 1-888-317-6016 (US callers),
1-855-669-9657 (Canadian callers) or 1-412-317-6016 (International
callers).
For those investors unable to participate in the live conference
call, a replay of the conference call will be available via
telephone beginning February 12, 2014 one (1) hour after the
conference call through March 12, 2014 at 9:00 a.m. ET. To listen
to the replay, for US, dial 1-877-344-7529 and use the conference
number 10039337. Canadian callers should dial 1-855-669-9658
and also use the conference number 10039337. International callers
should dial 1-412-317-0088 and also use the conference number
10039337. The webcast replay will also be available for replay on
http://investor.techtarget.com during the same period.
Non-GAAP Financial Measures
This release and the accompanying tables include a discussion of
adjusted EBITDA, adjusted EBITDA margin, adjusted net income and
adjusted net income per share, all of which are non-GAAP financial
measures which are provided as a complement to results provided in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”). The term “adjusted EBITDA”
refers to a financial measure that we define as earnings before net
interest, other income and expense, income taxes, depreciation and
amortization, as further adjusted to exclude stock-based
compensation and restructuring charges, if any. The term “adjusted
EBITDA margin” refers to a financial measure which we define as
adjusted EBITDA as a percentage of total revenues. The term
“adjusted net income” refers to a financial measure which we define
as net income adjusted for amortization, stock-based compensation
and restructuring charges, if any, as further adjusted for the
related income tax impact of the adjustments. The term “adjusted
net income per share” refers to a financial measure which we define
as adjusted net income divided by adjusted weighted average diluted
shares outstanding. These non-GAAP measures should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP results.
In addition, our definition of adjusted EBITDA, adjusted EBITDA
margin, adjusted net income and adjusted net income per share may
not be comparable to the definitions as reported by other
companies. We believe adjusted EBITDA, adjusted EBITDA margin,
adjusted net income and adjusted net income per share are relevant
and useful information because it provides us and investors with
additional measurements to compare the Company’s operating
performance. These measures are part of our internal management
reporting and planning process and are primary measures used by our
management to evaluate the operating performance of our business,
as well as potential acquisitions. The components of adjusted
EBITDA include the key revenue and expense items for which our
operating managers are responsible and upon which we evaluate their
performance. In the case of senior management, adjusted EBITDA is
used as one of the principal financial metrics in their annual
incentive compensation program. Adjusted EBITDA is also used for
planning purposes and in presentations to our board of directors.
Adjusted net income is useful to us and investors because it
presents an additional measurement of our financial performance,
taking into account depreciation, which we believe is an ongoing
cost of doing business, but excluding the impact of certain
non-cash expenses and items not directly tied to the core
operations of our business. Furthermore, we intend to provide these
non-GAAP financial measures as part of our future earnings
discussions and, therefore, the inclusion of these non-GAAP
financial measures will provide consistency in our financial
reporting. A reconciliation of these non-GAAP measures to GAAP is
provided in the accompanying tables.
Forward Looking Statements
Certain matters included in this press release may be considered
to be “forward-looking statements” within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934, as
amended by the Private Securities Litigation Reform Act of 1995.
Those statements include statements regarding the intent, belief or
current expectations of the Company and members of our management
team. All statements contained in this press release, other than
statements of historical fact, are forward-looking statements,
including those regarding: guidance on our future financial results
and other projections or measures of our future performance; our
expectations concerning market opportunities and our ability to
capitalize on them; and the amount and timing of the benefits
expected from acquisitions, from new products or services and from
other potential sources of additional revenue. Investors and
prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ
materially from those contemplated by such forward-looking
statements. These statements speak only as of the date of this
press release and are based on our current plans and expectations,
and they involve risks and uncertainties that could cause actual
future events or results to be different than those described in or
implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to, those relating to:
market acceptance of our products and services; relationships with
customers, strategic partners and our employees; difficulties in
integrating acquired businesses; and changes in economic or
regulatory conditions or other trends affecting the Internet,
Internet advertising and information technology industries. These
and other important risk factors are discussed or referenced in our
Annual Report on Form 10-K filed with the Securities and Exchange
Commission, under the heading “Risk Factors” and elsewhere, and any
subsequent periodic or current reports filed by us with the SEC.
Except as required by applicable law or regulation, we do not
undertake any obligation to update our forward-looking statements
to reflect future events or circumstances.
About TechTarget
TechTarget (NASDAQ: TTGT) is the online intersection of serious
technology buyers, targeted technical content and technology
providers worldwide. Our extensive network of online and social
media, powered by TechTarget’s Activity Intelligence™ platform,
redefines how technology marketers view and engage technology
buyers based on their active projects, specific technical
priorities and business needs. With more than 120
technology-specific websites and a wide selection of custom
advertising, branding, lead generation, and sales enablement
solutions, TechTarget delivers unparalleled reach and innovative
opportunities to drive technology marketing success around the
world.
TechTarget has offices in Atlanta, Beijing, Boston, Cincinnati,
London, Munich, Paris, San Francisco, Singapore and Sydney.
To learn how you can engage with serious technology buyers
worldwide, visit techtarget.com and follow us @TechTarget.
