Form 8-K TechTarget Inc For: Nov 04

November 4, 2014 4:03 PM

�

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

�

FORM 8-K

�

CURRENT REPORT

Pursuant to Section�13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November�4, 2014

�

TechTarget, Inc.

(Exact Name of Registrant as Specified in its Charter)

�

Delaware

�

1-33472

�

04-3483216

(State or Other Jurisdiction

of Incorporation

�

(Commission

File Number)

�

(IRS Employer

Identification No.)

�


275 Grove Street, Newton MA	�	02466
(Address of Principal Executive Offices)	�	(Zip Code)

Registrant�s telephone number, including area code: (617)�431-9200

(Former Name or Former Address, if Changed Since Last Report)

�

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

�

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

�

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

�

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

�

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

�

Item�2.02.

Results of Operations and Financial Condition.

On November�4, 2014, TechTarget, Inc. (the �Company�) issued a press release announcing its results for the third fiscal quarter ended September�30, 2014. TechTarget is also posting a copy of its supplemental Shareholders Letter with respect to the completed quarter on the Investor Information section of its website at www.techtarget.com. The full text of the press release issued in connection with the announcement and the related Shareholders Letter are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K. The information contained in Item�2.02 of this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed �filed� for purposes of Section�18 of the Securities Exchange Act of 1934, as amended (the �Exchange Act�) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation by reference language in such filing, except as expressly set forth by specific reference in such a filing.

�

Item�9.01

Financial Statements and Exhibits

�

(d)

Exhibits.

The following exhibits relating to Item�2.02 shall be deemed to be furnished, and not filed:

�



99.1	��	A copy of the press release issued by TechTarget, Inc. on November�4, 2014 is furnished herewith.

99.2	��	A copy of the Shareholders Letter posted by TechTarget, Inc. to its website on November�4, 2014 is furnished herewith.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

�


	�	�	TechTarget, Inc.

Date: November�4, 2014	�	�	By:	�	/s/ Janice Kelliher
	�	�		�	Janice Kelliher Chief Financial Officer and Treasurer

Exhibit 99.1

�

LOGO

FOR IMMEDIATE RELEASE

TechTarget Reports Third Quarter 2014 Financial Results

Online revenues up 29%

Newton, MA � November�4, 2014 � Technology media company TechTarget, Inc. (NASDAQ: TTGT) today announced financial results for the three months ended September�30, 2014:

�

Online revenues up 29%

�

North American online revenues up 28%

�

International online revenues up 29%

�

IT Deal Alert^TM revenues up 661%

�

Adjusted EBITDA up 88%

�

2014 forecast increased

�We are very pleased that online revenues were up 29% in the third quarter� said Greg Strakosch, TechTarget CEO. �We saw strength in all geographies and product areas. The increase in online revenues contributed to 88% adjusted EBITDA growth. We�re optimistic that our current momentum will carry into Q4 and 2015.�

Our revenue for Q3 2014 grew 20%, to $26.4 million, when compared with the same period in 2013. Online revenue for Q3 2014 grew 29% to $24.2 million compared to Q3 2013.

Adjusted EBITDA (earnings before interest, other income and expense, income taxes, depreciation and amortization, as further adjusted to eliminate secondary offering costs and stock-based compensation) for Q3 2014 increased 88% to $4.9 million compared to $2.6 million for Q3 2013.

Total gross profit margin for Q3 2014 was 74%, compared to 70% for Q3 2013. Online gross profit margin increased to 75% for Q3 2014, compared to 71% for Q3 2013. Events gross profit margin increased to 64% for Q3 2014, as compared to 63% for Q3 2013.

Net income was $0.9 million for Q3 2014 compared to $0.6 million in Q3 2013. Adjusted net income (net income adjusted to eliminate amortization, stock-based compensation expense, secondary offering costs and the related income tax impact of these charges) for Q3 2014 was $2.3 million compared to $1.3 million in Q3 2013. Net income per basic share for Q3 2014 was $0.03 compared to $0.01 for Q3 2013. Adjusted net income per share (adjusted net income divided by adjusted weighted average diluted shares outstanding) for Q3 2014 was $0.07 compared to $0.03 for Q3 2013.

As of September�30, 2014, our cash, cash equivalents and investments totaled $42.4 million, and we had no outstanding bank debt.

In the quarter, we purchased 311,522 shares related to a previously announced Stock Repurchase Program at an average price of $8.49, reducing the outstanding share count to 32,983,218 shares as of September�30, 2014.

Recent Company Highlights

�

We had more than 175 IT Deal Alert customers in the quarter. We recognized $4.8 million of IT Deal Alert revenue in the quarter which is up 661% from a year ago and up 17% sequentially from last quarter.

�

International online revenues were up 29% in the quarter over the third quarter of 2013. International online revenues represented 32% of online revenues.

