(Former name, former address and formal fiscal year, if changed since last report):Not applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~July 31, ~~2019,~~2020, the registrant had ~~28,003,987~~27,536,786 shares of common stock, $0.001 par value per share, outstanding.

	September 30, 2019			December 31, 2018
	(Unaudited)						June 30, 2020			December 31, 2019
Assets							(Unaudited)			(Unaudited)
Current assets:
Cash and cash equivalents	$	52,140		$	34,673
Cash							$	50,390		$	52,487
Short-term investments		—			500			5,023			5,012
Accounts receivable, net of allowance for doubtful accounts of $2,080 and $2,099, respectively		24,643			30,042
Accounts receivable, net of allowance for doubtful accounts of $2,028 and $1,899 respectively								25,568			27,102
Prepaid taxes		1,655			1,834			—			1,017
Prepaid expenses and other current assets		2,658			3,069			1,830			1,813
Total current assets		81,096			70,118			82,811			87,431
Property and equipment, net		12,121			10,901			12,951			12,371
Goodwill		93,540			93,687			97,023			93,639
Intangible assets, net		735			849			3,471			710
Operating lease assets with right-of-use		25,518			—			25,485			26,385
Deferred tax assets		108			55			616			136
Other assets		899			853			903			936
Total assets	$	214,017		$	176,463		$	223,260		$	221,608
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,007		$	1,871		$	1,847		$	2,036
Current operating lease liability		2,209			—			2,769			2,571
Current portion of term loan		1,241			1,241			1,554			1,241
Accrued expenses and other current liabilities		3,182			3,260			3,737			2,476
Accrued compensation expenses		1,253			2,432			1,164			3,679
Income taxes payable		—			176			3,217			65
Contract liabilities		4,949			5,573			5,051			4,335
Total current liabilities		14,841			14,553			19,339			16,403
Long-term liabilities:
Long-term portion of term loan		22,784			23,714			21,540			22,473
Non-current operating lease liability		27,614			—			26,845			28,170
Deferred rent		—			4,949
Deferred tax liabilities		1,007			662			850			1,611
Other liabilities								1,140			—
Total liabilities		66,246			43,878			69,714			68,657
Leases and contingencies (see Note 9)
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; 54,666,417 and 54,117,325 shares issued, respectively; 28,001,487 and 27,791,045 shares outstanding, respectively		55			54
Treasury stock, at cost; 26,664,930 and 26,326,280 shares, respectively		(182,630	)		(177,905	)
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued or outstanding								—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 55,035,081 and 54,903,824 shares issued, respectively; 27,536,786 and 28,142,519 shares outstanding, respectively								55			55
Treasury stock, at cost; 27,498,295 and 26,761,305 shares, respectively								(199,796	)		(184,972	)
Additional paid-in capital		314,384			307,014			326,194			317,675
Accumulated other comprehensive loss		(467	)		(215	)		(399	)		(319	)
Retained earnings		16,429			3,637			27,492			20,512
Total stockholders’ equity		147,771			132,585			153,546			152,951
Total liabilities and stockholders’ equity	$	214,017		$	176,463		$	223,260		$	221,608

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
	(Unaudited)						(Unaudited)						(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	33,809		$	30,742		$	98,067		$	89,513		$	34,796		$	34,286		$	66,212		$	64,258
Cost of revenues⁽¹⁾		8,047			7,445			23,011			21,294			8,785			7,952			16,936			14,964
Gross profit		25,762			23,297			75,056			68,219			26,011			26,334			49,276			49,294
Operating expenses:
Selling and marketing⁽¹⁾		12,454			12,479			38,877			35,254			12,570			13,976			25,519			26,422
Product development⁽¹⁾		2,085			2,340			6,073			6,527			1,846			2,001			3,878			3,988
General and administrative⁽¹⁾		3,107			3,938			9,252			10,663			3,267			3,123			6,622			6,145
Depreciation and amortization, excluding depreciation of $94, $0, $163, $0 included in cost of revenues		1,205			1,156			3,481			3,404
Depreciation and amortization, excluding depreciation of $221, $56, $392, and $69, respectively, included in cost of revenues														1,453			1,146			2,798			2,276
Total operating expenses		18,851			19,913			57,683			55,848			19,136			20,246			38,817			38,831
Operating income		6,911			3,384			17,373			12,371			6,875			6,088			10,459			10,463
Interest and other expense, net		(409	)		(362	)		(798	)		(1,206	)		(10	)		(253	)		(479	)		(390	)
Income before provision for (benefit from) income taxes		6,502			3,022			16,575			11,165
Provision for (benefit from) income taxes		1,151			(747	)		3,783			882
Income before provision for income taxes														6,865			5,835			9,980			10,073
Provision for income taxes														2,092			1,684			3,000			2,632
Net income	$	5,351		$	3,769		$	12,792		$	10,283		$	4,773		$	4,151		$	6,980		$	7,441
Other comprehensive loss, net of tax:
Unrealized gain on investments (net of tax provision of $0,$5,$0, $8)	$	-		$	1		$	-		$	13
Foreign currency translation loss		(235	)		(120	)		(252	)		(249	)
Other comprehensive loss		(235	)		(119	)		(252	)		(236	)
Other comprehensive income (loss), net of tax:
Unrealized loss on investments (net of tax provision of $(24), $0, $13, and $0, respectively)													$	84		$	—		$	(48	)	$	—
Foreign currency translation gain (loss)														21			(58	)		(32	)		(17	)
Other comprehensive income (loss)														105			(58	)		(80	)		(17	)
Comprehensive income	$	5,116		$	3,650		$	12,540		$	10,047		$	4,878		$	4,093		$	6,900		$	7,424
Net income per common share:
Basic	$	0.19		$	0.14		$	0.46		$	0.37		$	0.17		$	0.15		$	0.25		$	0.27
Diluted	$	0.19		$	0.13		$	0.45		$	0.36		$	0.17		$	0.15		$	0.25		$	0.26
Weighted average common shares outstanding:
Basic		27,910			27,827			27,785			27,627			27,533			27,640			27,768			27,723
Diluted		28,370			28,764			28,253			28,711			28,163			28,232			28,304			28,226

Cost of revenues	$	64	$	53	$	144	$	114	$	71	$	41	$	140	$	80
Selling and marketing		1,911		1,608		6,567		3,263		2,118		2,964		4,307		4,655
Product development		106		73		292		113		125		93		321		186
General and administrative		849		1,394		2,151		2,654		979		664		1,953		1,303

For ~~The Three~~the three and ~~Nine Months Ended September~~six months ended June 30, ~~2018~~2020

	Common Stock				Treasury Stock																	Common Stock				Treasury Stock
	Number of Shares		$0.001 Par Value		Number of Shares		Cost			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss)			Retained Earnings			Total Stockholders’ Equity			Number of Shares		$0.001 Par Value		Number of Shares		Cost			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss)			Retained Earnings		Total Stockholders’ Equity
Balance, December 31, 2017		53,338,297	$	53		25,855,182	$	(170,816	)	$	300,763		$	64		$	(9,318	)	$	120,746
Issuance of common stock from exercise of options		74,375		—		—		—			406			—			—			406
Balance, December 31, 2019																							54,903,824	$	55		26,761,305	$	(184,972	)	$	317,675		$	(319	)	$	20,512	$	152,951
Issuance of common stock from restricted stock awards		38,180		—		—		—			—			—			—			—			123,027		—		—		—			—			—			—		—
Purchase of common stock through stock buyback		—		—		112,303		(1,613	)		—			—			—			(1,613	)		—		—		736,760		(14,824	)		—			—			—		(14,824	)
Impact of net settlements		—		—		—		—			(522	)		—			—			(522	)		230		—		230		—			(68	)		—			—		(68	)
Stock-based compensation expense⁽¹⁾																							—		—		—		—			5,294			—			—		5,294
Comprehensive income:
Unrealized loss on investments																							—		—		—		—			—			(132	)		—		(132	)
Unrealized loss on foreign currency exchange																							—		—		—		—			—			(53	)		—		(53	)
Net income																							—		—		—		—			—			—			2,207		2,207
Balance, March 31, 2020																							55,027,081	$	55		27,498,295	$	(199,796	)	$	322,901		$	(504	)	$	22,719	$	145,375
Issuance of common stock from restricted stock awards																							8,000		—		—		—			—			—			—		—
Stock-based compensation expense		—		—		—		—			1,501			—			—			1,501			—		—		—		—			3,293			—			—		3,293
Comprehensive income:
Unrealized gain on investments		—		—		—		—			—			4			—			4			—		—		—		—			—			84			—		84
Unrealized gain on foreign currency exchange		—		—		—		—			—			134			—			134			—		—		—		—			—			21			—		21
Net income		—		—		—		—			—			—			2,094			2,094			—		—		—		—			—			—			4,773		4,773
Comprehensive income																				2,232
Balance, March 31, 2018		53,450,852	$	53		25,967,485	$	(172,429	)	$	302,148		$	202		$	(7,224	)	$	122,750
Issuance of common stock from exercise of options		81,000		1		—		—			477			—			—			478
Issuance of common stock from restricted stock awards		13,887		—		—		—			—			—			—			—
Impact of net settlements		—		—		—		—			(213	)		—			—			(213	)
Stock-based compensation expense		—		—		—		—			1,514			—			—			1,514
Comprehensive income:
Unrealized gain on investments		—		—		—		—			—			8			—			8
Unrealized loss on foreign currency exchange		—		—		—		—			—			(263	)		—			(263	)
Net income		—		—		—		—			—			—			4,420			4,420
Comprehensive income																				4,165
Balance, June 30, 2018		53,545,739	$	54		25,967,485	$	(172,429	)	$	303,926		$	(53	)	$	(2,804	)	$	128,694
Issuance of common stock from exercise of options		12,715		—		—		—			72			—			—			72
Issuance of common stock from restricted stock awards		510,128		—		—		—			—			—			—			—
Purchase of common stock through stock buyback		—		—		99,426		(2,351	)		—			—			—			(2,351	)
Impact of net settlements		13,693		—		13,693		—			(2,338	)		—			—			(2,338	)
Stock-based compensation expense		—		—		—		—			3,129			—			—			3,129
Comprehensive income (loss):
Unrealized gain on investments		—		—		—		—			—			1			—			1
Unrealized gain on foreign currency exchange		—		—		—		—			—			(120	)		—			(120	)
Net income		—		—		—		—			—			—			3,769			3,769
Comprehensive income																				3,650
Balance, September 30, 2018		54,082,275	$	54		26,080,604	$	(174,780	)	$	304,789		$	(172	)	$	965		$	130,856
Balance, June 30, 2020																							55,035,081	$	55		27,498,295	$	(199,796	)	$	326,194		$	(399	)	$	27,492	$	153,546