(C) 2014 TechTarget, Inc. All rights reserved. TechTarget and
the TechTarget logo are registered trademarks, and IT Deal Alert
and Activity Intelligence are trademarks of TechTarget. All other
trademarks are the property of their respective owners.
TECHTARGET, INC.Consolidated
Statements of Operations(in $000's, except per share
amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2013 2012 2013 2012
(Unaudited) Revenues: Online $ 22,033 $ 22,636 $ 79,709 $
88,192 Events 1,706 2,723 8,787 11,799
Total revenues 23,739 25,359 88,496 99,991
Cost of revenues:
Online(1) 5,782 5,695 23,362 23,513 Events(1) 787
1,012 3,771 4,301 Total cost of revenues 6,569
6,707 27,133 27,814
Gross profit
17,170 18,652 61,363 72,177
Operating expenses:
Selling and marketing(1) 9,934 9,246 36,920 36,718 Product
development(1) 1,618 1,866 6,715 7,521 General and
administrative(1) 3,609 3,145 14,156 13,206 Depreciation 1,005 851
3,823 3,279 Amortization of intangible assets 467 697
2,223 3,351 Total operating expenses 16,633
15,805 63,837 64,075
Operating income (loss)
537 2,847 (2,474 ) 8,102 Interest (expense) income, net (35
) 22 (20 ) 107 Income (loss) before provision
for (benefit from) income taxes 502 2,869 (2,494 ) 8,209 Provision
for (benefit from) income taxes 503 1,847 (657
) 4,185 Net (loss) income $ (1 ) $ 1,022 $ (1,837 ) $ 4,024
Net (loss) income per common share: Basic $ 0.00 $ 0.03 $ (0.05 ) $
0.10 Net (loss) income per common share: Diluted $ 0.00 $ 0.02 $
(0.05 ) $ 0.10 Weighted average common shares outstanding: Basic
33,363 40,469 37,886 40,211 Weighted
average common shares outstanding: Diluted 33,363
40,956 37,886 40,910
(1) Amounts include stock-based
compensation expense as follows:
Cost of online revenues $ 45 $ 52 $ 173 $ 202 Cost of events
revenues 6 6 18 18 Selling and marketing 815 675 2,751 2,888
Product development 58 71 212 265 General and administrative 633
553 2,431 1,894
TECHTARGET, INC.
Reconciliation of Net (Loss) Income to
Adjusted EBITDA
(in $000’s)
For the Three Months Ended
December 31,
For the Twelve Months Ended
December 31,
2013 2012 2013 2012
(Unaudited) Net (loss) income $
(1 ) $ 1,022 $ (1,837 )
$ 4,024 Interest expense (income), net 35 (22 ) 20
(107 )
Provision for (benefit from) income
taxes
503 1,847 (657 ) 4,185
Depreciation
1,005 851 3,823 3,279 Amortization of purchase price adj. 55 — 201
— Amortization of intangible assets 467 697
2,223 3,351
EBITDA 2,064
4,395 3,773 14,732 Stock-based
compensation expense 1,557 1,357 5,585
5,267
Adjusted EBITDA $ 3,621 $
5,752 $ 9,358 $ 19,999
TECHTARGET, INC.Reconciliation
of Net (Loss) Income to Adjusted Net Income and Net (Loss) Income
per Diluted Share to
Adjusted Net Income per Share
(in $000's, except per share
amounts)
For the Three Months Ended
December 31,
For the Twelve Months Ended
December 31,
2013 2012 2013 2012
(Unaudited) Net (loss) income $
(1 ) $ 1,022 $ (1,837 )
$ 4,024 Amortization of intangible assets 467 697
2,223 3,351 Stock-based compensation expense 1,557 1,357 5,585
5,267 Amortization of purchase price adjustment 55 — 201 — Impact
of income taxes (646 ) 29 (2,775 )
(2,579 )
Adjusted net income $ 1,432 $
3,105 $ 3,397 $ 10,063
Net (loss) income per diluted share $ 0.00
$ 0.02 $ (0.05 )
$ 0.10
Weighted average diluted shares outstanding
33,363 40,956 37,886
40,910 Adjusted net income per share $
0.04 $ 0.08 $ 0.09 $
0.25 Adjusted weighted average diluted shares
outstanding 34,100 40,956
38,430 40,910
Options, warrants and restricted stock,
treasury method included in adjusted weighted average
diluted shares above
737 — 544 —
Weighted average
diluted shares outstanding 33,363
40,956 37,886 40,910
TECHTARGET, INC.Financial Guidance for the Three
Months Ended March 31, 2014(in $000's)
For the Three Months
Ended March 31, 2014
Range Revenues $ 20,100
$ 21,200
Adjusted EBITDA $ (16 )
$ 984
Depreciation, amortization and stock-based compensation 3,060 3,060
Interest and other income, net (10 ) (10 ) Benefit from income
taxes (1,415 ) (950 )
Net loss $
(1,651 )
$ (1,116 )
TechTargetInvestor InquiriesJanice Kelliher, 617-431-9449Chief
Financial Officerjkelliher@techtarget.comorMedia InquiriesPeter
Ross, 617-431-9668Vice President, Corporate
Marketingpross@techtarget.com
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