�

As the official media partner for the VMworld Awards for the seventh year in a row, TechTarget�s SearchServerVirtualization.com� staff appointed a team of experts and editors that selected 19 winning products from more than 200 entries.

Q4 and Updated 2014 Financial Guidance

In the fourth quarter of 2014, the Company expects total revenues to be within the range of $28.4 million to $29.6 million, online revenues within the range of $25.5 million to $26.5 million, events revenues within the range of $2.9 million to $3.1 million and adjusted EBITDA to be within the range of $6.0 million to $7.0 million.

For 2014, we expect overall revenues to be between $104 million and $105 million and adjusted EBITDA to be between $19 million and $20 million.

Conference Call and Webcast

TechTarget will discuss these financial results in a conference call at 5:00 p.m. (Eastern Time) today (November 4, 2014). 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 1-888-339-0724 (US callers), 1-855-669-9657 (Canadian callers) or 1-412-902-4121 (International callers).

For those investors unable to participate in the live conference call, a replay of the conference call will be available via telephone beginning November�4, 2014 one (1)�hour after the conference call through December�4, 2014 at 9:00 a.m. ET. To listen to the replay, for US, dial 1-877-344-7529 and use the conference number 10053415. Canadian callers should dial 1-855-669-9658 and also use the conference number 10053415. International callers should dial 1-412-317-0088 and also use the conference number 10053415. 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, other income and expense, income taxes, depreciation and amortization, as further adjusted to exclude secondary offering costs, stock-based compensation and restructuring charges, if any.�The term �adjusted net income� refers to a financial measure which we define as net income adjusted for amortization, stock-based compensation, secondary offering costs 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 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 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, including particularly continued increased sales of our IT Deal Alert offering and continued increased international growth; 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 Web�s leading destination for serious technology buyers researching and making enterprise technology decisions. Our extensive global network of online and social media, powered by TechTarget�s Activity Intelligence� platform, allows technology sales and marketing teams to leverage real-time purchase intent data to more intelligently engage technology buyers and prioritize follow-up based on active projects, technical priorities and business needs. With more than 120 highly targeted technology-specific websites and a wide selection of custom advertising, branding, lead generation and sales enablement solutions, TechTarget delivers unparalleled reach and innovative opportunities to drive technology sales and marketing success around the world.

TechTarget has offices in Atlanta, Beijing, Boston, London, Munich, 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) 2014 TechTarget, Inc. All rights reserved. TechTarget and the TechTarget logo are registered trademarks, and IT Deal Alert, Activity Intelligence and SearchServerVirtualization.com are trademarks of TechTarget. All other trademarks are the property of their respective owners.

�


Contacts:	�

Investor Inquiries	�	Media Inquiries
Janice Kelliher	�	Peter Ross
Chief Financial Officer	�	Vice President, Corporate Marketing
TechTarget	�	TechTarget
617-431-9449	�	617-431-9668
[email protected]	�	[email protected]

TECHTARGET, INC.

Consolidated Statements of Operations

(in 000�s, except per share amounts)

�

��

Three Months Ended
September�30,

�

Nine Months Ended
September�30,

�

��

2014

�

2013

�

2014

�

2013

�

��

(Unaudited)

�

Revenues:

��

�

Online

��

24,218

��

�

18,830

��

�

69,950

��

�

57,676

��

Events

��

�

2,214

��

�

3,281

��

�

5,607

��

�

7,081

��

�

Total revenues

��

�

26,432

��

�

22,111

��

�

75,557

��

�

64,757

��

Cost of revenues:

��

�

Online(1)

��

�

5,949

��

�

5,514

��

�

18,188

��

�

17,580

��

Events(1)

��

�

805

��

�

1,221

��

�

2,331

��

�

2,984

��

�

Total cost of revenues

��

�

6,754

��

�

6,735

��

�

20,519

��

�

20,564

��

�

Gross profit

��

�

19,678

��

�

15,376

��

�

55,038

��

�

44,193

��

Operating expenses:

��

�

Selling and marketing(1)

��

�

10,964

��

�

8,773

��

�

30,717

��

�

26,986

��

Product development(1)

��

�

1,854

��

�

1,680

��

�

5,201

��

�

5,097

��

General and administrative(1)

��

�

3,628

��

�

3,722

��

�

10,864

��

�

10,307

��

Depreciation

��

�

1,024

��

�

961

��

�

3,025

��

�

2,818

��

Amortization of intangible assets

��

�

451

��

�

474

��

�

1,356

��

�

1,756

��

�

Total operating expenses

��

�

17,921

��

�

15,610

��

�

51,163

��

�

46,964

��

�

Operating income (loss)

