TechTarget, Inc. (NASDAQ: TTGT) announced today that it is
delaying its earnings release, but is releasing estimated third
quarter results, its prepared remarks regarding the current period
ended September 30, 2009 and financial guidance for the fourth
quarter of 2009. The Company recently identified an improper
accounting practice relating to certain customer credits that were
improperly eliminated as liabilities on the Company's balance
sheet. The Company believes that the result of this practice was
that expenses were understated (overstated) by approximately
$353,000 in 2007, $426,000 in 2008 and ($15,000) in 2009. As a
result, TechTarget is delaying the filing of its Quarterly Report
on Form 10-Q for the third quarter of 2009, and the Audit Committee
of TechTarget’s Board of Directors is currently conducting an
investigation into this matter. The Company currently believes that
the improper accounting practice was limited to a single
individual. The Company's expectations concerning the nature and
materiality of these or any other improper accounting activity that
may be discovered in the course of its investigation are subject to
change based on the final outcome of the investigation.
Estimated Third Quarter Results
Estimated revenues for the Q3 2009 are $23.3 million. Estimated
online revenues are $18.5 million. Estimated Q3 2009 Non-GAAP gross
profit margin is 73% and estimated Non-GAAP online gross profit
margin is 75%. Q3 2009 estimated adjusted EBITDA is $5.3 million,
which excludes any prior period adjustments associated with the
investigation into the accounting matter described previously.
Estimated Q3 2009 GAAP gross profit margin is 72% and estimated
GAAP online gross profit margin is 74%. Q3 2009 estimated net
income per basic share is $0.00, excluding any prior period
adjustments associated with the investigation into the accounting
matter described previously.
Our balance sheet and financial position remain strong. As of
September 30, 2009, our cash and investments totaled $78.6 million
and our bank debt was $750,000. As of September 30, 2009, our net
cash, defined as cash and investments less bank debt, increased by
$11.3 million compared to December 31, 2008.
It is important to note that the foregoing amounts are estimated
results for the third quarter and may change as a result of the
Company’s continued investigation of the improper accounting
practice as described above, or otherwise as we complete our review
of the third quarter of 2009 and any applicable prior periods.
These results include certain Non-GAAP financial measures which we
are providing as a complement to the estimated results provided in
accordance with GAAP. The Company defines "adjusted EBITDA" as
earnings before interest, taxes, depreciation, and amortization, as
further adjusted for stock-based compensation. "Non-GAAP gross
profit margin" as gross profit less stock-based compensation as a
percentage of total revenues.
Recent Company Highlights
- Launched
SearchVirtualDataCentre.co.uk, our third direct web site in The
United Kingdom. The editorial focus of
SearchVirtualDataCentre.co.uk will include server virtualization,
power conservation, green data center initiatives and data center
management and automation. Charter advertisers include: Oracle,
Citrix and F5 Networks.
- Launched the company’s first
three direct websites in India. SearchCIO.in™, SearchDataCenter.in™
and SearchSecurity.in™. TechTarget has more than 750,000 registered
members in India. Charter advertisers include Microsoft, Dell and
HP.
- Hosted the 5th TechTarget Online
ROI Summit for almost 300 customers and prospects in San Francisco.
Multiple TechTarget customers presented including marketing
executives from Dell, EMC, Dell, Cisco, Oracle, HP and Hitachi Data
Systems.
- Finished the latest version of
our proprietary research project with our partner Google on how IT
professionals use the web to research new technologies and
products. Highlights of the findings were made available at The
TechTarget Online ROI Summit™. A road show and written report will
be produced before the end of the year.
- Partnered with VMware for the
third year in a row to run the “Best of VMworld Awards” at VMworld,
which was held in San Francisco and attracted more than 12,000
attendees. There were more than 175 product entrants in 8
categories.
- NotebookReview.com™ , part of
TechTarget’s TechnologyGuide® network of sites, was Named One of
Media Business Magazine’s “10 Great Web Sites” in the category of
Web 2.0/IT by Media Business magazine. NotebookReview.com is one of
the web’s largest sites devoted entirely to laptop computers that
helps buyers who are currently researching their next laptop
purchase. Other sites recognized by Media Business include; The
Wall Street Journal’s www.wsj.com, The Financial Times’ www.ft.com,
and BusinessWeek’s http://www.businessweek.com.
Financial Guidance
In the fourth quarter of 2009, the Company expects total
revenues to be within the range of $21.8 million to $22.8 million.
The Company expects online revenue to be within the range of $19.0
million to $19.8 million and events revenue to be in the range of
$2.8 to $3.0 million. The Company expects adjusted EBITDA to be
within the range of $4.5 million to $5.3 million, excluding costs
associated with the investigation into the accounting matter.
Conference Call and Webcast
TechTarget will discuss these financial results in a conference
call at 5:00 pm (Eastern Time) today (November 9, 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)
679-8034 (US callers) or 617-213-4847 (International
callers) ten minutes prior to the call and referencing
participant pass code 13347242 for both domestic and international
callers. Participants may pre-register for the call at:
https://www.theconferencingservice.com/prereg/key.process?key=PU4MJHUUH.
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 November 9, 2009 at 8:00 p.m. ET through
November 23, 2009 at 11:59 p.m. (ET). To listen to the replay, dial
888-286-8010 and use the pass
code 24672076. International callers should dial
617-801-6888 and also use the pass code 24672076 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
SearchVirtualDataCentre.co.uk, SearchCIO.in™, SearchDataCenter.in™
and SearchSecurity.in™., are trademarks, of TechTarget. All other
trademarks are the property of their respective owners.
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