TechTarget, Inc. (NASDAQ: TTGT) today announced financial results
for the second quarter ended June 30, 2008. Total revenues for the
second quarter increased by 19% to $29.4 million compared to $24.6
million for the comparable prior year quarter. Online revenue
increased by 28% to $20.8 million compared to $16.3 million for the
second quarter of 2007 and represented 71% of total revenues.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and
amortization, as further adjusted for stock-based compensation) for
the second quarter decreased by 1% to $7.5 million compared to $7.6
million for the comparable prior year quarter. �Despite a very
tough macro environment, we are proud that we grew online revenue
by 28% and maintained 26% adjusted EBITDA margins,� said Greg
Strakosch, Chairman and CEO of TechTarget. �We look at the economic
downturn as an opportunity to strengthen our competitive position
and gain market share by taking advantage of the long term trends
that are clearly in our favor.� Total gross profit margin for the
quarter was 69% compared to 70% for the comparable prior year
quarter. Online gross profit margin for the quarter was 74%
compared to 76% for the comparable prior year quarter. Net income
for the quarter was $1.7 million compared to $3.2 million for the
comparable prior year quarter. Adjusted net income (net income
adjusted for amortization and stock-based compensation, as further
adjusted for the related income tax impact) was $4.3 million
compared to $4.9 million for the comparable prior year quarter. Net
income per diluted share for the quarter was $0.04 compared to net
income per diluted share of $0.08 on a pro forma basis for the
comparable prior year quarter. Adjusted net income per share
(adjusted net income divided by adjusted weighted average diluted
shares outstanding) for the quarter was $0.10 compared to $0.13 on
a pro forma basis for the comparable prior year quarter. As of June
30, 2008, TechTarget had $67.7 million�of cash, cash equivalents
and short term investments, and bank debt of $4.5 million. Recent
Company Highlights Launched DesktopReview.com� to support the
information requirements of IT professionals researching which
desktop computers to purchase. DesktopReview.com is the fifth site
offered under the TechnologyGuide.com� banner, and joins
NotebookReview.com� in supporting the information needs of buyers
of personal computers. ITKnowledgeExchange.com�, IT social media
Web site, was named as one of the �10 Great Web Sites� in the June
Media Business magazine special report. All content within this
community is peer generated and includes contributions by industry
experts interested in supporting the IT community with their
expertise. Other sites recognized by Media Business include
CNNMoney (Time Warner), MarketWatch (Dow Jones & Co.), and
Aviation Week (McGraw-Hill Cos.). Won 12 Awards for editorial
excellence from independent organizations, including eight Awards
of Excellence from the American Society of Business Publication
Editors (ASBPE) and four awards from Trade Association and Business
Publications International (TABPI). Named for the eighth
consecutive year by BtoB Magazine to the �Media Power 50� list of
the 50 most powerful business-to-business advertising venues.
TechTarget was ranked #8 overall. Other venues listed in the 2008
Top 10 of the Media Power 50 include Google, The Wall Street
Journal, BusinessWeek, CNNMoney and Forbes. Financial guidance In
the third quarter of 2008, the Company expects total revenues to be
within the range of $25.0 million to $26.0 million and adjusted
EBITDA to be within the range of $4.3 million to $5.1 million. As
previously announced on July 24, 2008, the Company expects 2008
total annual revenues to be within the range of $108 and $112
million and adjusted EBITDA to be within the range of $25 and $27
million. Additionally, the Company expects its online revenue for
2008 to grow between 24% - 30%. Conference Call and Webcast
TechTarget will discuss these financial results in a conference
call at 4:30 p.m. (Eastern Time) today (August 13, 2008). The
public is invited to listen to a live webcast of TechTarget�s
conference call, which can be accessed on the Investor Relations
section of our website at http://investor.techtarget.com/. The
conference call can also be heard via telephone by dialing (888)
713-4199 (US callers) or 617-213-4861 (International callers) ten
minutes prior to the call and referencing participant pass code
44203165 for both domestic and international callers. Participants
may pre-register for the call at:
https://www.theconferencingservice.com/prereg/
key.process?key=PJVWNDMGT Pre-registrants will be issued a pin
number to use when dialing into the live call which will provide
quick access to the conference by bypassing the operator upon
connection. (Due to the length of the above URL, it may be
necessary to copy and paste it into your Internet browser's URL
address field. You may also need to remove an extra space in the
URL if one exists.) For those investors unable to participate in
the live conference call, a replay of the conference call will be
available via telephone beginning August 13, 2008 at 6:30 p.m. ET
through August 27, 2008 at 11:59 p.m. (ET). To listen to the
replay, dial 888-286-8010 and use the pass code 55515502.