��

�

1,757

��

�

(234

)�

�

3,875

��

�

(2,771

)�

Interest and other (expense) income, net

��

�

(230

)�

�

148

��

�

(121

)�

�

(225

)�

��

�

Income (loss) before provision for (benefit from) income taxes

��

�

1,527

��

�

(86

)�

�

3,754

��

�

(2,996

)�

Provision for (benefit from) income taxes

��

�

589

��

�

(663

)�

�

1,378

��

�

(1,160

)�

��

�

Net income (loss)

��

938

��

�

577

��

�

2,376

��

�

(1,836

)�

��

�

Net income (loss) per common share:

��

�

Basic

��

0.03

��

�

0.01

��

�

0.07

��

�

(0.05

)�

��

�

Net income (loss) per common share:

��

�

Diluted

��

0.03

��

�

0.01

��

�

0.07

��

�

(0.05

)�

��

�

Weighted average common shares outstanding:

��

�

Basic

��

�

33,145

��

�

39,049

��

�

32,907

��

�

39,394

��

�

Weighted average common shares outstanding:

��

�

Diluted

��

�

34,663

��

�

39,502

��

�

34,184

��

�

39,394

��

�

(1)��Amounts include stock-based compensation expense as follows:

��

�

Cost of online revenues

��

�

��

�

��

�

128

��

Cost of events revenues

��

�

��

�

��

�

��

�

��

Selling and marketing

��

�

905

��

�

645

��

�

2,145

��

�

1,936

��

Product development

��

�

��

�

��

�

��

�

154

��

General and administrative

��

�

651

��

�

638

��

�

1,890

��

�

1,798

��

TECHTARGET, INC.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in 000�s)

�

��

For�the�Three�Months�Ended
September�30,

�

For�the�Nine�Months�Ended
September�30,

�

��

2014

�

��

2013

�

2014

�

��

2013

�

��

(Unaudited)

�

Net income (loss)

��

938

��

577

��

�

2,376

��

(1,836

)�

��

�

��

�

��

�

Interest and other expense (income), net

��

�

230

��

�

(148

)�

�

121

��

�

225

��

Provision for (benefit from) income taxes

��

�

589

��

�

(663

)�

�

1,378

��

�

(1,160

)�

Depreciation

��

�

1,024

��

�

961

��

�

3,025

��

�

2,818

��

Amortization of purchase price adj.

��

�

��

�

��

�

241

��

�

146

��

Amortization of intangible assets

��

�

451

��

�

474

��

�

1,356

��

�

1,756

��

�

��

�

��

�

EBITDA

��

�

3,298

��

�

1,234

��

�

8,497

��

�

1,949

��

Secondary offering costs

��

�

��

�

��

�

510

��

�

��

Stock-based compensation expense

��

�

1,622

��

�

1,382

��

�

4,218

��

�

4,028

��

�

��

�

��

�

Adjusted EBITDA

��

4,920

��

2,616

��

�

13,225

��

5,977

��

�

��

�

��

�

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 per share amounts)

�

��

For�the�Three�Months�Ended
September�30,

�

For�the�Nine�Months�Ended
September�30,

�

��

2014

�

2013

�

2014

�

2013

�

��

(Unaudited)

�

Net income (loss)

��

938

��

�

577

��

�

2,376

��

�

(1,836

)�

Income tax provision (benefit), GAAP

��

�

589

��

�

(663

)�

�

1,378

��

�

(1,160

)�

��

�

Net income (loss) before taxes

��

1,527

��

�

(86

)�

�

3,754

��

�

(2,996

)�

Amortization of intangible assets

��

�

451

��

�

474

��

�

1,356

��

�

1,756

��

Stock-based compensation expense

��

�

1,622

��

�

1,382

��

�

4,218

��

�

4,028

��

Secondary offering costs

��

�

��

�

��

�

510

��

�

��

Amortization of purchase price adjustment

��

�

��

�

��

�

241

��

�

146

��

Impact of income taxes

��

�

(1,379

)�

�

(553

)�

�

(4,001

)�

�

(968

)�

��

�

Adjusted net income

��

2,287

��

�

1,250

��

�

6,078

��

�

1,966

��

�

Net income (loss) per diluted share

��

0.03

��

�

0.01

��

�

0.07

��

�

(0.05

)�

Weighted average diluted shares outstanding

��

�

34,663

��

�

39,502

��

�

34,184

��

�

39,394

��

�

Adjusted net income per share

��

0.07

��

�

0.03

��

�

0.18

��

�

0.05

��

Adjusted weighted average diluted shares outstanding

��

�

34,663

��

�

39,502

��

�

34,184

��

�

39,861

��

�

Options, warrants and restricted stock, treasury method included in adjusted weighted average diluted shares above

��

�

��

�

��

�

��

�

467

��

�

Weighted average diluted shares outstanding

��

�

34,663

��

�

39,502

��

�

34,184

��

�

39,394

��

�

TECHTARGET, INC.