For ~~The Three~~the three and ~~Nine Months Ended September~~six months ended June 30, 2019

	Common Stock				Treasury Stock																Common Stock				Treasury Stock
	Number of Shares		$0.001 Par Value		Number of Shares		Cost			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss)			Retained Earnings		Total Stockholders’ Equity			Number of Shares		$0.001 Par Value		Number of Shares		Cost			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss)			Retained Earnings		Total Stockholders’ Equity
Balance, December 31, 2018		54,117,325	$	54		26,326,280	$	(177,905	)	$	307,014		$	(215	)	$	3,637	$	132,585			54,117,325	$	54		26,326,280	$	(177,905	)	$	307,014		$	(215	)	$	3,637	$	132,585
Issuance of common stock from exercise of options		10,000		—		—		—			23			—			—		23			10,000		—		—		—			23			—			—		23
Issuance of common stock from restricted stock awards		112,545		—		—		—			—			—			—		—			112,545		—		—		—			—			—			—		—
Purchase of common stock through stock buyback		—		—		220,297		(3,125	)		—			—			—		(3,125	)		—		—		220,297		(3,125	)		—			—			—		(3,125	)
Impact of net settlements		6,391		—		6,391		—			(868	)		—			—		(868	)		6,391		—		6,391		—			(868	)		—			—		(868	)
Stock-based compensation expense		—		—		—		—			3,179			—			—		3,179			—		—		—		—			3,179			—			—		3,179
Comprehensive income:
Unrealized gain on foreign currency exchange		—		—		—		—			—			41			—		41			—		—		—		—			—			41			—		41
Net income		—		—		—		—			—			—			3,290		3,290			—		—		—		—			—			—			3,290		3,290
Comprehensive income																			3,331
Balance, March 31, 2019		54,246,261	$	54		26,552,968	$	(181,030	)	$	309,348		$	(174	)	$	6,927	$	135,125			54,246,261	$	54		26,552,968	$	(181,030	)	$	309,348		$	(174	)	$	6,927	$	135,125
Issuance of common stock from exercise of options																						56,207		—		—		—			—			—			—		—
Issuance of common stock from restricted stock awards		56,207		—		—		—			—			—			—		—			—		—		97,427		(1,600	)		—			—			—		(1,600	)
Purchase of common stock through stock buyback		—		—		97,427		(1,600	)		—			—			—		(1,600	)		—		—		—		—			3,762			—			—		3,762
Stock-based compensation expense		—		—		—		—			3,762			—			—		3,762			—		—		—		—			—			—			—		—
Comprehensive income:
Unrealized loss on foreign currency exchange		—		—		—		—			—			(58	)		—		(58	)
Unrealized gain on foreign currency exchange																						—		—		—		—			—			(58	)		—		(58	)
Net income		—		—		—		—			—			—			4,151		4,151			—		—		—		—			—			—			4,151		4,151
Comprehensive income																			4,093
Balance, June 30, 2019		54,302,468	$	54		26,650,395	$	(182,630	)	$	313,110		$	(232	)	$	11,078	$	141,380			54,302,468	$	54		26,650,395	$	(182,630	)	$	313,110		$	(232	)	$	11,078	$	141,380
Issuance of common stock from exercise of options		16,000		1		—		—			95			—			—		96
Issuance of common stock from restricted stock awards		333,414		—		—		—			—			—			—		—
Impact of net settlements		14,535		—		14,535		—			(1,751	)		—			—		(1,751	)
Stock-based compensation expense		—		—		—		—			2,930			—			—		2,930
Comprehensive income:
Unrealized loss on foreign currency exchange		—		—		—		—			—			(235	)		—		(235	)
Net income		—		—		—		—			—			—			5,351		5,351
Comprehensive income																			5,116
Balance, September 30, 2019		54,666,417	$	55		26,664,930	$	(182,630	)	$	314,384		$	(467	)	$	16,429	$	147,771

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2019			2018			2020			2019
	(Unaudited)						(Unaudited)
Operating activities:
Net income	$	12,792		$	10,283		$	6,980		$	7,441
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,644			3,404			3,190			2,345
Provision for bad debt		237			701			317			367
Amortization of investment premiums		—			68
Stock-based compensation		9,154			6,144			6,721			6,224
Amortization of debt issuance costs		7			84			4			4
Deferred tax provision		(412	)		—			(1,236	)		(80	)
Changes in operating assets and liabilities:
Accounts receivable		5,162			1,158			1,217			2,600
Prepaid expenses and other current assets		152			(1,072	)		(17	)		(112	)
Other assets		(58	)		1			15			(94	)
Accounts payable		139			266			(187	)		(843	)
Income taxes payable		550			(1,391	)		4,162			1,153
Accrued expenses and other current liabilities		(63	)		270			(346	)		(175	)
Operating lease right-of-use assets and liabilities, net		(237	)		—			(182	)		(161	)
Accrued compensation expenses		(452	)		8			(637	)		(763	)
Contract liabilities		(623	)		(2,322	)		700			913
Other liabilities		1			(229	)		1,140			—
Net cash provided by operating activities		29,993			17,373			21,841			18,819
Investing activities:
Purchases of property and equipment, and other capitalized assets		(4,771	)		(4,970	)		(3,338	)		(3,379	)
Proceeds from sales and maturities of investments		500			5,100
Purchases of investments and maturities of investments								(71	)		500
Acquisitions of businesses, net		—			(370	)		(5,015	)		—
Net cash used in investing activities		(4,271	)		(240	)		(8,424	)		(2,879	)
Financing activities:
Tax withholdings related to net share settlements		(2,619	)		(3,073	)		(68	)		(868	)
Purchase of treasury shares and related costs		(4,725	)		(3,964	)		(14,824	)		(4,725	)
Proceeds from exercise of stock options		119			956			—			23
Term loan principal payment		(938	)		(7,500	)		(625	)		(625	)
Net cash used in financing activities		(8,163	)		(13,581	)		(15,517	)		(6,195	)
Effect of exchange rate changes on cash and cash equivalents		(92	)		(71	)
Net increase in cash and cash equivalents		17,467			3,481
Cash and cash equivalents at beginning of period		34,673			25,966
Cash and cash equivalents at end of period	$	52,140		$	29,447
Effect of exchange rate changes on cash								3			(13	)
Net (decrease) increase in cash								(2,097	)		9,732
Cash at beginning of period								52,487			34,673
Cash at end of period							$	50,390		$	44,405
Supplemental disclosure of cash flow information:
Cash paid for taxes, net	$	3,512		$	2,734		$	92		$	1,407
Property and equipment included in accounts payable and in accrued expenses and other liabilities	$	—		$	408

(In thousands, except share and per share data, where otherwise noted, or instances where expressed in millions)

TechTarget, Inc. and its subsidiaries (the “Company”) is a leading provider of specialized online content for buyers of enterprise ~~information~~ technology ~~(“IT”)~~ products and services, and a leading provider of purchase-intent marketing and sales services for ~~enterprise~~business-to-business “B2B” technology ~~vendors.~~companies. The Company’s service offerings enable enterprise B2B technology ~~vendors~~companies to better identify, reach, and influence corporate ITenterprise technology decision makers actively researching specific ITenterprise technology purchases. The Company improves ~~vendors’~~B2B technology companies’ ability to impact these audiences for business growth using advanced targeting, analytics, and data services complemented with customized marketing programs that integrate demand generation and brand advertising techniques. The Company operates a network of over 140 websites, each of which focuses on a ~~specific IT~~major enterprise technology sector such as storage, security, or networking. ITEnterprise technology and business professionals have become increasingly specialized, and they have come to rely on the Company’s sector-specific websites for purchasing decision support. The Company’s content platform enables ITenterprise technology and business professionals to navigate the complex and rapidly changing ITenterprise technology landscape where purchasing decisions can have significant financial and operational consequences. At critical stages of the purchase decision process, these content offerings, through different channels, meet ITenterprise technology and business professionals’ needs for expert, peer, and IT vendor information and provide a platform on which IT vendors can launch targeted marketing campaigns which generate measurable return on investment. Based upon the logical clustering of members’ respective job responsibilities and the marketing focus of the products being promoted by the Company’s customers, the Company categorizes its content offerings to address the key market opportunities and audience extensions across a portfolio of distinct market categories including: ~~Security; Networking; Storage;~~Security, Networking, Storage, Data Center and Virtualization ~~Technologies;~~Technologies, CIO/IT ~~Strategy;~~Strategy, Business Applications and ~~Analytics;~~Analytics, Application Architecture and ~~Development;~~Development, and ANCL Channel.