International callers should dial 617-801-6888 and also use the
pass code 55515502 to listen to the replay. The webcast replay will
also be available for replay on http://investor.techtarget.com/
during the same period. Non-GAAP Financial Measures This press
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, income taxes, depreciation, and amortization, as further
adjusted for stock-based compensation. 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 and stock-based compensation, as
further adjusted for the related income tax impact for the specific
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 the principal financial
metric 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, a leading online Information Technology (IT) media
company, provides IT companies with ROI-focused marketing programs
to generate leads, shorten sales cycles, and grow revenues. With
its network of over 50 technology-specific Web sites and over 6.6
million registered members, TechTarget is a primary Web destination
for IT professionals researching which products to purchase. The
company is also a leading provider of independent, peer and vendor
content, a leading distributor of white papers, and a leading
producer of vendor-sponsored Webcasts and Podcasts for the IT
market. Its Web sites are complemented by numerous invitation-only
events and two magazines. TechTarget provides proven lead
generation and branding programs to over 1,100 advertisers
including Cisco, Dell, EMC, HP, IBM, Intel, Microsoft, SAP and
Symantec. (C) 2008 TechTarget, Inc. All rights reserved. TechTarget
and the TechTarget logo are registered trademarks, and
DesktopReview.com, ITKnowledgeExchange.com, and The IT Media ROI
Experts are trademarks, of TechTarget, Inc. All other trademarks
are the property of their respective owners. TechTarget, Inc.
Consolidated Balance Sheets (in $000's) � � June 30, 2008 December
31, 2007 Assets (Unaudited) Current assets: Cash and cash
equivalents $ 49,369 $ 10,693 Short-term investments 18,348 51,308
Accounts receivable, net of allowance for doubtful accounts 17,131
15,198 Prepaid expenses and other current assets 4,837 1,962
Deferred tax assets � 2,743 � 2,947 Total current assets 92,428
82,108 � Property and equipment, net 3,780 4,401 Goodwill 88,326
88,326 Intangible assets, net of accumulated amortization 19,177
21,939 Deferred tax assets 3,354 2,910 Other assets � 198 � 203 �
Total assets $ 207,263 $ 199,887 � Liabilities and Stockholders'
Equity Current liabilities: Current portion of bank term loan
payable $ 3,000 $ 3,000 Accounts payable 4,158 2,919 Income taxes
payable 208 1,031 Accrued expenses and other current liabilities
1,803 2,473 Accrued compensation expenses 688 2,600 Deferred
revenue � 5,440 � 3,761 Total current liabilities 15,297 15,784 �
Long-term liabilities: Other liabilities 392 455 Bank term loan
payable, net of current portion � 1,500 � 3,000 Total liabilities
17,189 19,239 � Commitments - - � Stockholders' equity: Common
stock 42 41 Additional paid-in capital 217,577 209,773 Warrants 3
13 Accumulated other comprehensive loss (91 ) (102 ) Accumulated
deficit � (27,457 ) � (29,077 ) Total stockholders' equity 190,074
180,648 � Total liabilities and stockholders' equity $ 207,263 $
199,887 TechTarget, Inc. Consolidated Statements of Operations (in
$000's, except�per share information) � � Three Months Ended June
30, Six Months Ended June 30, 2008 � 2007 2008 � 2007 (Unaudited)
Revenues: Online $ 20,844 $ 16,330 $ 39,707 $ 30,039 Events 7,262
6,350 11,247 9,289 Print � 1,274 � 1,924 � 2,296 � 3,621 Total
revenues � 29,380 � 24,604 � 53,250 � 42,949 � Cost of revenues:
Online (1) 5,481 3,900 10,650 7,425 Events (1) 2,923 2,410 4,750
3,782 Print (1) � 632 � 999 � 1,178 � 2,128 Total cost of revenues
