TechTarget, Inc. (NASDAQ: TTGT) today announced financial
results for the three months ended March 31, 2010.
Total Q1 2010 revenues increased 14% to $21.0 million compared
to Q1 2009. Q1 2010 online revenue increased by 14% to $18.6
million compared to Q1 2009 and represented 88% of total Q1 2010
revenues. Q1 2010 events revenue increased by 13% to $2.5 million
compared to Q1 2009 and represented 12% of total Q1 2010
revenues.
“We are pleased that online revenues grew 14% in the quarter”
said Greg Strakosch, CEO of TechTarget. “We are glad to see that
investments we made during the downturn to grow market share are
starting to materialize as the environment continues to
improve.”
Total Q1 2010 gross profit margin increased to 74% compared to
68% for Q1 2009. Q1 2010 online gross profit margin increased to
76% compared to 70% for Q1 2009.
Net loss was $2.3 million for both Q1 2010 and Q1 2009. Adjusted
net income (net income adjusted for amortization and stock-based
compensation, as further adjusted for the related income tax
impact) for Q1 2010 was $1.0 million compared to $0.6 million for
Q1 2009. Net loss per basic share was $0.06 for both Q1 2010 and Q1
2009. Adjusted net income per share (adjusted net income divided by
adjusted weighted average diluted shares outstanding) for the Q1
2010 was $0.02 compared to $0.01 for Q1 2009.
Adjusted EBITDA (earnings before interest, taxes, depreciation,
and amortization, as further adjusted for stock-based compensation)
for Q1 2010 increased 55% to $2.5 million compared to $1.6 million
for Q1 2009. Q1 2010 adjusted EBITDA was reduced by $0.7 million as
a result of the following nonrecurring items: $0.4 million of
expenses associated with the move into the company’s new corporate
headquarters and $0.3 million associated with the previously
disclosed prior year investigation of an improper accounting
practice.
The Company’s balance sheet and financial position remain
strong. As of March 31, 2010, the Company’s cash and
investments totaled $81.6 million and the company has no
outstanding bank debt.
Recent Company Highlights
- Hired Jeff Wakely as Chief
Financial Officer and Treasurer. In this role, Wakely will have
overall leadership responsibility for the strategy and operations
for all of the Company’s finance and control functions. He will
assume his new role on June 7. Wakely is currently the Chief
Accounting Officer, Vice President of Finance and Assistant
Treasurer at NetScout Systems, Inc. (NASDAQ: NTCT), an industry
leader in network management. When Wakely joined NetScout in 2005,
the company had less than $100 million in revenue. For the fiscal
year ended March 31, 2010, the company’s revenues were $260
million.
- Acquired BeyeNETWORK™, a group
of online technology sites that provide news, expert information
and exclusive resources on the business information management
lifecycle, including business intelligence (BI) best practices,
business analytics, data integration, and data governance. All of
the sites’ content is written by industry experts who share their
experiences and research in a collection of articles, podcasts, and
blogs focused on specific vertical industries.
- Named by BtoB Magazine as one of
the Top 50 Most Powerful BtoB Advertising Venues for the 10th
consecutive year. TechTarget was named #9 on this year’s list.
Other companies in the Top 10 include: Google, The Wall Street
Journal, The National Football League, Yahoo!, CNBC, Financial
Times and Bloomberg/BusinessWeek.
- Announced The TechTarget/Google
Online ROI Summit to be held at the Hilton Metropole in London on
May 26th. There will be expert speakers from TechTarget and Google
as well as customer case studies from EMC and 3PAR. This is the
first time that TechTarget is taking its popular ROI Summit to
Europe, which reflects the growing importance of TechTarget’s
business outside of North America.
Financial Guidance
In the second quarter of 2010, the Company expects total
revenues to be within the range of $24.3 million to $25.3 million;
online revenues within the range of $20.1 million to $20.9 million;
events revenues within the range of $4.2 million to $4.4 million
and adjusted EBITDA to be within the range of $5.0 million to $5.8
million. This Q2 guidance is based on an assumption of
approximately 15% online growth over Q2 2009.
In the Company’s previous prepared remarks, issued on March 10,
2010, it was stated that online growth for 2010 was expected be in
the low double digits; the Company is now providing guidance that
its online growth rate for 2010 is expected to be in the mid-teens.
Additionally, the Company stated in its March 10 prepared remarks
that it expected 2010 event revenue to decline 20-25% from last
year; the Company is now decreasing the expected decline in events
revenue to be only 15-20%. Based on the foregoing revised guidance,
the Company is now increasing its previously stated expectation
regarding the range for annual adjusted EBITDA margins from 18% -
22% to 19% - 23%.
Conference Call and Webcast
TechTarget will discuss these financial results in a conference
call at 5:30 pm (Eastern Time) today (May 10, 2010).
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) 713-4218 (US callers) or
617-213-4870 (International callers) ten minutes prior to the
call and referencing participant pass code 72673576 for both
domestic and international callers. Participants may pre-register
for the call at:
https://www.theconferencingservice.com/prereg/key.process?key=P9TTEP8WQ.
