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Exhibit 99.1
August 4, 2021
Dear Fellow Shareholders:
We continue to enjoy positive momentum, which is translating into broad-based strength in regards to products, customer segments and geographies.
For Q2 2021:
|
|
• |
Revenue grew 83% to approximately $64 million; Adjusted Revenue grew 92% to approximately $67 million. |
|
|
• |
Net income grew 7% to approximately $5 million; Adjusted EBITDA grew 116% to approximately $26 million. Net income margin was 8%. Adjusted EBITDA margin was 38%. |
|
|
• |
Gross margin was 72%; Adjusted Gross Margin was 76%. |
|
|
• |
Longer-Term Contracts represented 40% of revenue. |
|
|
• |
Cash flow from operations was $18.2 million. Free Cash Flow was $15.1 million. |
We continue to benefit from the three tailwinds that have been fueling our growth.
|
|
1. |
Our customers continue to partner with us as they execute on their strategic initiatives to modernize their sales and marketing organizations by integrating our purchase intent data into their sales and marketing workflow. They use this data to inform their sales and marketing outreach, which helps them improve response rates, win more deals and expand their market share. |
|
|
2. |
As companies continue to be more sensitive to privacy issues, they are attracted to our offerings because of our opt-in audience of registered members, who give us permission to observe what content they are consuming and share their contact information with relevant vendors. Many of our customers view this as superior to solutions that scrape the web and/or LinkedIn and collect and sell personal information with no permission from the individual. In addition, many customers view our first-party purchase intent data from our owned and operated websites as more useful and valuable than third party data. The ongoing saga of when Google is going to eliminate third party cookies has generated a lot of awareness around this issue with our customers and we believe we are benefitting from it. |
|
|
3. |
The COVID-19 pandemic has accelerated the pre-COVID-19 trend of the migration of face-to-face event budgets to online budgets. This has especially been the case for vendor content-driven demand generation, which is a long-standing core component of our product suite and a key component of the product strategies of our recent acquisitions. Customers are finding that content creation through our ESG offerings, promotion of their content through our content syndication offerings and webinar, video and virtual event creation through BrightTALK are very efficient means of replicating the sales funnel contribution they had previously sought from face to face events. |
Due to these trends coupled with good execution on our part, we are growing faster than anticipated. As we communicated in last quarter’s shareholder letter, Priority Engine growth has rebounded, registering 20% year-over-year growth in the quarter. Our June Priority Engine release more than doubled the number of accounts for which we provide actionable intelligence for our customers by leveraging the insights available to us through the BrightTALK network. It also significantly increased the ability of our customers to understand the best follow up approach for accounts visiting their own websites, and to see the entire buyers’ journey for an account through our new timeline feature. Sales momentum coming out of the June release is very strong, and we have a robust roadmap of additional features informed by customer feedback.
1 of 12
As you know, we have been busy on the acquisition front and have made good headway in the first six months of the year integrating the two acquisitions we made last December. BrightTALK and ESG both continue to perform according to our expectations and we are starting to see some payoff from our initial cross-selling efforts.
Today, we are announcing that we closed on the acquisition of Xtelligent Healthcare Media. Xtelligent is a Boston-area firm that creates high-quality independent content that helps over 1.5 million visitors per quarter make healthcare-related software and technology decisions. They have 10 dedicated, targeted websites that cover topics such as telehealth, healthcare analytics, revenue cycle management, healthcare IT security and electronic health records. The healthcare IT market is one of the most important vertical technology markets and a natural adjacency for TechTarget to expand into.
This acquisition checks all of the boxes for us. Xtelligent has an original content model with a permission-based audience of registered members and a large amount of first party purchase intent data. Similar to BrightTALK, Xtelligent did not have a natural way to monetize this purchase intent data on its own. Obviously, we do with Priority Engine. You can expect us to create new Priority Engine segments around some of these topics.
The founder and CEO of Xtelligent, Sean Brooks, is a former TechTarget VP, who worked with us for 12 years before founding Xtelligent almost 10 years ago. We are thrilled to welcome Sean back to the TechTarget team, where he will continue to run the Xtelligent business. The consideration was $25 million upon closing, which we paid from cash on hand, plus a $5 million earn-out.
Balance Sheet and Liquidity
As of June 30, 2021, we had approximately $109.1 million in cash and investments.
