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TechTarget Reports First Quarter 2013 Financial Results



  TechTarget Reports First Quarter 2013 Financial Results

Business Wire

NEWTON, Mass. -- May 08, 2013

Technology media company TechTarget, Inc. (NASDAQ: TTGT) today announced
financial results for the three months ended March 31, 2013.

Total Q1 2013 revenues decreased 18% to $19.5 million compared to Q1 2012. Q1
2013 online revenue decreased by 16% to $18.5 million compared to Q1 2012.
Online revenues represented 95% of total Q1 2013 revenues. Q1 2013 events
revenue decreased by 35% to $1.1 million compared to Q1 2012.

Adjusted EBITDA (earnings before interest, other income and expense, income
taxes, depreciation, and amortization, as further adjusted to eliminate
stock-based compensation) for Q1 2013 decreased 93% to $0.3 million compared
to $3.5 million for Q1 2012.

Total gross profit margin for Q1 2013 was 66%, compared to 71% for Q1 2012.
Online gross profit margin decreased to 68% for Q1 2013, compared to 73% for
Q1 2012. Events gross profit margin decreased to 37% for Q1 2013, as compared
to 53% for Q1 2012.

Net loss was $1.5 million for Q1 2013 compared to net income of $0.4 million
in Q1 2012. Adjusted net loss (net loss adjusted to eliminate amortization,
stock-based compensation expense and the related income tax impact of these
charges) for Q1 2013 was $0.3 million compared to adjusted net income of $1.7
million in Q1 2012. Net loss per basic share for Q1 2013 was $0.04 compared to
net income per basic share of $0.01 for Q1 2012. Adjusted net loss per share
(adjusted net loss divided by adjusted weighted average diluted shares
outstanding) for Q1 2013 was $0.01 compared to adjusted net income per share
of $0.04 for Q1 2012.

The Company’s balance sheet and financial position remain strong. As of March
31, 2013, the Company’s cash, cash equivalents and investments totaled $61.9
million, and the Company has no outstanding bank debt.

In the quarter, the company purchased 2,093,551 shares at an average price of
$4.83 on the open market reducing the outstanding share count to 38,504,216
shares as of March 31, 2013.

“The steep downturn in the IT market is creating challenges for us. TechTarget
is the go-to marketing partner when IT vendors are playing offense. Many of
our customers are in defensive mode as they face weak demand and declining
revenues,” said Greg Strakosch, TechTarget CEO. “Despite this challenging
environment, we are committed to stay the course and to continue to invest in
the business, specifically in our international operations, our Activity
Intelligence platform and by continuing to introduce innovative new products.
Of course, we will manage expenses carefully during this period and will
manage the business to produce double-digit adjusted EBITDA margins and
positive cash flow in 2013.”

Recent Company Highlights

  * Announced the launch of SearchSDN.com™, a new website designed to help
    network professionals make informed decisions as they transition to
    software-defined networking. Software-defined networking (SDN) is a
    disruptive technology that promises to revolutionize networking.
    SearchSDN.com is dedicated to covering all aspects of software-defined
    networking to provide more focused coverage of evolving SDN technology and
    business issues. It provides news and technical content on
    software-defined networking deployment, building service provider/cloud
    networks based on SDN, as well as SDN implementation and management in
    data centers, remote branches and in local area networks (LANs).
  * Announced the launch of TechnologyGuide.com™, a website that focuses on
    growing trends including consumerization of IT and "bring your own device"
    (BYOD). Test centers in Cincinnati and Boston enable TechnologyGuide’s
    experienced editorial staff to carefully evaluate and compare products in
    a completely controlled environment. This makes it a must-read resource
    for technology-savvy enthusiasts, IT professionals, and other buyers
    searching for trusted purchase information.
  * Was recognized by The Boston Business Journal as one of the top 25 large
    companies to work for in Massachusetts. This is the 6^th time that
    TechTarget has been named to “The Best Places to Work List”.

Financial Guidance

In the second quarter of 2013, the Company expects total revenues to be within
the range of $22.7 million to $23.9 million, online revenues within the range
of $20.5 million to $21.5 million, events revenues within the range of $2.2
million to $2.4 million and adjusted EBITDA to be within the range of $2.5
million to $3.5 million.

Conference Call and Webcast

TechTarget will discuss these financial results in a conference call at 5:00
p.m. (Eastern Time) today (May 8, 2013). Supplemental financial information
and our Chief Executive Officer’s Letter to Shareholders will be posted to the
Investor Information section of our website simultaneously with this press
release.

NOTE: Our Chief Executive Officer’s Letter to Shareholders 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 Information section of our website
at http://investor.techtarget.com/. The conference call can also be heard via
telephone by dialing 1-888-317-6016 (US callers) or 1-412-317-6016
(International callers).

For those investors unable to participate in the live conference call, replay
of the conference call will be available via telephone beginning May 8, 2013
at 7:00 p.m. ET through June 17, 2013 at 9:00 a.m. ET. To listen to the
replay, for US, dial 1-877-344-7529 and use the passcode 10026502.
International callers should dial 1-412-317-0088 and also use the passcode
10026502. 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 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, other income and expense, income taxes, depreciation and
amortization, as further adjusted to exclude stock-based compensation and
restructuring charges, if any. 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, stock-based compensation
and restructuring charges, if any, 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 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 one of the principal financial metrics 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 (NASDAQ: TTGT) is the online intersection of serious technology
buyers, targeted technical content and technology providers worldwide. Our
extensive network of online and social media, powered by TechTarget’s Activity
Intelligence™ platform, redefines how technology marketers view and engage
technology buyers based on their active projects, specific technical
priorities and business needs. With more than 100 technology-specific websites
and a wide selection of custom advertising, branding, and lead generation
solutions, TechTarget delivers unparalleled reach and innovative opportunities
to drive technology marketing success around the world.