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 May 10, 2010 at 8:00 p.m. ET through
May 24, 2010 at 11:59 p.m. ET. To listen to the replay, dial
888-286-8010 and use the pass
code 29819772. International callers should dial
617-801-6888 and also use the pass code 29819772 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 release and the accompanying tables include a discussion of
adjusted EBITDA, 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 to
exclude stock-based compensation. 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 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 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 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 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 80 technology-specific websites and more than 8.5 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) 2010 TechTarget, Inc. All rights reserved.
TechTarget and the TechTarget logo are registered trademarks, and
BeyeNETWORK™ is a trademark, of TechTarget. All other trademarks
are the property of their respective owners.
TECHTARGET, INC. Consolidated Balance
Sheets (in $000's) March 31,
December 31, 2010 2009 (Unaudited)
Assets Current assets: Cash and cash equivalents $ 17,491 $
20,884 Short-term investments 56,291 50,496 Accounts receivable,
net of allowance for doubtful accounts 18,360 16,623 Prepaid
expenses and other current assets 1,991 1,929 Deferred tax assets
2,204 2,399 Total current assets 96,337 92,331
Property and equipment, net 5,653 3,760 Long-term investments 7,810
11,177 Goodwill 89,293 88,958 Intangible assets, net of accumulated
amortization 12,087 12,528 Other assets 148 127 Deferred tax assets
5,739 5,182 Total assets $ 217,067 $ 214,063
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $ 4,497 $ 3,106 Accrued expenses and other current
liabilities 1,472 2,910 Accrued compensation expenses 1,191 808
Income taxes payable - 398 Deferred revenue 9,182
8,402 Total current liabilities 16,342 15,624 Long-term
liabilities: Other liabilities 1,821 575 Total
liabilities 18,163 16,199 Commitments and contingencies - -
Stockholders' equity: Common stock 43 42 Additional paid-in
capital 236,989 233,555 Warrants 2 2 Accumulated other
comprehensive (loss) income (47 ) 8 Accumulated deficit
(38,083 ) (35,743 ) Total stockholders' equity
198,904 197,864 Total liabilities and stockholders' equity $
217,067 $ 214,063
TECHTARGET, INC.
Consolidated Statements of Operations (in $000's, except
share and per share amounts) For the Three
Months
Ended March 31,
2010 2009 (Unaudited) Revenues: Online $
18,561 $ 16,282 Events 2,482 2,190 Total revenues
21,043 18,472 Cost of revenues: Online (1)
4,536 4,880 Events (1) 864 1,081 Total cost of
revenues 5,400 5,961 Gross profit 15,643
12,511 Operating expenses: Selling and marketing (1) 8,913
7,516 Product development (1) 2,185 2,081 General and
administrative (1) 5,495 3,919 Depreciation 525 536 Amortization of
intangible assets 1,135 1,215 Total operating
expenses 18,253 15,267 Operating loss (2,610 )
(2,756 ) Interest income (expense), net 107
(110 ) Loss before provision for income taxes (2,503 )
(2,866 ) Benefit from income taxes (163 ) (558
) Net loss $ (2,340 ) $ (2,308 ) Net loss per common
share: Basic and diluted $ (0.06 ) $ (0.06 ) Weighted
average common shares outstanding: Basic and diluted
42,479,994 41,754,131 (1) Amounts include
stock-based compensation expense as follows: Cost of online revenue
$ 88 $ 234 Cost of events revenue 26 17 Selling and marketing 1,929
1,328 Product development 161 131 General and administrative 1,225
893
TECHTARGET, INC. Reconciliation of Net
Loss to Adjusted EBITDA (in $000's) For the
Three Months
Ended March 31,
2010 2009 (Unaudited) Net
loss $ (2,340 ) $ (2,308
) Interest income (expense), net 107 (110 ) Benefit from
income taxes (163 ) (558 ) Depreciation 525 536 Amortization of
intangible assets 1,135 1,215
EBITDA
(950 ) (1,005 ) Stock-based
compensation expense 3,429 2,603
Adjusted
EBITDA $ 2,479 $ 1,598
TECHTARGET, INC. Reconciliation of Net Loss to
Adjusted Net Income and Net Loss per Diluted Share to Adjusted Net
Income per Share (in $000's, except share and per share
amounts) For the Three Months
Ended March 31,
2010 2009 (Unaudited) Net
loss $ (2,340 ) $ (2,308
) Amortization of intangible assets 1,135 1,215 Stock-based
compensation expense 3,429 2,603 Impact of income taxes
1,234 916
Adjusted net income $ 990
$ 594
Net loss per diluted share $ (0.06 )
$ (0.06 ) Weighted average diluted shares
outstanding 42,479,994 41,754,131
Adjusted net income per share
$ 0.02 $ 0.01 Adjusted weighted
average diluted shares outstanding 44,572,840
42,522,199 Options, warrants and restricted stock,
treasury method included in adjusted weighted average diluted
shares above 2,092,846 768,068
Weighted average
diluted shares outstanding 42,479,994
41,754,131 TECHTARGET, INC.
Financial Guidance for the Three Months Ended June 30, 2010
(in $000's) For the Three Months
Ended June 30, 2010
Range Revenues $ 24,300
$ 25,300 Adjusted
EBITDA $ 5,000 $ 5,800
Depreciation, amortization and stock-based compensation 5,113 5,113
Interest income, net 115 115 Provision for income taxes 607
937
Net loss $ (605 ) $
(135 )
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