The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these Notes to Consolidated Financial Statements. The Company’s critical accounting policies are those that affect its more significant judgments used in the preparation of its consolidated financial statements. A description of the Company’s critical accounting policies and estimates is contained in its Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, and in this note to the consolidated financial statements. There were no material changes to the Company’s critical accounting policies and use of estimates during the first nine months of 2019, other than those related to leases resulting from the adoption of a new accounting pronouncement, as described in this Note 2 under ~~“Recently Adopted Accounting Guidance”~~statements.

The accompanying ~~Consolidated Financial Statements~~consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, TechTarget Securities Corporation (“TSC”), TechTarget Limited, TechTarget (HK) Limited (“TTGT HK”), TechTarget (Australia) Pty Ltd., TechTarget (Singapore) Pte Ltd., E-Magine Médias SAS (“LeMagIT”) and TechTarget Germany GmbH. TSC is a Massachusetts corporation. TechTarget Limited is a subsidiary doing business principally in the United Kingdom. TTGT HK is a subsidiary incorporated in Hong Kong in order to facilitate the Company’s activities in the Asia-Pacific region. In 2018, TechTarget modified its People’s Republic of China operations consolidating its activities with other TechTarget locations. TechTarget (Beijing) Information Technology Consulting Co. Ltd. (“TTGT Consulting”) and Keji Wangtuo Information Technology Co., Ltd., (“KWIT”), which were incorporated under the laws of the People’s Republic of China (“PRC”), were closed during 2018. TechTarget (Australia) Pty Ltd. and TechTarget (Singapore) Pte Ltd. are the entities through which the Company does business in Australia and Singapore, respectively; LeMagIT and TechTarget Germany GmbH, both wholly-owned subsidiaries of TechTarget Limited, are entities through which the Company does business in France and Germany, respectively.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted (Generally Accepted Accounting Principles or “GAAP”) in the United States (“U.S.”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. All adjustments, which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown, are of a normal, recurring nature and have been reflected

in the consolidated financial statements. The results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim periods or for the full year. The information included in these consolidated financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report and the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenues, long-lived assets, goodwill, the allowance for doubtful accounts, stock-based compensation, self-insurance accruals, and income taxes. The Company reduces its accounts receivable for an allowance for doubtful accounts based on its best estimate of the amount of probable credit losses. Estimates of the carrying value of certain assets and liabilities are based on historical experience and on various other assumptions that the Company believes to be reasonable. Actual results could differ from those estimates.

The Company generates its revenues from the sale of targeted marketing and advertising campaigns, which it delivers via its network of websites and data analytics solutions. Revenue is recognized when performance obligations are satisfied by transferring promised goods or services to customers, as determined by applying a five-step process consisting of: a) identifying the contract, or contracts, with a customer, b) identifying the performance obligations in the contract, c) determining the transaction price, d) allocating the transaction price to the performance obligations in the contract, and e) recognizing revenue when, or as, performance obligations are satisfied.

We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the Consolidated Statements of Income and Comprehensive Income. We assess collectability by reviewing accounts receivable on an individual basis when we identify specific customers with known disputes, overdue amounts or collectability issues and also reserve for losses on all accounts based on historical information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status and make judgments about the creditworthiness of customers based on ongoing credit evaluations.

At June 30, 2020, the Company’s assessment considered business and market disruptions caused by COVID-19 and estimates of expected emerging credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict causing variability and volatility that may have a material impact on our allowance for credit losses in future periods.

Other liabilities consist of the long-term portions of amounts payable related to our acquisition of substantially all of the assets of Data Science Central LLC (see Notes 4 and 14) and the amounts deferred under the Coronavirus, Aid, Relief and Economic

Security Act (CARES Act) which allows employers to defer the payment of the Company’s employer share of FICA payroll taxes. The amount of the employer share of FICA payroll taxes (6.2% of the first $137,700 of employee pay) due for the period beginning on March 27, 2020, and ending December 31, 2020, can be deferred. The deferred amounts will then be payable in equal installments at December 31, 2021 and December 31, 2022.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Income and Comprehensive Income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees, capital and operating leases, existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company adopted ASU 2016-02 in the first quarter of 2019 using the modified retrospective approach, and elected the package of practical expedients permitted under the transition guidance. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic ~~842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840.~~842.

WeThe Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract was or contains a lease, and our initial direct costs for any leases that existed prior to January 1, 2019. We also elected to combine our lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the ~~consolidated statements~~Consolidated Statements of ~~income~~Income and Comprehensive Income on a straight-line basis over the lease term. The Company recorded operating lease assets with right-of-use of $27.5 million and $2.9 million current operating lease liability and $29.2 million non-current operating lease liability as of January 1, 2019, of which $4.9 million and $0.3 million were reclassified from deferred rent and prepaid rent, ~~respectively.~~

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (step 2 of the goodwill impairment test) and instead requires only a one-step quantitative impairment test, performed by comparing the fair value of goodwill with its carrying amount. ASU 2017-04 is effective on a prospective basis effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company ~~is currently evaluating~~adopted the ~~impact that~~new standard effective January 1, 2020. The adoption of this ~~standard will have on its consolidated financial statements and disclosures but does~~guidance did not ~~expect that it will~~ have a material ~~impact.~~impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangements plus any ~~option~~optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company ~~is currently evaluating~~adopted the ~~impact~~new standard effective January 1, 2020. The adoption of this ~~standard on its consolidated financial statements and disclosures but does~~guidance did not ~~expect that it will~~ have a material ~~impact.~~

In June 2016, the FASB issued ASU ~~2016-03,~~2016-13, “Measurement of Credit Losses on Financial Instruments,” (ASU ~~2016-03)~~2016-13) which amends ASC 326 “Financial Instruments—Credit Losses” which introduces a new methodology for accounting for credit losses on financial instruments. The guidance establishes a new forward ~~looking~~-looking "expected loss model" that requires entities to estimate current expected credit losses on accounts receivable and financial instruments by using all practical and relevant information. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued Accounting Standard Update No. 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements” (Topic 820) (ASU 2018-13), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): “Simplifying the Accounting for Income Taxes” (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for us in the ~~Company~~first quarter of 2021 on ~~January 1, 2020.~~a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of ~~this~~the new guidance on ~~the~~our consolidated financial statements.

The following table ~~above~~ depicts the disaggregation of revenue according to categories consistent with how the Company evaluates its financial ~~performance.~~performance and economic risk. International revenue consists of international geo-targeted campaigns, which are campaigns targeted at an audience of members outside of North America.

Timing may differ between the satisfaction of performance obligations and the invoicing and ~~collection~~collections of amounts related to the Company’s contracts with customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. Additionally, certain customers may receive credits, which are accounted for as a material right. The Company estimates these amounts based on the expected amount of future services to be provided to a customer and allocates a portion of the transaction price to these material rights. The Company recognizes these material rights as the material rights are exercised. The resulting amounts ~~which, are~~ included in the contract liabilities on the accompanying Consolidated Balance Sheets were ~~$3.0~~$2.6 million and ~~$3.5~~$2.4 million at ~~September~~June 30, ~~2019~~2020, and December 31, ~~2018,~~2019, respectively.

	Contract Liabilities			Contract Liabilities
Year-to-Date Activity	(in thousands)
Balance at December 31, 2018	$	5,573
Balance at December 31, 2019				$	4,335
Deferral of revenue		5,492			2,178
Recognition of previously unearned revenue		(6,116	)		(1,965	)
Balance at September 30, 2019	$	4,949
Balance at March 31, 2020				$	4,548
Deferral of revenue					1,822
Recognition of previously unearned revenue					(1,319	)
Balance at June 30, 2020				$	5,051

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including ~~cash equivalents,~~ short-term and long-term investments and contingent consideration. ~~The~~The Company’s ~~remaining short-term investments matured in the first quarter of 2019, therefore as of~~ ~~September 30, 2019~~ ~~there are no investments measured at fair value. Additionally, the Company switched banks~~bank and ~~the~~ money market accounts are in bank deposits and are not quoted instruments. As such they are all considered cash. The fair value of these financial assets and liabilities for was determined based on three levels of input as follows:

The fair value hierarchy of the Company’s financial assets carried at fair value and measured on a recurring basis ~~as of December 31, 2018 was~~is as follows:

											Fair Value Measurements at December 31, 2019
	December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds⁽¹⁾	$	15,070	$	15,070	$	—	$	—
Short-term investments⁽²⁾⁽¹⁾		500		—		500		—	$	5,012	$	—	$	5,012	$	—
Total assets	$	15,570	$	15,070	$	500	$	—	$	5,012	$	—	$	5,012	$	—

Cash ~~and cash equivalents consist of highly liquid investments with maturities of three months or less at date of purchase. Cash equivalents are~~is carried at cost, which approximates ~~their~~ fair market value. Cash ~~and cash equivalents~~ consisted of the following:

~~The Company’s short-term investments are accounted for as available for sale securities.~~ Investments are recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders’ equity, net of tax. ~~The cumulative unrealized loss, net of taxes, was $15 as of December 31, 2018. The Company’s investment matured in the first quarter of 2019.~~ Realized gains and losses on the sale of these investments are determined using the specific identification method. The cumulative unrealized loss, net of taxes, was $47 thousand as of June 30, 2020. There were no0 realized gains or losses ~~during the nine months ended September 30, 2019 or 2018.~~

~~The Company’s investment had a contractual maturity date in January 2019. All income generated from investments is recorded as interest income.~~

			September 30, 2019									June 30, 2020
	Estimated Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization			Net		Estimated Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net
Customer, affiliate and advertiser relationships	5-17		$	6,473	$	(6,240	)	$	233	5-17		$	8,684	$	6,326	$	2,358
Developed websites, technology and patents		10		1,443		(978	)		465		10		2,005		1,079		926
Trademark, trade name and domain name	5-8			1,765		(1,730	)		35	5-8			1,798		1,753		45
Proprietary user information database and internet traffic		5		1,092		(1,092	)		—		5		1,094		1,094		—
Non-Compete agreement		1.5		10		(8	)		2		3		170		28		142
Total intangible assets			$	10,783	$	(10,048	)	$	735			$	13,751	$	10,280	$	3,471

Intangible assets are amortized over their estimated useful lives, which range from approximately 23 to 17 years, using methods of amortization that are expected to reflect the estimated pattern of economic use. The remaining amortization expense will be recognized over a weighted-average period of approximately ~~5.03 years.~~5.01 years. Amortization expense was ~~approximately $50 and $50 for each of the three months ended September 30, 2019 and September 30, 2018, and $0.1 million and~~ $0.1 million for each of the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September 30, 2018, respectively.~~2019. Amortization expense is recorded within operating expenses as the intangible assets consist of ~~customer-~~

~~related~~customer-related assets which generate website traffic that the Company considers to be in support of selling and marketing activities. The Company did ~~not~~0t write off any fully amortized intangible assets in the first ~~nine~~six months of ~~2019 or 2018.~~2020.