TechTarget has offices in Atlanta, Beijing, Boston, Cincinnati, London, Paris,
San Francisco, Singapore and Sydney.

To learn how you can engage with serious technology buyers worldwide, visit
techtarget.com and follow us @TechTarget.

(C) 2013 TechTarget, Inc. All rights reserved. TechTarget and the TechTarget
logo are registered trademarks, and Activity Intelligence, SearchSDN.com, and
TechnologyGuide.com are trademarks of TechTarget. All other trademarks are the
property of their respective owners.

TECHTARGET, INC.
Consolidated Statements of Operations
(in $000's, except per share amounts)
 
                                                    For the Three Months Ended
                                                    March 31,
                                                    2013             2012
                                                    (Unaudited)
Revenues:
Online                                              $  18,475        $  22,071
Events                                                 1,073            1,643
Total revenues                                         19,548           23,714
                                                                         
Cost of revenues:
Online (1)                                             5,928            6,041
Events (1)                                             676              764
Total cost of revenues                                 6,604            6,805
                                                                         
Gross profit                                           12,944           16,909
                                                                         
Operating expenses:
Selling and marketing (1)                              9,120            9,163
Product development (1)                                1,741            1,855
General and administrative (1)                         3,307            3,649
Depreciation                                           872              767
Amortization of intangible assets                      734              937
Total operating expenses                               15,774           16,371
                                                                         
Operating (loss) income                                (2,830  )        538
                                                                         
Interest income, net                                   3                25
                                                                         
(Loss) income before (benefit from) provision for      (2,827  )        563
income taxes
                                                                         
(Benefit from) provision for income taxes              (1,285  )        198
                                                                         
Net (loss) income                                   $  (1,542  )     $  365
                                                                         
Net (loss) income per common share:
Basic and diluted                                   $  (0.04   )     $  0.01
                                                                         
Weighted average common shares outstanding:
Basic                                                  40,023           39,862
Diluted                                                40,023           40,853
(1) Amounts included in stock-based compensation
as follows:
Cost of online revenues                             $  47            $  53
Cost of events revenues                                4                4
Selling and marketing                                  703              731
Product development                                    53               65
General and administrative                             624              441
                                                                         

TECHTARGET, INC.

Reconciliation of Net (Loss) Income to Adjusted EBITDA

(in $000’s)
                                           
                                            For the Three Months Ended

                                            March 31,
                                            2013             2012
                                             
                                                                        
Net (loss) income                           $  (1,542  )     $  365
Interest income, net                           (3      )        (25    )
(Benefit from) provision for income taxes      (1,285  )        198
                                                                        
Depreciation                                   872              767
Amortization of purchase price adjustment      48               -
                                                                        
Amortization of intangible assets              734              937
EBITDA                                         (1,176  )        2,242
Stock-based compensation expense               1,431            1,294
Adjusted EBITDA                             $  255           $  3,536
                                                                        

TECHTARGET, INC.

Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income and Net
(Loss) Income per Diluted Share to

Adjusted Net (Loss) Income per Share

(in $000's, except per share amounts)
                                                   
                                                    For the Three Months Ended

                                                    March 31,
                                                    2013             2012
                                                   
Net (loss) income                                   $  (1,542  )     $  365
Amortization of intangible assets                      734              937
Stock-based compensation expense                       1,431            1,294
Amortization of purchase price adjustment              48               -
Impact of income taxes                                 964              945
Adjusted net (loss) income                          $  (293    )     $  1,651
                                                                         
Net (loss) income per diluted share                 $  (0.04   )     $  0.01
                                                                         
Weighted average diluted shares outstanding            40,023           40,853
                                                                         
Adjusted net (loss) income per share                $  (0.01   )     $  0.04
                                                                         
Adjusted weighted average diluted shares               40,023           40,853
outstanding
Options, warrants and restricted stock, treasury
method included in adjusted weighted average           -                -
diluted shares above
                                                                         
Weighted average diluted shares outstanding            40,023           40,853
                                                                         

TECHTARGET, INC.
Financial Guidance for the Three Months Ended June 30, 2013
(in $000's)
                                                                   
                                                       For the Three Months

                                                       Ended June 30, 2013
                                                       Range
                                                                              
Revenues                                               $ 22,700     $ 23,900
                                                                              
Adjusted EBITDA                                        $ 2,500      $ 3,500
Depreciation, amortization and stock-based               2,737        2,737
compensation
Interest and other income, net                           19           21
Benefit from (provision for) income taxes                22           (310   )
Net (loss) income                                      $ (196   )   $ 474

Contact:

TechTarget
Investor Inquiries
Janice Kelliher, 617-431-9449
Chief Financial Officer
jkelliher@techtarget.com
or
Media Inquiries
Peter Ross, 617-431-9668
Vice President, Corporate Marketing
pross@techtarget.com
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