TTGT Tech Target Inc

TechTarget, Inc. (NASDAQ: TTGT) today announced financial results for the first quarter ended March 31, 2009 and the second quarter ended June 30, 2009.

“We are pleased that the restatement project is now behind us. It is important to point out that the restatement involved a change only in the timing of our recognizing revenue. The validity of our revenue was never questioned, our total revenue did not change for any specific customer contract and the aggregate revenue shifted between the annual periods reviewed was approximately 1%. Turning to the company’s performance, the market seems to have stabilized and we are encouraged by our sequential revenue growth in Q2 and our strong cash flow” said Greg Strakosch, Chairman and CEO of TechTarget. “Our primary focus continues to be to take advantage of the downturn by investing and growing market share, while maintaining healthy profitability.”

Total revenues for the first quarter are as follows:

  Three Months Ended March 31, (In $000's, unaudited) 2009    

% ofRevenues

  2008    

% ofRevenues

 

%Change2009 vs.2008

Revenues: Online $ 16,282   88 % $ 18,210   78 %   (11 )% Events 2,190 12 % 3,985 17 % (45 )% Print   -   -   1,068   5 %   (100 )% Total revenues   18,472   100 %   23,263   100 %   (21 )%

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization, as further adjusted for stock-based compensation) for the first quarter was $1.6 million compared to $3.0 million for the comparable prior year quarter. The first quarter of 2009 includes professional fees of $191,000 incurred in connection with the company’s activities related to the restatement of prior periods.

Total revenues for the second quarter are as follows:

  Three Months Ended June 30, (In $000's, unaudited)

2009

   

% ofRevenues

  2008    

% ofRevenues

 

%Change2009 vs.2008

Revenues: Online $ 17,801   82 % $ 19,071   69 %   (7 )% Events 3,936 18 % 7,262 26 % (46 )% Print   -   -   1,282   5 %   (100 )% Total revenues   21,737   100 %   27,615   100 %   (21 )%

Adjusted EBITDA for the second quarter was $3.9 million compared to $5.8 million for the comparable prior year quarter. The second quarter of 2009 includes professional fees of $417,000 incurred in connection with the company’s activities related to the restatement of prior periods.

Total Non-GAAP gross profit margin (gross profit margin less stock-based compensation) increased for both the first and second quarters to 69% and 72% respectively compared to 68% and 68%, respectively for the comparable prior year quarters. Online Non-GAAP gross profit margin was 71% for the first quarter of 2009 compared to 72% for the comparable prior year quarter. Online Non-GAAP gross profit margin for Q2 2009 increased to 74% compared to 71% for the comparable prior year quarter.

Net loss for the first quarter of 2009 was $2.3 million compared to a net loss of $436,000 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) for the first quarter was $594,000 compared to $1.6 million for the comparable prior year quarter. Net loss per basic share for the first quarter was ($0.06) compared to ($0.01) for the comparable prior year quarter. Adjusted net income per share (adjusted net income divided by adjusted weighted average diluted shares outstanding) for the first quarter of 2009 was $0.01 compared to $0.04 for the comparable prior year quarter. Net loss for the second quarter of 2009 was $543,000 compared to net income of $1.1 million for the comparable prior year quarter. Adjusted net income for the second quarter was $2.2 million compared to $3.3 million for the comparable prior year quarter. Net loss per basic share for the second quarter was ($0.01) compared to net income per basic share of $0.03 for the comparable prior year quarter. Adjusted net income per share for the second quarter of 2009 was $0.05 compared to $0.07 for the comparable prior year quarter.

As of June 30, 2009, TechTarget had $75.7 million of cash, cash equivalents and short and long-term investments. Outstanding bank debt was $1.5 million as of June 30, 2009. Our net cash, as defined as cash, cash equivalents and investments less bank debt increased by $7.6 million compared to December 31, 2008.