We have issued and outstanding approximately $201 million of senior unsecured convertible notes, which are convertible into our common stock contingent upon certain conditions contained within the note indenture being met. The convertible notes bear interest at .0125%, which payments are due semi-annually (June and December). The convertible notes mature December 2025.
Q3 and 2021 Guidance
For Q3 2021, we expect revenue to be between $65 and $67 million and Adjusted Revenue to be between $67 million and $69 million. Under accounting principles generally accepted in the United States (“GAAP”), we are not allowed to recognize approximately $2 million in the quarter related to the acquisition of deferred revenue. We expect Q3 2021 net income to be between $8.2 million and $8.3 million and Adjusted EBITDA to be between $26 million and $27 million. $21 million and $22 million.be between $21 million and
For the full year 2021, we are raising our annual forecast. We expect revenue to be between $254 and $259 million. We expect Adjusted Revenue to be between $265 million and $270 million. We expect net income to be between $24 million and $27 million and Adjusted EBITDA to be between $95 million and $100 million.
Summary
We are excited to see that the significant competitive advantages that we have built are being rewarded. This is good for our customers, employees, shareholders and communities. We are focused on continuing to scale a data subscription business with expanding margins to take advantage of the inherent operating leverage and high cash flow conversion of our financial model.
Sincerely,
|
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|
|
Michael Cotoia |
Greg Strakosch |
|
Chief Executive Officer |
Executive Chairman |
© 2021 TechTarget, Inc. All rights reserved. TechTarget, the TechTarget logo, and BrightTALK are registered trademarks, and IT Deal Alert, Priority Engine and Deal Data are trademarks of TechTarget. All other trademarks are the property of their respective owners.
2 of 12
TechTarget will discuss these financial results in a conference call at 5:00 p.m. (Eastern Time) today, August 4, 2021. Supplemental financial information and this Letter to Shareholders will be posted to the Investor Relations section of our website.
NOTE: Our 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 Relations 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), 1-412-902-4191 (International callers), or 1-855-669-9657 (Canadian callers).
For those investors unable to participate in the live conference call, a replay of the conference call will be available via telephone beginning August 4, 2021 approximately one (1) hour after the conference call through September 3, 2021 at 9:00 a.m. (Eastern Time). To listen to the replay, US callers should dial 1-877-344-7529 and use the conference number 10157754. International callers should dial 1-412-317-0088 and use the conference number 10157754. Canadian callers should dial 1-855-669-9658 and use the conference number 10157754. The webcast replay will also be available on http://investor.techtarget.com during the same period.
Non-GAAP Financial Measures
This letter and the accompanying tables include a discussion of Adjusted Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Margin, Adjusted Net Income, Adjusted Net Income Per Share and Free Cash Flow, all of which are non-GAAP financial measures which are provided as a complement to results provided in accordance with GAAP.
“Adjusted Revenue” means revenue recorded in accordance with GAAP plus the impact of fair value adjustments to acquired unearned revenue in accordance with ASC 805, Business Combinations.
“Adjusted Gross Profit” means gross profit adding back the effects of stock compensation, depreciation and amortization, and the impact of fair value adjustments to acquired unearned revenue.
“Adjusted Gross Margin” means Adjusted Gross Profit divided by Adjusted Revenue.
“Adjusted EBITDA” means earnings before net interest, other income and expense, income taxes, depreciation and amortization, as further adjusted to include the impact of the fair value adjustments to acquired unearned revenue and to exclude stock-based compensation and other one-time charges, such as costs related to acquisitions, if any.
“Adjusted EBITDA Margin” means Adjusted EBITDA divided by Adjusted Revenue.
“Free Cash Flow” means the change in net cash provided by operations less purchases of equipment and other capitalized assets.
“Adjusted Net Income” means net income adjusted for amortization, stock-based compensation, foreign exchange, interest on our debt instruments, impact of the fair value adjustment to acquired unearned revenue and one-time charges, if any, as further adjusted for the related income tax impact of the adjustments.
“Adjusted Net Income Per Share” means Adjusted Net Income divided by adjusted weighted average diluted shares outstanding. We adjust the average diluted shares outstanding to include shares on the if converted basis for our convertible note.
“Longer-Term Contracts” means contracts in excess of 270 days.