Years Ending December 31:	Amortization Expense		Amortization Expense
2019 (October 1 – December 31)	$	32
2020		110
2020 (July 1 – December 31)			$	223
2021		125		463
2022		153		492
2023		37		329
2024				319
Thereafter		278		1,645
Total	$	735	$	3,471

Goodwill and indefinite-lived intangible assets are not amortized but are reviewed annually for impairment or more frequently if impairment indicators arise. The Company did ~~not~~0t have any intangible assets other than goodwill with indefinite lives as of ~~September~~June 30, ~~2019~~2020 or December 31, ~~2018.~~2019. There were no indications of impairment as of ~~September~~June 30, ~~2019,~~2020, and the Company believes that, as of the balance sheet dates presented, none of the Company’s goodwill or intangible assets was ~~impaired.~~impaired

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per common share is as follows:

	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Numerator:
Net income	$	5,351	$	3,769	$	12,792	$	10,283	$	4,773	$	4,151	$	6,980	$	7,441
Denominator:
Basic:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding		27,910,030		27,827,296		27,785,024		27,627,083		27,532,786		27,640,207		27,768,224		27,722,521
Diluted:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding		27,910,030		27,827,296		27,785,024		27,627,083		27,532,786		27,640,207		27,768,224		27,722,521
Effect of potentially dilutive shares ⁽¹⁾		460,132		936,730		468,280		1,083,798		630,127		591,538		535,844		503,469
Total weighted average shares of common stock and vested, undelivered restricted stock units outstanding and potentially dilutive shares		28,370,162		28,764,026		28,253,304		28,710,881		28,162,913		28,231,745		28,304,068		28,225,990
Net Income Per Share:
Basic net income per share	$	0.19	$	0.14	$	0.46	$	0.37	$	0.17	$	0.15	$	0.25	$	0.27
Diluted net income per share	$	0.19	$	0.13	$	0.45	$	0.36	$	0.17	$	0.15	$	0.25	$	0.26

On December 24, 2018, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Western Alliance Bank (the “Bank”) as the lender. The Loan Agreement provides for a $25 million term loan facility with a maturity date of December 10, 2023 (the “Term Loan”).

The Term Loan is secured by a lien on substantially all of the assets of the Company, including a pledge of the stock of certain of its wholly-owned subsidiaries (limited, in the case of the stock of certain foreign subsidiaries of the Company, to no more than 65% of the capital stock of such subsidiaries).

The Term Loan must be repaid quarterly, with applicable interest paid monthly, in the following manner: 1.25% of the initial aggregate borrowings are due and payable each quarter for the first two loan years, 1.88% of the initial aggregate borrowings are due and payable each quarter for the third loan year, and 2.50% of the initial aggregate borrowings are due and payable each quarter for the fourth and fifth loan years. At maturity, all outstanding amounts, including unpaid principal and accrued and unpaid interest, under the Loan Agreement will be due and payable.

The Term Loan bears interest at a floating per annum rate equal to ~~1.375%~~one and three-eighths percent (1.375%) above the greater of (a) the one-month U.S. LIBOR rate reported in The Wall Street Journal or (b) ~~2.00%~~two percent (2.00%).

On July 2, 2020, the Company entered into a Loan and Security Modification Agreement (“Modification Agreement”) with the Bank pursuant to which the Company and the Bank agreed to amend the Loan Agreement. The Modification Agreement, among other things, added or amended certain definitions in the Loan Agreement, added a financial covenant requiring the Company to maintain an Asset Coverage Ratio (as defined in the Loan Agreement) of no less than 1.0 to 1.0 tested as of the end of each quarter, and provided

the Company with a new revolving line of credit facility of $20,000,000 (“Line of Credit”). The Line of Credit allows the Company to request non-formula advances in an aggregate principal amount not to exceed the Line of Credit and to use the proceeds of such advances until the facility matures on July 2, 2022. Advances under the Line of Credit bear interest at a floating rate equal to one-quarter percent (0.25%) above the Prime Rate (as published in the Money Rates section of the Western Edition of The Wall Street Journal, or such other rate of interest publicly announced from time to time by Western Alliance as its Prime Rate); provided that at no time shall the interest rate on such advances be less than three and one half percent (3.50%). The Modification Agreement also establishes a process by which the Company and the Bank will determine an alternative interest rate for the Company’s existing Term Loan under the Loan Agreement in the event that the Bank determines that LIBOR ceases to exist or is no longer available. In addition, the Company will be required to pay customary fees and expenses, including an annual facility fee with respect to the Line of Credit. Together, the Loan Agreement and Line of Credit are guaranteed by the Company and secured by substantially all assets of the Company and its subsidiaries.

On January 1, 2019, the Company adopted ~~ASU 2016-02~~Topic 842 Leases using the modified retrospective approach. The Company recorded operating lease assets (right-of-use assets) of $27.5 million and operating lease liabilities of $32.1 million. There was no impact to retained earnings upon adoption of ~~ASU 2016-02.~~Topic 842.

The Company has various non-cancelable lease agreements for certain of its offices with original lease periods expiring between 2019 and 2029. ~~Its lease~~Lease terms may include options to extend or terminate the lease when it is reasonably certain wethe Company will exercise that option. Leases with a renewal option allow the Company to extend the lease term typically between 1 and 5 years. When determining the lease term, renewal options reasonably certain of being exercised are included in the lease term. When determining if a renewal option is reasonably certain of being exercised, the Company considers several economic factors, including but not limited to, the significance of leasehold improvements incurred on the property, whether the asset is difficult to replace, underlying contractual obligations, or specific characteristics unique to that particular lease that would make it reasonably certain that the Company would exercise such option. Renewal and termination options were generally not included in the lease term for the Company's existing operating leases. Certain of the arrangements have discounted rent periods or escalating rent payment provisions. Leases with an initial term of twelve months or less are not recorded on the ~~consolidated balance sheets.~~Consolidated Balance Sheets. The ~~Compnay recognize~~Company recognizes rent expense on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantee or material restrictive covenants.

As of ~~September~~June 30, ~~2019,~~2020, operating lease assets were $25.5 million and operating lease liabilities were ~~$29.8~~$29.6 million. The maturity of the Company’s operating lease liabilities as of ~~September~~June 30, ~~2019~~2020 are as follows:

	Minimum Lease		Minimum Lease
Years Ending December 31:	Payments		Payments
2019 (September 30, – December 31)	$	595
2020		3,620
2020 (June 30 – December 31)			$	2,063
2021		3,708		4,132
2022		3,397		3,778
2023		3,397		3,696
2024				3,725
Thereafter		21,267		17,760
Total future minimum lease payments	$	35,984	$	35,154
Less imputed interest		6,161		5,540
Total operating lease liabilities	$	29,823	$	29,614

Included in the condensed consolidated balance sheet:
Included in the Consolidated Balance Sheet:
Current operating lease liabilities	$	2,209	$	2,769
Non-current operating lease liabilities		27,614		26,845
Total operating lease liabilities	$	29,823	$	29,614

~~As of September 30, 2019, the Company had entered into a lease that had not yet commenced with future lease payments of $1.5 million which are not reflected in the table above.~~

For the three and ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, the total lease cost is comprised of the following amounts:

					Three Months Ended				Six Months Ended
	Three Months Ended		Nine Months Ended		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Operating lease expense	$	964	$	2,914	$	946	$	975	$	1,893	$	1,950
Short-term lease expense		22		64		26		21		54		42
Total lease expense	$	986	$	2,978	$	972	$	996	$	1,947	$	1,992

If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgment when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.

~~As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, ASC 840,~~ ~~Leases, the total commitment for non-cancelable operating leases was $39.6 million as of December 31, 2018:~~

~~Total rent expense under the Company’s noncancelable leases was approximately $1 and $3 million for the three and nine months ended September 30, 2018, respectively~~

From time to time and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company did ~~not~~0t have any pending claims, charges, or litigation that it expects would have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

In April 2007, the Board approved the 2007 Stock Option and Incentive Plan (the “2007 Plan”), which was approved by the stockholders of the Company and became effective upon the consummation of the Company’s IPO in May 2007. The 2007 Plan allowed the Company to grant ISOs, NSOs, stock appreciation rights, deferred stock awards, restricted stock units and other awards. Under the 2007 Plan, stock options could not be granted at less than fair market value on the date of grant, and grants generally vested over a three- to four-year period. Stock options granted under the 2007 Plan expire no later than ten years after the grant date. Additionally, beginning with awards made in August 2015, the Company had the option to direct a net issuance of shares for satisfaction of tax liability with respect to vesting of awards

and delivery of shares. Prior to August 2015, this choice of settlement method was solely at the discretion of the award recipient.