Recent Company Highlights

• Continued the strategy of aggressive new site launches to respond to areas of opportunity with five new sites launches in 2009: SearchCloudComputing.com™; SearchVirtualDesktop.com™; SearchCompliance.com™; SearchEnterpriseWAN.com™; and SearchMid-MarketSecurity.com™. • Launched operations in India with government approval of its India branch office, the hire of veteran IT editor Sandeep Ajgaonkar, formerly of IndiaExpress and CNET India, as General Manager, and the announcement of plans to launch three India-focused websites by the end of 2009: SearchCIO.in™, SearchDataCenter.in™, and SearchSecurity.in™. • Published a new research report in partnership with Google, examining the buying process and research of IT buyers across the United Kingdom. The research was released to customers at an event at Google's UK Headquarters in London. • Recognized by The Boston Business Journal as one of the top 20 “Best Places to Work” in the large company category. This is the 4th time the Company has been named to this list. • Named to the BtoB magazine “Media Power 50” list of the 50 most powerful business-to-business advertising venues for the ninth consecutive year - ranked #6 overall. Others in the top 10 included the Wall Street Journal, Google, the National Football League, and CNBC’s “Power Lunch.”

Financial Guidance

In the third quarter of 2009, the Company expects total revenues to be within the range of $21.7 million to $22.7 million and adjusted EBITDA to be within the range of $4.0 million to $4.8 million.

Compliance Status

TechTarget today filed its Forms 10-Q for the quarters ending March 31 and June 30, 2009 and the Company believes that it is now compliant with all of its public filing requirements. With the filing of our Form 10-K and related amended quarterly filings in mid-July, we have completed our revenue restatement activities and do not expect to incur any additional restatement expenses related to those activities.

Conference Call and Webcast

TechTarget will discuss these financial results in a conference call at 5:00 pm (Eastern Time) today (August 17, 2009). Supplemental financial information and prepared remarks for the conference call will be posted to the investor relations section of our website simultaneously with this press release.

NOTE: The prepared remarks 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 Relations section of our website at http://investor.techtarget.com/. The conference call can also be heard via telephone by dialing (888) 679-8035 (US callers) or 617-213-4848 (International callers) ten minutes prior to the call and referencing participant pass code 80683943 for both domestic and international callers. Participants may pre-register for the call at: https://www.theconferencingservice.com/prereg/key.process?key=PQE4GJH4G. 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 17, 2009 at 7:30 p.m. ET through August 31, 2009 at 11:59pm (ET). To listen to the replay, dial 888-286-8010 and use the pass code 63031470. International callers should dial 617-801-6888 and also use the pass code 63031470 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, Non-GAAP gross profit, 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 “Non-GAAP gross profit “ refers to a financial measure which we define as gross profit less stock-based compensation. The term “Non-GAAP Gross Profit Margin” refers to a financial measure which we define as gross profit less stock-based compensation 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, Non-GAAP gross profit, 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, Non-GAAP gross profit, 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. Non-GAAP gross profit is useful to us and investors because it presents an additional measurement of our financial performance by excluding the impact of certain non-cash expenses not directly tied to the core operations of our business. 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/A 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 technology media company, gives technology providers ROI-focused marketing programs to generate leads, shorten sales cycles, and grow revenues. With its network of more than 60 technology-specific websites and more than 7.5 million registered members, TechTarget is a primary Web destination for technology professionals researching 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 webcasts, podcasts, videos and virtual trade shows for the technology market. Its websites are complemented by numerous invitation-only events. TechTarget provides proven lead generation and branding programs to top advertisers including Cisco, Dell, EMC, HP, IBM, Intel, Microsoft, SAP and Symantec.

(C) 2009 TechTarget, Inc. All rights reserved. TechTarget and the TechTarget logo are registered trademarks, and SearchCloudComputing.com; SearchVirtualDesktop.com; SearchCompliance.com; SearchEnterpriseWAN.com; SearchMid-MarketSecurity.com and SearchCIO.in™, SearchDataCenter.in™, and SearchSecurity.in™ are trademarks, of TechTarget. All other trademarks are the property of their respective owners.