3 of 12
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 definitions of Adjusted EBITDA, Free Cash Flow, Adjusted Net Income and Adjusted Net Income Per Share may not be comparable to the definitions as reported by other companies. We believe that Adjusted EBITDA, Free Cash Flow, Adjusted Net Income and Adjusted Net Income Per Share provide relevant and useful information to enable us and investors to compare our operating performance using an additional measurement. We use these measures in our internal management reporting and planning process as primary measures 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, such as costs related to acquisitions and interest on our debt instruments. Free Cash Flow represents net cash provided by operating activities excluding purchases of property and equipment and other capitalized assets. Free Cash Flow provides useful information to management and investors about the amount of cash generated by the business after the purchases of property and equipment and other capitalized assets, which can then be used to, among other things, invest in the business and make strategic acquisitions. A limitation of the utility of Free Cash Flow as a measure of financial performance is that it does not represent the total increase or decrease in our cash balance for the period. 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, except that full reconciliations of certain forward-looking non-GAAP measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including but not limited to, stock-based compensation and other one-time charges such as acquisitions.
4 of 12
This shareholder letter contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or referenced in this shareholder letter that address activities, events or developments which we expect will or may occur in the future are forward-looking statements, including statements regarding our intent, beliefs or current expectations and those of our management team. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of these words or other similar terms or expressions that concern our expectations, strategy, priorities, plans, or intentions. Such statements may include those regarding our future financial results and other projections or measures of our future operating performance, including the drivers of such growth, profitability, and performance (including, in each case, any potential impact of product and service development efforts, GDPR, potential changes to customer relationships, and other operational decisions); expectations concerning market opportunities and our ability to capitalize on them; the amount and timing of the benefits expected from acquisitions, new strategies, products or services and other potential sources of additional revenue; and the behavior of our members, partners, and customers. These statements speak only as of the date of this shareholder letter and are based on our current plans and expectations. Such forward-looking statements are not guarantees of future performance and 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 continued increased sales of our IT Deal Alert offerings and continued increased international growth; relationships with customers, strategic partners and employees; the duration and extent of the COVID-19 pandemic; difficulties in integrating acquired businesses; changes in economic or regulatory conditions or other trends affecting the internet, internet advertising and information technology industries; data privacy laws, rules, and regulations; and other matters included in our SEC filings, including in our Annual Report on Form 10-K for the year ended December 31, 2020 and our Quarterly Report on Form 10-Q for quarter ended June 30, 2021. Actual results may differ materially from those contemplated by the forward-looking statements. We undertake no obligation to update our forward-looking statements to reflect future events or circumstances.
5 of 12
Consolidated Balance Sheet