~~At the inception of the plan, the Company reserved for issuance an aggregate of 2,911,667 shares of common stock under the 2007 Plan.~~ The 2007 Plan was subject to an automatic annual increase of shares on January 1 of each year, beginning on January 1, 2008, equal to the lesser of (a) 2% of the outstanding number of shares of common stock (on a fully-diluted basis) on the immediately preceding December 31 and (b) such lower number of shares as may be determined by the compensation committee of the Board. Noexpired in May 2017.

NaN new awards may be granted under the 2007 Plan; however, the shares of common stock remaining in the 2007 Plan are available for issuance in connection with previously awarded grants under the 2007 Plan. There are ~~305,000~~77,500 shares of common stock that remain subject to outstanding stock grants under the 2007 Plan as of ~~September~~June 30, ~~2019.~~2020.

In March 2017, the Board approved the 2017 Stock Option and Incentive Plan (the “2017 Plan”), which was approved by the stockholders of the Company at the 2017 Annual Meeting and became effective June 16, 2017. The 2017 Plan replaces the Company’s 2007 Plan. On that date, 3,000,000 shares of Common Stock were reserved for issuance under the 2017 Plan and, generally, shares that are forfeited or canceled from awards under the 2017 Plan also will be available for future awards. Under the 2017 Plan, the Company may grant restricted stock and restricted stock units, non-qualified stock options, stock appreciation rights, performance awards, and other stock-based and cash-based awards. Grants generally vest in equal tranches over a three-year period. Stock options granted under the 2017 Plan expire no later than ten years after the grant date. Shares of stock issued pursuant to restricted stock awards are restricted in that they are not transferable until they vest. Stock underlying awards of restricted stock units are not issued until the units vest. Non-qualified stock options cannot be exercised until they vest. Under the 2017 Plan, all stock options and stock appreciation rights must be granted with an exercise price that is at least equal to the fair market value of the stock on the date of grant. The 2017 Plan broadly prohibits the repricing of options and stock appreciation rights without stockholder approval and requires that no dividends or dividend equivalents be paid with respect to options or stock appreciation rights. The 2017 Plan further provides that, in the event any dividends or dividend equivalents are declared with respect to restricted stock, restricted stock units, other stock-based awards and performance awards (referred to as “full-value awards”), they would be subject to the same vesting and forfeiture provisions as the underlying award. There is a total of ~~1,385,130~~1,368,630 shares of common stock that remain subject to outstanding stock grants under the 2017 Plan as of ~~September~~June 30, ~~2019.~~2020.

The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of an award.

The expected volatility of options granted has been determined using a weighted average of the historical volatility of the Company’s stock for a period equal to the expected life of the option. The expected life of options has been determined utilizing the “simplified” method. The risk-free interest rate is based on a zero coupon U.S. treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be ~~zero.~~0. The Company applied an estimated annual forfeiture rate based on historical averages in determining the expense recorded in each period.

A summary of the stock option activity under the Company’s plans for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 is presented below:

Year-to-Date Activity	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value		Options Outstanding		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding at December 31, 2018		186,000		$	9.50
Options outstanding at December 31, 2019											140,000	$	13.14
Granted		22,500		$	20.32						25,000	$	29.64
Exercised		(26,000	)	$	4.58			$	416		—		—
Forfeited		—		$	-						—		—
Cancelled		—		$	-						—		—
Options outstanding at September 30, 2019		182,500		$	11.54		4.84	$	2,125
Options exercisable at September 30, 2019		160,000		$	10.30		4.16	$	2,074
Options vested or expected to vest at September 30, 2019		181,034		$	11.47		4.80	$	2,122
Options outstanding at June 30, 2020											165,000	$	15.64		6.11	$	2,375
Options exercisable at June 30, 2020											137,500	$	12.96		5.36	$	2,347
Options vested or expected to vest at June 30, 2020											162,880	$	15.46		6.06	$	2,374

There were 0 options exercised during the six months ended June 30, 2020. The total intrinsic value of options exercised (i.e. the difference between the market price at exercise and the price paid by the employee to exercise the options) was ~~$416~~$20 thousand ~~and $2.6 million~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2019 and September 30, 2018, respectively.~~2019. The total amount of cash received from exercise of these options was approximately ~~$119~~$23 thousand ~~and $1.0 million~~ during the ~~nine~~six months ended, ~~September~~June 30, ~~2019 and,~~ ~~2018~~ ~~respectively.~~2019.

Restricted stock units are valued at the market price of a share of the Company’s common stock on the date of the grant. A summary of the restricted stock unit activity under the Company’s plans for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 is presented below:

Year-to-Date Activity	Shares			Weighted- Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value		Shares			Weighted- Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value
Nonvested outstanding at December 31, 2018		1,197,261		$	17.69
Nonvested outstanding at December 31, 2019									1,301,130		$	21.82
Granted		823,915		$	21.99				95,688		$	21.10
Vested		(687,046	)	$	15.65				(103,688	)	$	21.12
Forfeited		(3,000	)	$	28.05				(12,000	)	$	25.21
Nonvested outstanding at September 30, 2019		1,331,130		$	20.22	$	33,967
Nonvested outstanding at June 30, 2020									1,281,130		$	21.79	$	38,472

There were ~~687,046 and 693,473~~103,688 restricted stock units with a total grant-date fair value of ~~$10.8~~$2.2 million ~~and~~ ~~$6.3 million~~ that vested during the ~~nine~~six months ended ~~September~~June 30, ~~2019 and September~~2020. There were 12,000 shares forfeited with a total value of $303 thousand for the six months ended June 30, ~~2018, respectively.~~ 2020. There were 98,811 restricted stock units with a total grant-date fair value of $1.9 million that vested during the six months ended June 30, 2019.

As of, ~~September~~June 30, ~~2019,~~2020 there was ~~$26.4~~$17.2 million of total unrecognized compensation expense related to stock options and restricted stock units, which is expected to be recognized over a weighted average period of ~~2.1~~ ~~years.~~1.5 years.

As of, ~~September~~June 30, ~~2019,~~2020 the Company has reserved ~~2,744,679~~2,376,015 shares of common stock for use in settling outstanding options and unvested restricted stock units that have not been issued as well as future awards available for grant under the 2007 and 2017 ~~Plan.~~Plans.

In November 2018, the Company announced that the Board had authorized a ~~$25~~$25.0 million stock repurchase program (the “November 2018 Repurchase Program”) under which the Company is authorized to repurchase the Company’s common stock from time to time on the open market or in privately negotiated transactions at prices and in a manner that may be determined by management. ~~During the three month period the Company did not repurchase any shares and during the nine months ended September 30, 2019 the~~The Company repurchased ~~317,724~~736,760 shares ~~of common stock,~~ at an aggregate purchase price of ~~$4.7~~approximately $14.8 million during the first quarter of 2020 under the November 2018 Stock Repurchase Program. NaN amounts were repurchased under this plan during the second quarter of 2020 and the November 2018 Repurchase Program was terminated in May 2020.

~~In June 2016~~On May 1, 2020, the ~~Company announced that the~~Company’s Board ~~had authorized~~of Directors approved a ~~$20~~new two-year $25.0 million stock repurchase program (the ~~“June 2016~~“May 2020 Repurchase Program”). Repurchases of the Company's stock under ~~which~~ the ~~Company was authorized to repurchase the Company’s common stock from time to time on~~May 2020 Repurchase Program may be made in the open market, or in privately negotiated transactions, ~~at prices~~or pursuant to one or more trading plans. The timing and ~~in the manner that may~~amount of repurchases, if any, will be determined by the ~~Board. Pursuant to~~Company's management at its discretion and be based on a variety of factors such as the ~~June 2016~~market price of the Company's common stock, corporate and contractual requirements, prevailing market and economic conditions and legal requirements. The May 2020 Repurchase Program ~~the Company repurchased 211,729 shares of common stock for an aggregate purchase price of $4.0 million during the nine months of September 30, 2018. No~~may be modified, suspended or discontinued at any time. NaN amounts were repurchased under May 2020 Repurchase Program during the ~~three months ended June 30, 2018. On May 5, 2017, the Board reauthorized the June 2016 Repurchase Program to allow the Company to use the remaining balance~~second quarter of ~~the unused authorization under such program after its original expiration date in June 2017. In August 2018, the June 2016 Repurchase Program expired.~~ 2020.

Repurchased shares are recorded under the cost method and are reflected as treasury stock in the accompanying Consolidated Balance Sheets. All share repurchases were funded with cash on hand.

The Company measures its interim period tax expense using an estimated annual effective tax rate and adjustments for discrete taxable events that occur during the interim period. The estimated annual effective income tax rate is based upon the Company’s estimations of annual pre-tax income, the geographic mix of pre-tax income, and its interpretations of tax laws. The Company updates the estimate of its annual effective tax rate at the end of each quarterly period. The Company recorded income tax expense of ~~$1.2~~$3.0 million and ~~$0.7~~$2.6 million ~~of income tax benefit for~~ the ~~three~~six months ended ~~September~~June 30, 2020 and June 30, 2019 ~~and 2018, respectively and recorded $3.8 million and $0.9 million of tax expense for the nine months ended~~ ~~September 30, 2019~~ ~~and~~ ~~2018~~respectively.~~The higher expense in 2019, for both the three and nine months as compared to 2018 is primarily due to the effect of non-deductible expenses, higher, income~~ ~~and a lower benefit from the recognition of excess tax benefits of stock based compensation in 2019 as compared to 2018.~~

The Company views its operations and manages its business as ~~one~~1 operating segment based on factors such as how the Company manages its operations and how its executive management team reviews results and makes decisions on how to allocate resources and assess performance.