TECHTARGET, INC. Consolidated Balance Sheets (in $000's)        

March 31, 2009

December 31,2008

Assets (Unaudited) Current assets: Cash and cash equivalents $ 22,948 $ 24,130 Short-term investments 41,114 42,863 Accounts receivable, net of allowance for doubtful accounts 13,684 17,622 Prepaid expenses and other current assets 7,072 6,251 Deferred tax assets   2,836   2,959 Total current assets 87,654 93,825   Property and equipment, net 3,710 3,904 Long-term investments 6,619 2,575 Goodwill 88,958 88,958 Intangible assets, net of accumulated amortization 16,027 17,242 Deferred tax assets 3,545 3,369 Other assets   132   139   Total assets $ 206,645 $ 210,012   Liabilities and Stockholders' Equity Current liabilities: Current portion of bank term loan payable $ 2,250 $ 3,000 Accounts payable 2,232 3,404 Accrued expenses and other current liabilities 2,260 2,908 Accrued compensation expenses 788 702 Deferred revenue   7,910   8,749 Total current liabilities 15,440 18,763   Long-term liabilities: Other liabilities   244   312 Total liabilities 15,684 19,075   Commitments - -   Stockholders' equity: Preferred stock - - Common stock 42 42 Additional paid-in capital 223,746 221,597 Warrants 2 2 Accumulated other comprehensive loss 106 (77 ) Accumulated deficit   (32,935 )   (30,627 ) Total stockholders' equity 190,961 190,937   Total liabilities and stockholders' equity $ 206,645 $ 210,012 TECHTARGET, INC. Consolidated Balance Sheets (in $000's)         June 30, 2009