(in 000’s, except per share data)
|
|
|
June 30, 2021 |
|
|
December 31, 2020 |
|
||
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|||
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
109,038 |
|
|
$ |
82,616 |
|
|
Short-term investments |
|
|
84 |
|
|
|
84 |
|
|
Accounts receivable, net of allowance for doubtful accounts of $1,646 and $1,754 respectively |
|
|
39,718 |
|
|
|
40,183 |
|
|
Prepaid taxes |
|
|
— |
|
|
|
796 |
|
|
Prepaid expenses and other current assets |
|
|
4,562 |
|
|
|
4,084 |
|
|
Total current assets |
|
|
153,402 |
|
|
|
127,763 |
|
|
Property and equipment, net |
|
|
16,453 |
|
|
|
13,661 |
|
|
Goodwill |
|
|
182,222 |
|
|
|
179,118 |
|
|
Intangible assets, net |
|
|
105,441 |
|
|
|
108,872 |
|
|
Operating lease assets with right-of-use |
|
|
22,291 |
|
|
|
26,031 |
|
|
Deferred tax assets |
|
|
1,500 |
|
|
|
216 |
|
|
Other assets |
|
|
909 |
|
|
|
907 |
|
|
Total assets |
|
$ |
482,218 |
|
|
$ |
456,568 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,718 |
|
|
$ |
4,303 |
|
|
Current operating lease liability |
|
|
3,657 |
|
|
|
3,611 |
|
|
Accrued expenses and other current liabilities |
|
|
13,430 |
|
|
|
16,539 |
|
|
Accrued compensation expenses |
|
|
3,438 |
|
|
|
5,789 |
|
|
Income taxes payable |
|
|
197 |
|
|
|
487 |
|
|
Contract liabilities |
|
|
27,854 |
|
|
|
15,689 |
|
|
Total current liabilities |
|
|
52,294 |
|
|
|
46,418 |
|
|
Non-current lease liability |
|
|
23,482 |
|
|
|
26,943 |
|
|
Convertible debt |
|
|
195,303 |
|
|
|
153,882 |
|
|
Other liabilities |
|
|
1,221 |
|
|
|
2,971 |
|
|
Deferred tax liabilities |
|
|
16,086 |
|
|
|
23,848 |
|
|
Total liabilities |
|
|
288,386 |
|
|
|
254,062 |
|
|
Leases and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding |
|
|
— |
|
|
|
— |
|
|
Common stock, $0.001 par value; 100,000,000 shares authorized; 55,669,885 and 55,633,155 shares issued, respectively; 28,159,043 and 28,122,603 shares outstanding, respectively |
|
|
56 |
|
|
|
56 |
|
|
Treasury stock, at cost; 27,510,842 and 27,510,552 shares, respectively |
|
|
(199,796 |
) |
|
|
(199,796 |
) |
|
Additional paid-in capital |
|
|
345,609 |
|
|
|
363,055 |
|
|
Accumulated other comprehensive income |
|
|
3,220 |
|
|
|
1,611 |
|
|
Retained earnings |
|
|
44,743 |
|
|
|
37,580 |
|
|
Total stockholders’ equity |
|
|
193,832 |
|
|
|
202,506 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
482,218 |
|
|
$ |
456,568 |
|
6 of 12
Consolidated Statements of Income and Comprehensive Income
(in 000’s, except per share data)
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
||||||||||
|
|
|
June 30, |
|
June 30, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
2021 |
|
|
2020 |
|
||||
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
(Unaudited) |
|
||||
|
Revenue |
|
$ |
63,711 |
|
|
$ |
34,796 |
|
$ |
116,680 |
|
|
$ |
66,212 |
|
|
Cost of revenue(1) |
|
|
17,114 |
|
|
|
8,785 |
|
|
32,282 |
|
|
|
16,936 |
|
|
Amortization of acquired technology |
|
|
776 |
|
|
|
— |
|
|
1,541 |
|
|
|
— |
|
|
Gross profit |
|
|
45,821 |
|
|
|
26,011 |
|
|
82,857 |
|
|
|
49,276 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing(1) |
|
|
22,099 |
|
|
|
12,570 |
|
|
43,705 |
|
|
|
25,519 |
|
|
Product development(1) |
|
|
2,534 |
|
|
|
1,846 |
|
|
5,457 |
|
|
|
3,878 |
|
|
General and administrative(1) |
|
|
6,208 |
|
|
|
3,267 |
|
|
12,643 |
|
|
|
6,622 |
|
|
Depreciation, excluding depreciation of $446, $221, $827 and $392, respectively, included in cost of revenue |
|
|
1,388 |
|
|
|
1,171 |
|
|
2,609 |
|
|
|
2,357 |
|
|
Amortization |
|
|
1,658 |
|
|
|
282 |
|
|
3,288 |
|
|
|
441 |
|
|
Total operating expenses |
|
|
33,887 |
|
|
|
19,136 |
|
|
67,702 |
|
|
|
38,817 |
|
|
Operating income |
|
|
11,934 |
|
|
|
6,875 |
|
|
15,155 |
|
|
|
10,459 |
|
|
Interest and other income (expense), net |
|
|
(486 |
) |
|
|
(10 |
) |
|
(1,182 |
) |
|
|
(479 |
) |
|
Income before provision for income taxes |
|
|
11,448 |
|
|
|
6,865 |
|
|
13,973 |
|
|
|
9,980 |
|
|