	For the three months ended September 30,				For the nine months ended September 30,				For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
North America	$	22,813	$	20,947	$	66,444	$	60,983	$	21,106	$	23,353	$	40,855	$	43,631
International		10,996		9,795		31,623		28,530		13,690		10,933		25,357		20,627
Total	$	33,809	$	30,742	$	98,067	$	89,513	$	34,796	$	34,286	$	66,212	$	64,258

Net sales to unaffiliated customers by geographic area were as follows₍₂₎:

	For the three months ended September 30,				For the nine months ended September 30,				For the Three Months Ended 2020				For the Six Months Ended June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
United States	$	25,424	$	22,799	$	73,497	$	65,755	$	24,197	$	25,813	$	46,634	$	48,063
United Kingdom		3,445		3,571		9,885		10,824		4,531		3,324		8,323		6,433
Other international		4,940		4,372		14,685		12,934		6,068		5,149		11,255		9,762
Total	$	33,809	$	30,742	$	98,067	$	89,513	$	34,796	$	34,286	$	66,212	$	64,258

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
United States	$	102,350	$	101,051	$	109,402	$	102,572
International		4,046		4,386		4,043		4,148
Total	$	106,396	$	105,437	$	113,445	$	106,720

Long-lived assets are comprised of property and equipment, net; goodwill; and intangible assets, net.No single country outside of the U.S. accounted for 10% or more of the Company’s long-lived assets during either of these periods.

On February 18, 2020, the Company acquired substantially all of the operating assets of Data Science Central LLC, which is a niche digital publishing and media company focused on data science and business analytics for $5.5 million, plus a potential future earnout valued at $0.9 million at the time of acquisition, which is currently valued at $1.1 million (Note 4). A $5.0 million cash payment was made at closing, with the remainder due in fiscal year 2021. The earnout is subject to certain revenue growth targets and the payment is adjusted based on actual results. If all targets are met, the total purchase price, including the earnout, shall not exceed $7.5 million which will become payable upon the achievement of certain revenue objectives during the next two years.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition andresults of operations should be read in conjunction with the consolidatedfinancial statements and accompanying notes included elsewhere in this QuarterlyReport on Form 10-Q. This discussion and analysis contains forward-lookingstatements that involve risks, uncertainties and assumptions. Our actualresults could differ materially from those anticipated in these forward-lookingstatements as a result of various factors including those discussed below in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2019 under Part I, Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 under Part II, Item 1A, “Risk Factors” under Part I, Item 1A, “Risk Factors,” and in the other documents we file with the Securities and Exchange Commission. Please refer to our “Forward-Looking Statements” section on page ~~XX.~~35.

~~We are~~TechTarget, Inc. (“we” or “the Company”) is a Delaware corporation incorporated on September 14, 1999. Through continued innovation around our specialized online content for buyers of enterprise ~~information~~ technology ~~(“IT”),~~solutions we have become a global leader in purchase intent-driven marketing and sales services that deliver business impact for enterprise business-to-business “B2B” technology ~~vendors.~~companies. Our offerings enable B2B technology ~~vendors~~companies to better identify, reach and influence corporate ITenterprise technology decision makers actively researching specific ITenterprise technology purchases. We improve ~~vendors’~~a vendor’s ability to impact these audiences for business growth using advanced targeting, analytics and data services complemented with customized marketing programs that integrate demand generation, ~~and~~ brand marketing and advertising techniques.

~~IT and business professionals have~~Enterprise technology has become increasingly specialized, and ~~because each of~~ the websites within our network of over 140 websites ~~focuses on a specific IT sector~~address every major enterprise technology segment such as storage, security, networking, orand business ~~applications, IT~~applications. Enterprise technology and business professionals rely on us for key decision support information tailored to their specific areas of responsibility.

We enable ITenterprise technology and business professionals to navigate the complex and rapidly-changing ITenterprise technology landscape where purchasing decisions can have significant financial and operational consequences. Our content strategy includes three primary sources ~~which IT~~that enterprise technology and business professionals use to assist them in their pre-purchase research: independent content provided by our professionals, vendor-generated content provided by our customers and member-generated, or peer-to-peer, content. In addition to utilizing our independent editorial content, registered members appreciate the ability to deepen their pre-purchase research by accessing the extensive vendor supplied content available across our website network. Likewise, these members derive significant additional value from the ability our network provides to seamlessly interact with and contribute to information exchanges in a given field.

We had approximately ~~20.4~~20.5 million and 19.8 million registered members – our “audiences” – as of ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 respectively. During the second quarter of 2020, the Company ended a partnership with a company covering the Belgium, Netherlands, and Luxembourg (“Benelux”) region. This reduced our member number by 0.5 million. Additionally, we restated our 2019 membership to remove the Benelux member number as of June 30, 2019 (0.5 million). We believe that we have sufficient members within our remaining database to support our business needs within the Benelux region. While the size of our registered member base does not provide direct insight into our customer numbers or our revenues, the value of our services sold to our customers is a direct result of the breadth and reach of this content footprint. This footprint creates the opportunity for our customers to gain business leverage by targeting our audiences through customized marketing programs. Likewise, the behavior exhibited by these audiences enables us to provide our customers with data products to improve their marketing and sales efforts. The targeted nature of our member base enables ~~IT vendors~~B2B technology companies to reach a specialized audience efficiently because our content is highly segmented and aligned with the ~~IT vendors’~~B2B technology companies’ specific products. With it, we have developed a broad customer base and, in ~~2019~~2020 expect to deliver marketing and sales services programs to approximately ~~1,300 to~~ 1,400 customers.

We finished the second quarter of 2020 in a strong financial position. As of June 30, 2020, our balance sheet included:

Our remaining debt obligation for 2020, including required interest payments, is approximately $1.0 million. We generated $21.8 million in cash from operations during the six months ended June 30, 2020. In July 2020, we obtained a $20 million line of credit with Western Alliance Bank. While we do not have any current plans to utilize the line of credit, we feel that the line of credit provides us with additional flexibility in the current economic environment. We expect to be able to maintain adequate liquidity to satisfy our cash needs as we navigate through the current environment, although we could experience significant fluctuations in our ~~Quarterly Reports on Form 10-Q~~cash flows from period to period. If necessary, we ~~have disaggregated~~may take additional steps to preserve adequate liquidity, including through accessing capital markets and other sources of external financing.

During the ~~revenues~~second quarter we saw similar trends that we saw at the end of the first quarter. We saw a general shift in customer behavior moving away from longer term contracts in favor of shorter term contracts, which allow our ~~IT Deal Alert~~customers greater flexibility. Additionally, our ability to attract new customer to longer term contracts was impacted as a result of the general cautiousness related to the COVID-19 environment. These factors resulted in Priority Engine revenue growth of only 1% over last year. We saw weakness from the Global 10 accounts, in particular their investments in their branding.

Our revenue growth in quarter was driven in large part due to increases in our international revenue. We believe the increase in international revenue was driven by three items:

We continue to prepare for a new release of Priority Engine (expected after Labor Day). This release will include further enhancements for field sales use cases.

Even after the easing of governmental restrictions and ~~Core Online product lines. However, because all~~the severity of the COVID-19 crisis lessens, we could experience further fluctuations in our results of operations and cash flows resulting from the ongoing global impacts of the crisis and our customers’ realignment of their marketing and sales budgets.

Our priorities remain to ensuring the health and safety of our ~~products leverage purchase intent data~~employees, customers, vendors, members, stockholders, and other stakeholders, while delivering our content and services to our customers around the world and continuing to drive long-term growth.

At the beginning of 2020, we expected the strong demand we saw in 2019 to continue. However, beginning in March, we saw certain customers extend their ~~delivery, we believe there is no longer a meaningful distinction between~~normal sales cycles and shift their budgets away from long-term commitments to shorter-term marketing campaigns as they began to navigate through the ~~two product lines. As a result, beginning with this first~~pandemic. This trend continued throughout the second quarter of ~~2019~~2020 and through the date of this report. We expect these adverse impacts to result in lower revenue for the duration of the pandemic. The impact COVID-19 will have on our 2020 results remains uncertain, and we continue to evaluate the impacts the pandemic will have ~~reported revenue as a single number.~~on our business operations and strategy going forward. We ~~are disclosing total revenue, revenue by geography (North America and International) and~~believe we will return to normal growth rates when the ~~percentage of revenue generated in~~macro environment improves.

For the ~~quarter from longer-term contracts.~~ Six Months Ended June 30, 2020 Financial Results

Our revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 increased by ~~$8.6~~$2.0 million, or ~~10%~~3%, to ~~$98.1~~$66.2 million, compared with ~~$89.5~~$64.3 million, during the same period in ~~2018.~~ 2019. Priority Engine™ revenues increased 6% to more than ~~30%~~$25.0 million, in the first ~~nine~~six months of ~~2019,~~2020 compared with $23.6 million in the first six months of 2019. This increase was offset, in part, by our legacy Global customers, who decreased their spend, particularly as it related to our brand offerings.

The amount of revenue that we derived from longer-term contracts in the second quarter of 2020 increased 6%, compared to the ~~first nine months~~second quarter of ~~2018.~~

~~We continue to have success selling longer-term contracts of approximately twelve months. We derived 35%~~2019. As we noted above, we saw some of our ~~third quarter revenue~~customers shift from ~~longer-term contracts.~~long-term commitments to shorter-term commitments.