� 9,036 � 7,309 � 16,578 � 13,335 � Gross profit 20,344 17,295
36,672 29,614 � Operating expenses: Selling and marketing (1) 8,885
6,388 17,329 12,540 Product development (1) 2,890 1,596 5,652 3,344
General and administrative (1) 3,459 2,943 7,254 5,553 Depreciation
581 364 1,305 694 Amortization of intangible assets � 1,332 � 1,041
� 2,812 � 1,800 Total operating expenses � 17,147 � 12,332 � 34,352
� 23,931 � Operating income 3,197 4,963 2,320 5,683 � Interest
income (expense): Interest income 368 655 900 1,015 Interest
expense � (100 ) � (278 ) � (214 ) � (705 ) Total interest income
(expense) � 268 � 377 � 686 � 310 � Income before provision for
income taxes 3,465 5,340 3,006 5,993 � Provision for income taxes �
1,733 � 2,092 � 1,386 � 2,428 � Net income $ 1,732 $ 3,248 $ 1,620
$ 3,565 � Net income (loss) per common share: Basic $ 0.04 $ 0.07 $
0.04 $ (0.02 ) Diluted $ 0.04 $ 0.06 $ 0.04 $ (0.02 ) � Weighted
average common shares outstanding: Basic � 41,375,997 � 24,295,344
� 41,267,207 � 16,246,313 Diluted � 43,598,364 � 27,243,822 �
43,531,804 � 16,246,313 (1) Amounts include stock-based
compensation expense as follows: Cost of online revenue $ 39 $ 70 $
137 $ 140 Cost of events revenue 25 11 47 23 Cost of print revenue
4 10 4 19 Selling and marketing 1,347 588 2,739 1,124 Product
development 140 73 280 146 General and administrative 858 446 1,459
817 TechTarget, Inc. Reconciliation of GAAP to Non-GAAP Measures �
� � Reconciliation of Net�Income�to Adjusted EBITDA (in $000's) � �
� Three Months Ended June 30, Six Months Ended June 30, 2008 � �
2007 2008 � � 2007 (Unaudited) � � � � � Net Income $ 1,732 $ 3,248
$ 1,620 $ 3,565 Interest Income, net 268 377 686 310 Provision For
Income Taxes 1,733 2,092 1,386 2,428 Depreciation 581 364 1,305 694
Amortization of Intangible Assets � 1,332 � 1,041 � 2,812 � 1,800
EBITDA � 5,110 � 6,368 � 6,437 � 8,177 Stock-Based Compensation
Expense � 2,413 � 1,198 � 4,666 � 2,269 Adjusted EBITDA $ 7,523 $
7,566 $ 11,103 $ 10,446 Reconciliation of Net�Income to Adjusted
Net Income and Net Income (Loss) per Diluted Share to Adjusted Net
Income per Share (in $000's, except share and per share amounts) �
� � Three Months Ended June 30, Six Months Ended June 30, 2008 � �
2007 2008 � � 2007 (Unaudited) � � � � � Net Income $ 1,732 $ 3,248
$ 1,620 $ 3,565 Amortization of Intangible Assets 1,332 1,041 2,812
1,800 Stock-Based Compensation Expense 2,413 1,198 4,666 2,269
Impact of Income Taxes � 1,142 � 542 � 2,793 � 1,134 Adjusted Net
Income $ 4,335 $ 4,945 $ 6,305 $ 6,500 � � � � � � � � � � � Net
Income (Loss) per Diluted Share $ 0.04 $ 0.06 $ 0.04 $ (0.02 )
Weighted Average Diluted Shares Outstanding � 43,598,364 �
27,243,822 � 43,531,804 � 16,246,313 � � � � � � � � � Adjusted Net
Income per Share $ 0.10 $ 0.13 $ 0.14 $ 0.17 Adjusted Weighted
Average Diluted Shares Outstanding � 43,598,364 � 39,430,305 �
43,531,804 � 37,388,527 Options and Warrants, Treasury Method
Included in Adjusted Weighted Average Diluted Shares Above - - -
2,862,490 Pro Forma Adjustment Including Assumed Conversion of
Redeemable Convertible Preferred Stock � - � 12,186,483 � - �
18,279,724 Weighted Average Diluted Shares Outstanding � 43,598,364
� 27,243,822 � 43,531,804 � 16,246,313 TechTarget, Inc. Financial
Guidance Summary (in $000's) � � � For the Three Months Ended
September 30, 2008 For the Year Ended December 31, 2008 Range Range
� � � � � � � � � Revenues $ 25,000 $ 26,000 $ 108,000 $ 112,000 �
� � � � � � � � Adjusted EBITDA $ 4,300 $ 5,100 $ 25,000 $ 27,000
Interest income, net 260 260 1,216 1,216 Provision for income taxes
195 619 4,752 5,812 Depreciation, amortization and stock-based
compensation � 4,192 � 4,192 � 17,250 � 17,250 Net income $ 173 $
549 $ 4,214 $ 5,154
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