Financial Guidance for the Three Months Ended December�31, 2014

(in 000�s)

�


�	��	For�the�Three�Months Ended�December�31,�2014						�
�	��	Range						�
Revenues	��	$	28,400	��	��	$	29,600	�
	��	�	�	�	��	�	�	�
Adjusted EBITDA	��	$	6,000	��	��	$	7,000	�
	��	�	�	�	��	�	�	�
Depreciation, amortization and stock-based compensation	��	�	3,200	��	��	�	3,200	�
Interest and other expense, net	��	�	10	��	��	�	10	�
Provision for income taxes	��	�	1,250	��	��	�	1,650	�
	��	�	�	�	��	�	�	�
Net income	��	$	1,540	��	��	$	2,140	��
	��	�	�	�	��	�	�	�

Exhibit 99.2

November�4, 2014

Dear Fellow Shareholders:

We are pleased that our online revenues were up 29% in the quarter. Based on our results for the first 9 months combined with our Q4 guidance that we are issuing today, we are revising our 2014 revenue forecast to be between $104 million and $105 million. We are raising our adjusted EBITDA forecast to be between $19 million and $20 million for 2014.

We are encouraged that we saw strength across all geographies and products including a return to modest growth in North American core revenues, which is benefiting from the halo effect of our data business. We believe that core North American online revenues will continue to grow modestly in Q4 2014 and 2015. Overall North American online revenue was up 28% in the quarter.

In regards to the macro IT environment, we are not seeing any meaningful improvement as many of our customers continue to be revenue-challenged and as a result marketing budgets continue to be under pressure. Our growth was driven in large part by the return on the investments we made during the downturn in our direct international operations and our new data subscription product, IT Deal Alert^�, which is driving market share gains for us. The marketing budgets cuts last year were primarily implemented in Q3, setting up a favorable comparable this year. Our guidance for Q4 reflects online revenue growth in our target range of 15% to 20%.

Adjusted EBITDA was up 88% to $4.9 million. Adjusted EBITDA margin was 19%. Online gross margin was 75% versus 71% a year ago.

Q3 2014 Results

Our revenue for Q3 grew 20% to $26.4 million, when compared with the same period in 2013. Online revenues for Q3 2014 grew 29% to $24.2 million compared to Q3 2013.

Total gross profit margin for Q3 2014 was 74% compared to 70% in Q3 2013. Online gross margin was 75% in the quarter versus 71% a year ago. Events gross margin was 64% this quarter versus 63% a year ago.

IT Deal Alert Update

The success of IT Deal Alert continued in Q3 with revenues of $4.8 million. This is up over 600% from the same period a year ago and up 17% from Q2 2014. We had over 175 active customers in the quarter. Our renewal metrics among our top 100 customers continue to be approximately 75% and our revenue renewal rate continues to be over 200%.

International Update

International online revenues were up 29% in the quarter, with especially good strength coming from APAC, Germany and France. International revenues for the year are up approximately 25% and we are on target to hit our $30 million revenue goal for 2014.

Traffic Update

Organic traffic represented 93% of overall traffic in the quarter. Organic traffic for the year is up in excess of 20% and organic traffic in Q3 grew modestly. We are seeing improved traffic trends as Google continues to modify their algorithm and we optimize our sites to the areas of emphasis from Panda 4.0. This process is consistent with our experience that, over the long run, search engines reward high quality content and we are a beneficiary of that trend.

Share buyback

We bought 311,522 shares at an average price of $8.49 for a total expenditure of approximately $2.6 million during the quarter. We will continue to be opportunistic in regards to buying back shares. As of September�30, 2014, we had $17.4 million available in our existing buyback program.

Balance Sheet

Our cash and investments totaled $42.4 million as of September�30, 2014. We have no bank debt.

New Shelf Registration Filing

In the near future, we plan on filing a shelf registration with the SEC as we used up most of the shares in our previous shelf filing with our secondary offering in May of this year. We expect the filing will be for approximately 3�million primary shares and approximately 11�million secondary shares.

Q4 and Updated 2014 Guidance

We expect overall revenues in Q4 2014 to be between $28.4 million and $29.6 million. We expect online revenues to be between $25.5 million and $26.5 million. We expect event revenues to be between $2.9 and $3.1 million. We expect adjusted EBITDA to be between $6.0 and $7.0 million.

For 2014, we expect overall revenues to be between $104 million and $105 million and adjusted EBITDA to be between $19 million and $20 million.

Summary

We are pleased with our Q3 results and the upward revision to our 2014 plan. We continue to be optimistic about 2015. We look forward to sharing more good results in future quarters.

Sincerely,

Greg Strakosch

CEO

Forward Looking Statements

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Form 8-K TechTarget Inc For: Nov 04

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