We continue to benefit from our customers’ increasing demand for purchase intent data to fuel their sales and marketing outreach. Another important factor in our revenue trajectory relates to the evolving way our customers use our purchase intent data relative to our offerings. Our offerings help customers identify “in-market” prospects for their products and services – our offerings help them reach, influence, and activate these prospects. A growing number of customers purchase “always on” programs from us that combine offerings to identify and influence active buyers throughout the year. The growth in our longer-term revenue component is evidence of our continued traction for these types of integrated programs. Additionally, customers use our offerings to support quarterly sales and marketing campaigns. These purchases are more fluid – customers of this type may focus more on offerings in a particular campaign, and shift objectives as opposed to an “always on” program.

Our international geo-targeted revenues, where our target audience is outside North America (“International”), increased ~~11%~~25% for the ~~first nine~~three months ~~of September~~ended June 30, ~~2019,~~2020, compared with the prior year ~~period.~~period driven by the items noted above.

Gross profit percentage was ~~77%~~75% and ~~76%~~77% for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Gross profit ~~increased~~decreased by ~~$6.8~~$0.3 million, mainly due to ~~the increase in revenues as~~product mix compared to the same period a year ago.

Revenue ~~increased~~changes for the three and ~~nine~~six month period ended, ~~September~~June 30, ~~2019~~2020 as compared to the same period in ~~2018, as~~2019, are shown in the table below. See the discussion above and Note 3 and Note 13 to our consolidated financial statements for additional information on ~~revenue.~~our revenues.

	For the three months ended September 30,				Percent Change	For the nine months ended September 30,				Percent Change	For the Three Months Ended June 30,				Percent Change	For the Six Months Ended June 30,				Percent Change
	2019		2018			2019		2018			2020		2019			2020		2019
North America	$	22,813	$	20,947	9%	$	66,444	$	60,983	9%	$	21,106	$	23,353	-10%	$	40,855	$	43,631	-6%
International		10,996		9,795	12%		31,623		28,530	11%		13,690		10,933	25%		25,357		20,627	23%
Total	$	33,809	$	30,742	10%	$	98,067	$	89,513	10%	$	34,796	$	34,286	1%	$	66,212	$	64,258	3%

We sell customized marketing programs to ~~IT vendors~~B2B technology companies targeting a specific audience within a particular ITenterprise technology or business sector or sub-sector. We maintain multiple points of contact with our customers to provide support throughout their organizations and their customers’ ITenterprise technology sales cycles. As a result, our customers often run multiple advertising programs with us in order to target their desired audience of ITenterprise technology and business professionals more effectively. There are multiple factors that can impact our customers’ marketing and advertising objectives and spending with us, including but not limited to, ITenterprise technology product launches, increases or decreases to their advertising budgets, the timing of key industry marketing events, responses to competitor activities and efforts to address specific marketing objectives such as creating brand awareness or generating sales leads. Our products and services are generally delivered under short-term contracts that run for the length of a given program, typically less than nine months. ~~In 2016, we began~~We continue to enter into longer-term contracts with certain customers, and in the quarter ended, ~~September~~June 30, ~~2019~~2020 approximately ~~35%~~34% of our revenues were from longer-term contracts of approximately twelve months.

We use our offerings to provide ~~IT vendors~~B2B technology companies with numerous touch points to identify, reach and influence key ITenterprise technology decision makers. The following is a description of the products and services we offer:

IT Deal Alert. IT Deal Alert is a suite of products and services for ~~IT vendors~~B2B technology companies that leverages the detailed purchase intent data that we collect about end-user ITenterprise technology organizations. Through proprietary scoring methodologies, we use this insight to help our customers identify and prioritize accounts whose content consumption around specific ITenterprise technology topics indicates that they are “in-market” for a particular product or service. We also use the data directly to identify and further profile accounts’ upcoming purchase plans.

Demand Solutions. Our offerings enable our customers to reach and influence prospective buyers through content marketing programs designed to generate demand for their solutions, and through display advertising and other brand programs that influence consideration by prospective buyers. This allows ~~IT vendors~~B2B technology companies to maximize return on investment by capturing sales leads from the distribution and promotion of content to our audience of ITenterprise technology and business professionals.

Brand ~~Solutions.~~Solutions. Our suite of brand solutions offerings provides ~~IT vendors~~B2B technology companies exposure to targeted audiences of ITenterprise technology and business professionals actively researching information related to their products and services. We leverage our Activity Intelligence to enable significant segmentation and targeting of specific audiences that can be accessed through these programs. Components of brand programs may include:

Custom Content ~~Creation.~~Creation. We will at times create white papers, case studies, webcasts or videos to our customers’ specifications through our Custom Content team. These customized content assets are then promoted to our audience within both demand solutions and brand solutions programs.

Our suite of demand solutions offerings allows B2B technology companies to maximize return on investment by capturing sales leads from the distribution and promotion of content to our audience of enterprise technology and business professionals. Our demand solutions campaigns typically offer the Activity Intelligence Dashboard, a tool that gives our customers’ marketers and sales representatives a near real-time view of their prospects including insights on the research activities

Expenses consist of cost of revenues, selling and marketing, product development, general and administrative, depreciation and amortization, and interest and other expense, net. Personnel-related costs are a significant component of each of these expense categories except for depreciation and amortization and ~~except for~~ interest and other expense, net.

Cost of Revenues. Cost of revenues consists primarily of: salaries and related personnel costs; member acquisition expenses (primarily keyword purchases from leading internet search sites); freelance writer expenses; website hosting costs; vendor expenses associated with the delivery of webcast, podcast, videocast and similar content, and other offerings; stock-based compensation expenses; facility expenses, and other related overhead.

Selling and Marketing. Selling and marketing expenses consist primarily of: salaries and related personnel costs; sales commissions; travel-related expenses; stock-based compensation expenses; facility expenses and other related overhead. Sales commissions are recorded as expense when earned by the employee, based on recorded revenues.

Product Development. Product development includes the creation and maintenance of our network of websites, advertiser offerings and technical infrastructure. Product development expense consists primarily of salaries and related personnel costs; stock-based compensation expenses; facility expenses, and other related overhead.

General and Administrative. General and administrative expenses consist primarily of salaries and related personnel costs; facility expenses and related overhead; accounting, legal and other professional fees; and stock-based compensation expenses.

Depreciation and Amortization. Depreciation expense consists of the depreciation of our property and equipment and other capitalized assets. Depreciation is calculated using the straight-line method over their estimated useful lives, ranging from three to twelve years. Amortization of intangible assets expense consists of the amortization of intangible assets recorded in connection with our acquisitions. Separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives, which range from 2 to 17 years, using methods that are expected to reflect the estimated pattern of economic use.

Interest and Other Income (Expense), Net. Interest and other expense, net consists primarily of interest costs and the related amortization of deferred issuance costs on amounts borrowed under our Loan and Security Agreement (the “Loan Agreement”) with Western Alliance Bank and amortization of premiums on our investments, less any interest income earned on cash, ~~cash equivalents,~~ and short-term and long-term investments. We historically have invested our cash in money market accounts, municipal bonds, government agency bonds, U.S. Treasury securities and corporate bonds. Other expense, net consists of non-operating gains or losses, primarily related to realized and unrealized foreign currency gains and losses on trade assets and liabilities.

The discussion of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”). The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenues, long-lived assets, goodwill, allowance for doubtful accounts, stock-based compensation, contingent liabilities, self-insurance accruals and income taxes. We based our estimates of the carrying value of certain

assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies are those that affect our more significant judgments used in the preparation of our consolidated financial statements. A description of our critical accounting policies and estimates is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019. Other than those noted in Note 2 to our consolidated financial statements, there were no material changes to our critical accounting policies and estimates during the first ~~nine~~six months of ~~2019.~~2020.

We are subject to income taxes in both the U.S. and foreign jurisdictions, and we use estimates in determining our provision for income taxes. We recognize deferred tax assets and liabilities based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates.

Our deferred tax assets are comprised primarily of book to tax differences on stock-based compensation and timing of deductions for rent expense, accrued expenses, depreciation, and amortization. As of ~~September~~June 30, ~~2019,~~2020, we had foreign net operating loss (“NOL”) carryforwards of $0.2 million, which may be used to offset future taxable income in foreign jurisdictions indefinitely.

The following table sets forth our results of operations for the periods indicated, including percentage of total revenues:

	Three Months Ended September 30,										Nine Months Ended September 30,
	2019					2018					2019					2018					Three Months Ended June 30,										Six Months Ended June 30,
	($ in thousands)										($ in thousands)										2020					2019					2020					2019
Revenues	$	33,809		100	%	$	30,742		100	%	$	98,067		100	%	$	89,513		100	%	$	34,796		100	%	$	34,286		100	%	$	66,212		100	%	$	64,258		100	%
Cost of revenues		8,047		24	%		7,445		24	%		23,011		23	%		21,294		24	%		8,785		25	%		7,952		23	%	$	16,936		26	%		14,964		23	%
Gross profit		25,762		76	%		23,297		76	%		75,056		77	%		68,219		76	%		26,011		75	%		26,334		77	%		49,276		74	%		49,294		77	%
Operating expenses:
Selling and marketing		12,454		37	%		12,479		41	%		38,877		40	%		35,254		39	%		12,570		36	%		13,976		41	%		25,519		39	%		26,422		41	%
Product development		2,085		6	%		2,340		8	%		6,073		6	%		6,527		7	%		1,846		5	%		2,001		6	%		3,878		6	%		3,988		6	%
General and administrative		3,107		9	%		3,938		13	%		9,252		9	%		10,663		12	%		3,267		9	%		3,123		9	%		6,622		10	%		6,145		10	%
Depreciation and amortization		1,205		4	%		1,156		4	%		3,481		4	%		3,404		4	%		1,453		4	%		1,146		3	%		2,798		4	%		2,276		4	%
Total operating expenses		18,851		56	%		19,913		65	%		57,683		59	%		55,848		62	%		19,136		55	%		20,246		59	%		38,817		59	%		38,831		60	%
Operating income		6,911		20	%		3,384		11	%		17,373		18	%		12,371		14	%		6,875		20	%		6,088		18	%		10,459		16	%		10,463		16	%
Interest and other expense, net		(409	)	(1	)%		(362	)	(1	)%		(798	)	(1	)%		(1,206	)	(1	)%		(10	)	0	%		(253	)	-1	%		(479	)	-1	%		(390	)	-1	%
Income before provision for (benefit from) income taxes		6,502		19	%		3,022		10	%		16,575		17	%		11,165		12	%
Income before provision for income taxes																						6,865		20	%		5,835		17	%		9,980		15	%		10,073		16	%
Provision for income taxes		1,151		3	%		(747	)	(2	)%		3,783		4	%		882		1	%		2,092		6	%		1,684		5	%		3,000		5	%		2,632		4	%
Net income	$	5,351		16	%	$	3,769		12	%	$	12,792		13	%	$	10,283		11	%	$	4,773		14	%	$	4,151		12	%	$	6,980		11	%	$	7,441		12	%