December 31,2008

Assets (Unaudited) Current assets: Cash and cash equivalents $ 33,408 $ 24,130 Short-term investments 36,075 42,863 Accounts receivable, net of allowance for doubtful accounts 14,116 17,622 Prepaid expenses and other current assets 5,319 6,251 Deferred tax assets   2,876   2,959 Total current assets 91,794 93,825   Property and equipment, net 3,449 3,904 Long-term investments 6,209 2,575 Goodwill 88,958 88,958 Intangible assets, net of accumulated amortization 14,846 17,242 Deferred tax assets 3,518 3,369 Other assets   88   139   Total assets $ 208,862 $ 210,012   Liabilities and Stockholders' Equity Current liabilities: Current portion of bank term loan payable $ 1,500 $ 3,000 Accounts payable 3,153 3,404 Accrued expenses and other current liabilities 1,843 2,908 Accrued compensation expenses 790 702 Deferred revenue   8,432   8,749 Total current liabilities 15,718 18,763   Long-term liabilities: Other liabilities   181   312 Total liabilities 15,899 19,075   Commitments - -   Stockholders' equity: Preferred stock - - Common stock 42 42 Additional paid-in capital 226,330 221,597 Warrants 2 2 Accumulated other comprehensive loss 67 (77 ) Accumulated deficit   (33,478 )   (30,627 ) Total stockholders' equity 192,963 190,937   Total liabilities and stockholders' equity $ 208,862 $ 210,012 TECHTARGET, INC. Consolidated Statements of Operations (in $000's, except share and per share amounts)         Three Months Ended March 31, 2009 2008 (Unaudited) Revenues: Online $ 16,282 $ 18,210 Events 2,190 3,985 Print   -   1,068 Total revenues   18,472   23,263   Cost of revenues: Online (1) 4,880 5,169 Events (1) 1,081 1,827 Print   -   546 Total cost of revenues   5,961   7,542   Gross profit 12,511 15,721   Operating expenses: Selling and marketing (1) 7,516 8,444 Product development (1) 2,081 2,762 General and administrative (1) 3,919 3,795 Depreciation 536 724 Amortization of intangible assets   1,215   1,480 Total operating expenses   15,267   17,205   Operating loss (2,756 ) (1,484 )   Interest income (expense), net   (110 )   418   Loss before benefit from income taxes (2,866 ) (1,066 )   Benefit from income taxes   (558 )   (630 )   Net loss $ (2,308 ) $ (436 )   Net loss per common share: Basic and diluted $ (0.06 ) $ (0.01 )   Weighted average common shares outstanding: Basic and diluted   41,754,131   41,158,418     (1) Amounts include stock-based compensation expense as follows: Cost of online revenue $ 234 $ 98 Cost of events revenue 17 22 Selling and marketing 1,328 1,392 Product development 131 140 General and administrative 893 601 TECHTARGET, INC. Consolidated Statements of Operations (in $000's, except share and per share amounts)               Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 (Unaudited) Revenues: Online $ 17,801 $ 19,071 $ 34,083 $ 37,281 Events 3,936 7,262 6,126 11,247 Print   -   1,282   -   2,350 Total revenues   21,737   27,615   40,209   50,878   Cost of revenues: Online (1) 4,776 5,481 9,656 10,650 Events (1) 1,455 2,923 2,536 4,750 Print   -   632   -   1,178 Total cost of revenues   6,231   9,036   12,192   16,578   Gross profit 15,506 18,579 28,017 34,300   Operating expenses: Selling and marketing (1) 8,023 8,885 15,539 17,329 Product development (1) 2,194 2,890 4,275 5,652 General and administrative (1) 4,064 3,459 7,983 7,254 Depreciation 498 581 1,034 1,305 Amortization of intangible assets   1,181   1,332   2,396   2,812 Total operating expenses   15,960   17,147   31,227   34,352   Operating income (loss) (454 ) 1,432 (3,210 ) (52 )                 Interest income (expense), net   174   268   64   686   Income (loss) before provision for (benefit from) income taxes (280 ) 1,700 (3,146 ) 634   Provision for (benefit from) income taxes   263   648   (295 )   18   Net income (loss) $ (543 ) $ 1,052 $ (2,851 ) $ 616   Net income (loss) per common share: Basic $ (0.01 ) $ 0.03 $ (0.07 ) $ 0.01 Diluted $ (0.01 ) $ 0.02 $ (0.07 ) $ 0.01   Weighted average common shares outstanding: Basic   41,759,506   41,375,997   41,756,818   41,267,207 Diluted   41,759,506   43,598,364   41,756,818   43,531,804     (1) Amounts include stock-based compensation expense as follows: Cost of online revenue $ 78 $ 43 $ 312 $ 141 Cost of events revenue 36 25 53 47 Selling and marketing 1,478 1,347 2,806 2,739 Product development 132 140 263 280 General and administrative 917 858 1,810 1,459 TECHTARGET, INC. Reconciliation of Net Income (Loss) to Adjusted EBITDA (in $000's)         Three Months Ended March 31, 