Provision for income taxes |
|
|
6,328 |
|
|
|
2,092 |
|
|
7,043 |
|
|
|
3,000 |
|
|
Net income |
|
$ |
5,120 |
|
|
$ |
4,773 |
|
$ |
6,930 |
|
|
$ |
6,980 |
|
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized income (loss) on investments (net of tax provision of $0, $(24), $0 and $13, respectively) |
|
$ |
— |
|
|
$ |
84 |
|
$ |
— |
|
|
$ |
(48 |
) |
|
Foreign currency translation gain (loss) |
|
|
575 |
|
|
|
21 |
|
|
1,609 |
|
|
|
(32 |
) |
|
Other comprehensive income (loss) |
|
|
575 |
|
|
|
105 |
|
|
1,609 |
|
|
|
(80 |
) |
|
Comprehensive income |
|
$ |
5,695 |
|
|
$ |
4,878 |
|
$ |
8,539 |
|
|
$ |
6,900 |
|
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.18 |
|
|
$ |
0.17 |
|
$ |
0.25 |
|
|
$ |
0.25 |
|
|
Diluted |
|
$ |
0.17 |
|
|
$ |
0.17 |
|
$ |
0.24 |
|
|
$ |
0.25 |
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
28,152 |
|
|
|
27,533 |
|
|
28,146 |
|
|
|
27,768 |
|
|
Diluted |
|
|
32,144 |
|
|
|
28,163 |
|
|
32,121 |
|
|
|
28,304 |
|
(1) Amounts include stock-based compensation expense as follows:
|
Cost of revenue |
|
$ |
384 |
|
|
$ |
71 |
|
$ |
896 |
|
|
$ |
140 |
|
|
Selling and marketing |
|
|
3,535 |
|
|
|
2,118 |
|
|
7,058 |
|
|
|
4,307 |
|
|
Product development |
|
|
121 |
|
|
|
125 |
|
|
776 |
|
|
|
321 |
|
|
General and administrative |
|
|
1,972 |
|
|
|
979 |
|
|
3,882 |
|
|
|
1,953 |
|
7 of 12
Consolidated Statements of Cash Flows
(in 000’s, except per share data)
|
|
|
For the Six Months Ended |
|
|||||
|
|
|
June 30, |
|
|||||
|
|
|
2021 |
|
|
2020 |
|
||
|
|
|
(Unaudited) |
|
|||||
|
Operating activities: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
6,930 |
|
|
$ |
6,980 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
3,436 |
|
|
|
2,749 |
|
|
Amortization |
|
|
4,829 |
|
|
|
441 |
|
|
Provision for bad debt |
|
|
6 |
|
|
|
317 |
|
|
Stock-based compensation |
|
|
12,612 |
|
|
|
6,721 |
|
|
Amortization of debt issuance costs |
|
|
654 |
|
|
|
4 |
|
|
Deferred tax provision |
|
|
1,228 |
|
|
|
(1,236 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
460 |
|
|
|
1,217 |
|
|
Prepaid expenses and other current assets |
|
|
(867 |
) |
|
|
(17 |
) |
|
Other assets |
|
|
388 |
|
|
|
15 |
|
|
Accounts payable |
|
|
(552 |
) |
|
|
(187 |
) |
|
Income taxes payable |
|
|
502 |
|
|
|
4,162 |
|
|
Accrued expenses and other current liabilities |
|
|
(3,197 |
) |
|
|
(346 |
) |
|
Operating lease right-of-use assets and liabilities, net |
|
|
(2,239 |
) |
|
|
(182 |
) |
|
Accrued compensation expenses |
|
|
(728 |
) |
|
|
(637 |
) |
|
Contract liabilities |
|
|
12,165 |
|
|
|
700 |
|
|
Other liabilities |
|
|
(1,746 |
) |
|
|
1,140 |
|
|
Net cash provided by operating activities |
|
|
33,881 |
|
|
|
21,841 |
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
Purchases of property and equipment, and other capitalized assets, net |
|
|
(6,225 |
) |
|
|
(3,338 |
) |
|
Purchases of investments and maturities of investments |
|
|
— |
|
|
|
(71 |
) |
|
Acquisitions of businesses, net |
|
|
— |
|
|
|
(5,015 |
) |
|
Net cash used in investing activities |
|
|
(6,225 |
) |
|
|
(8,424 |
) |
|
Financing activities: |
|
|
|
|
|
|
|
|
|
Tax withholdings related to net share settlements |
|
|
(370 |
) |
|
|
(68 |
) |
|
Purchase of treasury shares and related costs |
|
|
— |
|
|
|
(14,824 |
) |
|
Registration fees |
|
|
(29 |
) |
|
|
— |
|
|
Proceeds from stock option exercises |
|
|
16 |
|
|
|
— |
|
|
Payment of earnout liabilities |
|
|
(1,032 |
) |
|
|
— |
|
|
Term loan principal payment |
|
|
— |
|
|
|
(625 |
) |
|
Net cash used in financing activities |
|
|
(1,415 |
) |
|
|
(15,517 |
) |
|
Effect of exchange rate changes on cash |
|
|
181 |
|
|
|
3 |
|
|
Net increase (decrease) in cash |
|
|
26,422 |
|
|
|
(2,097 |
) |
|
Cash at beginning of period |
|
|
82,616 |
|
|
|
52,487 |
|
|
Cash at end of period |
|
$ |
109,038 |
|
|
$ |
50,390 |
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
Cash paid for taxes, net |
|
$ |
5,306 |
|
|
$ |
92 |
|
8 of 12
TechTarget, Inc.
