TechTarget Reports First and Second Quarter 2009 Financial Results

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:

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:

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 onhttp://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.

Click here to view TechTarget, Inc. Consolidated Balance Sheets, Consolidated Statements of Operations and Reconciliation of GAAP to Non-GAAP Measures