2009 2008 (Unaudited)       Net loss $ (2,308 ) $ (436 ) Interest income (expense), net (110 ) 418 Benefit from income taxes (558 ) (630 ) Depreciation 536 724 Amortization of intangible assets   1,215   1,480 EBITDA   (1,005 )   720 Stock-based compensation expense   2,603   2,253 Adjusted EBITDA $ 1,598 $ 2,973     Three Months Ended June 30,   Six Months Ended June 30, 2009 2008 2009 2008 (Unaudited)           Net income (loss) $ (543 ) $ 1,052 $ (2,851 ) $ 616 Interest income, net 174 268 64 686 Provision for (benefit from) income taxes 263 648 (295 ) 18 Depreciation 498 581 1,034 1,305 Amortization of intangible assets   1,181   1,332   2,396   2,812 EBITDA   1,225   3,345   220   4,065 Stock-based compensation expense   2,641   2,413   5,244   4,666 Adjusted EBITDA $ 3,866 $ 5,758 $ 5,464 $ 8,731 TECHTARGET, INC. Reconciliation of Net Income (Loss) 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 March 31, 2009 2008 (Unaudited)       Net loss $ (2,308 ) $ (436 ) Amortization of intangible assets 1,215 1,480 Stock-based compensation expense 2,603 2,253 Impact of income taxes   916   1,662 Adjusted net income $ 594 $ 1,635               Net loss per diluted share $ (0.06 ) $ (0.01 ) Weighted average diluted shares outstanding   41,754,131   41,158,418           Adjusted net income per share $ 0.01 $ 0.04 Adjusted weighted average diluted shares outstanding   42,522,199   43,465,245 Options, warrants and restricted stock, treasury method included in adjusted weighted average diluted shares above   768,068   2,306,827 Weighted average diluted shares outstanding   41,754,131   41,158,418     Three Months Ended June 30,     Six Months Ended June 30, 2009   2008 2009   2008 (Unaudited)           Net income (loss) $ (543 ) $ 1,052 $ (2,851 ) $ 616 Amortization of intangible assets 1,181 1,332 2,396 2,812 Stock-based compensation expense 2,641 2,413 5,244 4,666 Impact of income taxes   1,096   1,528   2,019   3,223 Adjusted net income $ 2,183 $ 3,269 $ 2,770 $ 4,871                       Net income (loss) per diluted share $ (0.01 ) $ 0.02 $ (0.07 ) $ 0.01 Weighted average diluted shares outstanding   41,759,506   43,598,364   41,756,818   43,531,804                   Adjusted net income per share $ 0.05 $ 0.07 $ 0.06 $ 0.11 Adjusted weighted average diluted shares outstanding   42,763,961   43,598,364   42,643,080   43,531,804 Options, warrants and restricted stock, treasury method included in adjusted weighted average diluted shares above   1,004,455   -   886,262   - Weighted average diluted shares outstanding   41,759,506   43,598,364   41,756,818   43,531,804 TECHTARGET, INC. Reconciliation of Total Gross Profit Margin to Total Non-GAAP Gross Profit Margin (in $000's)               Three Months Ended March 31, 2009 2008 (Unaudited)           Total gross profit margin $ 12,511   68 % $ 15,721   68 % Stock-based compensation expense   251       120     Total non-GAAP gross profit margin $ 12,762   69 % $ 15,841   68 %     Three Months Ended June 30,     Six Months Ended June 30, 2009     2008 2009     2008 (Unaudited)                                   Total gross profit margin $ 15,506   71 % $ 18,579   67 % $ 28,017   70 % $ 34,300   67 % Stock-based compensation expense   114       68       365       188     Total non-GAAP gross profit margin $ 15,620   72 % $ 18,647   68 % $ 28,382   71 % $ 34,488   68 % TECHTARGET, INC. Reconciliation of Online Gross Profit Margin to Online Non-GAAP Gross Profit Margin (in $000's)                 Three Months Ended March 31, 2009 2008 (Unaudited)           Online gross profit margin $ 11,402   70 % $ 13,041   72 % Stock-based compensation expense   234       98     Online non-GAAP gross profit margin $ 11,636   71 % $ 13,139   72 %     Three Months Ended June 30,     Six Months Ended June 30, 2009     2008 2009     2008 (Unaudited)                                   Online gross profit margin $ 13,025   73 % $ 13,590   71 % $ 24,427   72 % $ 26,631   71 % Stock-based compensation expense   78       43       312       141     Online non-GAAP gross profit margin $ 13,103   74 % $ 13,633   71 % $ 24,739   73 % $ 26,772   72 % TECHTARGET, INC. Financial Guidance for the Three Months Ended September 30, 2009 (in $000's)      

For the Three Months EndedSeptember 30, 2009

Range       Revenues $ 21,700 $ 22,700           Adjusted EBITDA $ 4,000 $ 4,800 Depreciation, amortization and stock-based compensation 4,520 4,520 Interest income, net 190 190 Provision for income taxes   370   700 Net income $ (700 ) $ (230 )