Reconciliation of Revenue to Adjusted Revenue
(in 000’s)
|
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
|||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
||||||||||
|
Revenue |
|
$ |
63,711 |
|
|
$ |
34,796 |
|
|
$ |
116,680 |
|
|
$ |
66,212 |
|
|
Impact of fair value adjustment on acquired unearned revenue |
|
|
3,271 |
|
|
|
— |
|
|
|
8,296 |
|
|
|
— |
|
|
Adjusted Revenue |
|
$ |
66,982 |
|
|
$ |
34,796 |
|
|
$ |
124,976 |
|
|
$ |
66,212 |
|
TechTarget, Inc.
Reconciliation of Gross Profit to Adjusted Gross Profit
(in 000’s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
|
|||||||||||
|
|
|
June 30, |
|
|
June 30, |
|
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
||||
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
||||||||||
|
Gross Profit |
|
$ |
45,821 |
|
|
$ |
26,011 |
|
|
$ |
82,857 |
|
|
$ |
49,276 |
|
|
|
Stock compensation |
|
384 |
|
|
71 |
|
|
896 |
|
|
140 |
|
|
||||
|
Depreciation and amortization |
|
|
1,221 |
|
|
221 |
|
|
|
2,368 |
|
|
392 |
|
|
||
|
Impact of fair value adjustment of acquired unearned revenue |
|
|
3,271 |
|
|
|
— |
|
|
|
8,296 |
|
|
|
— |
|
|
|
Adjusted Gross Profit |
|
$ |
50,697 |
|
|
$ |
26,303 |
|
|
$ |
94,417 |
|
|
$ |
49,808 |
|
|
|
Gross Margin |
|
72 |
|
% |
75 |
|
% |
71 |
|
% |
74 |
|
% |
||||
|
Adjusted Gross Margin |
|
|
76 |
|
% |
76 |
|
% |
|
76 |
|
% |
75 |
|
% |
||
TechTarget, Inc.
Reconciliation of Cash Provided by Operations to Free Cash Flow
(in 000’s)
|
|
|
Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
|||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
||||||||||
|
Net cash provided by operating activities |
|
$ |
18,191 |
|
|
$ |
12,143 |
|
|
$ |
33,881 |
|
|
$ |
21,841 |
|
|
Purchases of property and equipment, and other capitalized assets, net |
|
|
(3,094 |
) |
|
|
(1,702 |
) |
|
|
(6,225 |
) |
|
|
(3,338 |
) |
|
Free Cash Flow |
|
$ |
15,097 |
|
|
$ |
10,441 |
|
|
$ |
27,656 |
|
|
$ |
18,503 |
|
9 of 12
TechTarget, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(in 000’s)
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
||||||||||
|
Net income |
|
$ |
5,120 |
|
|
$ |
4,773 |
|
|
$ |
6,930 |
|
|
$ |
6,980 |
|
|
Interest expense, net |
|
|
379 |
|
|
|
164 |
|
|
|
773 |
|
|
|
326 |
|
|
Provision for income taxes |
|
|
6,328 |
|
|
|
2,092 |
|
|
|
7,043 |
|
|
|
3,000 |
|
|
Depreciation and amortization |
|
|
4,268 |
|
|
|
1,674 |
|
|
|
8,265 |
|
|
|
3,190 |
|
|
EBITDA |
|
|
16,095 |
|
|
|
8,703 |
|
|
|
23,011 |
|
|
|
13,496 |
|
|
Stock-based compensation expense |
|
|
6,012 |
|
|
|
3,293 |
|
|
|
12,612 |
|
|
|
6,721 |
|
|
Other expense, net, including acquisition costs of $50, $0, $248 and $0, respectively |
|
|
156 |
|
|
|
(154 |
) |
|
|
657 |
|
|
|
152 |
|
|
Impact of fair value adjustment on acquired unearned revenue |
|
|
3,271 |
|
|
|
— |
|
|
|
8,296 |
|
|
|
— |
|
|
Adjusted EBITDA |
|
$ |
25,534 |
|
|
$ |
11,842 |
|
|
$ |
44,576 |
|
|
$ |
20,369 |
|
10 of 12
Reconciliation of Net Income to Adjusted Net Income and
Net Income per Diluted Share to Adjusted Net Income per Diluted Share
(in 000’s, except per share data)
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|||||
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
||||||||||
|
Net income |
|
$ |
5,120 |
|
|
$ |
4,773 |
|
|
$ |
6,930 |
|
|
$ |
6,980 |
|
|
Provision for income taxes |
|
|
6,328 |
|
|
|
2,092 |
|
|
|
7,043 |
|
|
|
3,000 |
|
|
Net income before taxes |
|
|
11,448 |
|
|
|
6,865 |
|
|
|
13,973 |
|
|
|
9,980 |
|
|
Amortization of intangible assets |
|
|
2,435 |
|
|
|
282 |
|
|
|
4,830 |
|
|
|
441 |
|
|
Stock-based compensation expense |
|
|
6,012 |
|
|
|
3,293 |
|
|
|
12,612 |
|
|
|
6,721 |
|
|
Foreign exchange loss and interest expense |
|
|
497 |
|
|
|
48 |
|
|
|
1,204 |
|
|
|
559 |
|
|
Transaction related expenses |
|
|
50 |
|
|
|
— |
|
|
|
248 |
|
|
|
— |
|
|
Impact of fair value adjustment on acquired unearned revenue |
|
|
3,271 |
|
|
|
— |
|
|
|
8,296 |
|
|
|
— |
|
|
Adjusted income tax provision (1) |
|
|
(7,322 |
) |
|
|
(2,671 |
) |
|
|
(10,673 |
) |
|
|
(4,502 |
) |
|
Adjusted Net Income |
|
$ |
16,391 |
|
|
$ |
7,817 |
|
|
$ |
30,490 |
|
|
$ |
13,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted share |
|
$ |
0.17 |
|
|
$ |
0.17 |
|
|
$ |
0.24 |
|
|
$ |
0.25 |
|
|
Weighted average diluted shares outstanding |
|
|
32,144 |
|
|
|
28,163 |
|
|
|
32,121 |
|
|
|
28,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income Per Diluted Share |
|
$ |
0.51 |
|
|
$ |
0.28 |
|
|
$ |
0.95 |
|
|
$ |
0.47 |
|
|
Adjusted weighted average diluted shares outstanding (2) |
|
|
32,144 |
|
|
|
28,163 |
|
|
|
32,121 |
|
|
|
28,304 |
|
|
|
(1) |
Adjusted income tax provision was calculated using an adjusted effective tax rate, excluding discrete items, for each respective period. |
|
|
(2) |
Adjusted weighted average diluted shares outstanding for the three and six months ended, June 30, 2021 includes 4.0 million shares related to unvested stock awards calculated using the treasury method and the dilutive impact on the if converted basis of our convertible bond. Adjusted weighted average diluted shares outstanding for the three and six months ended June 30, 2020, includes 0.6 million and 0.5 million related to unvested stock awards calculated using the treasury method. |
11 of 12
Financial Guidance for the Three Months Ended September 30, 2021
(in 000’s)
(Unaudited)
|
|
|
Three Months Ended September 30, 2021 |
|
|||||
|
|
Range |
|
||||||
|
Adjusted Revenue |
|
$ |
65,000 |
|
|
$ |
67,000 |
|
|
Expected impact of fair value adjustment of unearned revenue |
|
|
1,500 |
|
|
|
2,000 |
|
|
Revenue |
|
$ |
63,500 |
|
|
$ |
65,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
26,000 |
|
|
|
27,000 |
|
|
Depreciation, amortization and stock-based compensation |
|
|
12,700 |
|
|
|
12,700 |
|
|
Expected impact of fair value adjustment of unearned revenue |
|
|
1,500 |
|
|
|
2,000 |
|
|
Interest and other expense, net |
|
|
700 |
|
|
|
700 |
|
|
Provision for income taxes |
|
|
2,900 |
|
|
|
3,300 |
|
|
Net income |
|
$ |
8,200 |
|
|
$ |
8,300 |
|
12 of 12