Comparison of Three Months Ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018~~2019

The increase in revenues was due to customers increasing their spend for data driven marketing products. Priority ~~Engine™ revenues~~Engine revenue grew 1% versus last year to $12.5 million. Increases in lead generation, driven by the customers movement to shorter term contracts, were ~~up 30% for the three months ended~~ ~~September 30, 2019, compared to the prior year period.~~offset by decreases in brand.

Gross Profit. Our gross profit is equal to the difference between our revenues and our cost of revenues for the period. Gross profit percentage was ~~76%~~75% for ~~both~~ the three months ended ~~September~~2020 and 77% for the three months of June 30, ~~2019 and 2018.~~2019. Gross profit ~~increased~~decreased by ~~$2.5~~$0.3 million in the three months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018~~,2019, primarily attributable to the ~~increase in revenues~~product mix as compared to the same period a year ago. Because the majority of our costs are labor-related, we expect our gross profit to fluctuate from period to period depending on the total revenues for the period.

	Three Months Ended September 30,
	2019			2018			Increase (Decrease)			Percent Change			Three Months Ended June 30,
	($ in thousands)												2020			2019			Increase (Decrease)			Percent Change
Operating expenses:
Selling and marketing	$	12,454		$	12,479		$	(25	)		(0	)%	$	12,570		$	13,976		$	(1,406	)		-10	%
Product development		2,085			2,340			(255	)		(11	)%		1,846			2,001			(155	)		-8	%
General and administrative		3,107			3,938			(831	)		(21	)%		3,267			3,123			144			5	%
Depreciation and amortization		1,205			1,156			49			4	%		1,453			1,146			307			27	%
Total operating expenses	$	18,851		$	19,913		$	(1,062	)		(28	)%	$	19,136		$	20,246		$	(1,110	)		-5	%
Interest and other expense, net	$	(409	)	$	(362	)	$	(47	)		(13	)%	$	(10	)	$	(253	)	$	243			96	%
Provision for (benefit from) income taxes	$	1,151		$	(747	)	$	1,898			(254	)%
Provision for income taxes													$	2,092		$	1,684		$	408			24	%

Selling and Marketing. Selling and marketing expenses decreased for the three months ended ~~September~~June 30, ~~2019,~~2020, as compared to the same period in ~~2018,~~2019, primarily due to ~~increases~~decreases in stock-based compensation expense (accounting for 60% of the overall decrease) and contracted services as well as a reduction of travel and entertainment expenses ~~offset in part by reductions in travel expenses.~~related to COVID-19 circumstances.

Product Development. Product development expense decreased for the three months ended ~~September~~June 30, ~~2019,~~2020, as compared to the same period in ~~2018, primarily~~2019, mainly due to ~~$0.6 million that was~~an increase in labor and related costs capitalized ~~over the three months ended September 30, 2019~~ offset, in part, by increases in ~~consulting and related services, and salary expenses.~~contracted services.

General and Administrative. General and administrative expense ~~decreased~~increased for the three months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018, primarily~~2019, due to ~~a decrease~~an increase in ~~stock-based~~stock compensation expenses ~~and the recovery of previously reserved accounts receivable. This accounted for the vast majority of the overall decrease.~~offset in part by decreases in other labor costs.

Depreciation and Amortization. Depreciation and amortization expense ~~remained relatively flat for~~increased due to newly acquired intangible assets with high value, which were placed in service during 2020 and amortized during the three months ended ~~September~~June 30, ~~2019 when compared to~~2020 Those intangible assets were not in service during the same period in ~~2018.~~2019.

Comparison of ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018~~2019

The increase in revenues was due to customers increasing their spending for data driven marketing products. Priority Engine™ revenues were up ~~37%~~6% in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020. Increases in lead generation, driven by the customers movement to shorter term contracts, were offset by decreases in brand.

	Nine Months Ended September 30,
	2019			2018			Increase (Decrease)		Percent Change			Six Months Ended June 30,
	($ in thousands)											2020			2019			Increase (Decrease)			Percent Change
Cost of revenues	$	23,011		$	21,294		$	1,717		8	%	$	16,936		$	14,964		$	1,972			13	%
Gross profit	$	75,056		$	68,219		$	6,837		10	%	$	49,276		$	49,294		$	(18	)		(0	)%
Gross profit percentage		77	%		76	%							74	%		77	%

Gross Profit. Our gross profit is equal to the difference between our revenues and our cost of revenues for the period. Gross profit percentage was ~~77% and 76%~~74% for the ~~nine~~first six months of 2020 and 77% for the six months ended ~~September~~June 30, ~~2019 and 2018, respectively.~~2019. Gross profit ~~increased by $6.8~~ ~~million~~remained relatively flat in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018~~2019, primarily attributable to a shift in the ~~increase in revenues as~~product mix compared to the same period a year ago. Because the majority of our costs are labor-related, we expect our gross profit to fluctuate from period to period depending on the total revenues for the period.

	Nine Months Ended September 30,
	2019			2018			Increase (Decrease)			Percent Change			Six Months Ended June 30,
	($ in thousands)												2020			2019			Increase (Decrease)			Percent Change
Operating expenses:
Selling and marketing	$	38,877		$	35,254		$	3,623			10	%	$	25,519		$	26,422		$	(903	)		-3	%
Product development		6,073			6,527			(454	)		(7	)%		3,878			3,988			(110	)		-3	%
General and administrative		9,252			10,663			(1,411	)		(13	)%		6,622			6,145			477			8	%
Depreciation and amortization		3,481			3,404			77			2	%		2,798			2,276			522			23	%
Total operating expenses	$	57,683		$	55,848		$	1,835			3	%	$	38,817		$	38,831		$	(14	)		0	%
Interest and other expense, net	$	(798	)	$	(1,206	)	$	408			(34	)%	$	(479	)	$	(390	)	$	(89	)		23	%
Provision for income taxes	$	3,783		$	882		$	2,901			329	%	$	3,000		$	2,632		$	368			14	%

Selling and Marketing. Selling and marketing expenses ~~increased~~decreased for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, as compared to the same period in ~~2018,~~2019, primarily due to ~~increases~~decreases in stock-based compensation expenses (accounting for ~~90%~~39% of the overall ~~increase)~~decrease) and contracted services as well as a reduction of travel and entertainment expenses related to COVID-19.

Product Development. Product development expense decreased for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, as compared to the same period in ~~2018,~~2019, primarily due to ~~$1.7 million~~additional amounts that ~~was~~were capitalized over the ~~nine~~six months ended ~~September~~June 30, 2019 offset in part by increases in ~~consulting, and related, services, and salary expenses.~~contracted services.

General and Administrative. General and administrative expense ~~decreased~~increased for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018,~~2019, primarily due to ~~a decrease~~increases in stock compensation ~~expense (approximately $1 million) and the recovery of previously reserved accounts receivable.~~expense.

Depreciation and Amortization. Depreciation and amortization expense ~~remained relatively flat~~increased for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 when compared to the same period in ~~2018.~~2019, due to increased amortization expense related to the Company’s acquisition during February of 2020.

The timing of our revenues is affected by seasonal factors. Our revenues are seasonal primarily as a result of the annual budget approval process of many of our customers, the normal timing at which our customers introduce new products, and the historical decrease in advertising in summer months. The timing of revenues in relation to our expenses, many of which do not vary directly with revenues, has an impact on the cost of online revenues, selling and marketing, product development, and general and administrative expenses as a percentage of revenues in each calendar quarter during the year.

The majority of our expenses are personnel-related and includes salaries, stock-based compensation, benefits and incentive-based compensation plan expenses. As a result, we have not experienced significant seasonal fluctuations in the timing of our expenses period to period.

Our cash and ~~cash equivalents~~investments at ~~September~~June 30, ~~2019~~2020 totaled ~~$52.1~~$55.4 million, a ~~$17.0~~$2.1 million ~~increase~~decrease from December 31, ~~2018,~~2019, primarily driven by ~~cash generated from operations, partially offset by investments in property and equipment, principal payments on our term loan, and~~the repurchase of shares of our common stock under our ~~repurchase plan.~~November 2018 Repurchase Program, the acquisition of substantially all the operating assets of Data Science Central in February 2020, investments in property and equipment, and principal payments on our term loan partially offset by cash generated from operations. We believe that our existing cash and ~~cash equivalents~~investments and our cash flow from operating activities will be sufficient to meet our anticipated cash needs for at least the next twelve months. Additionally, we have $20 million available under a new line of credit agreement entered into in July 2020. Our future working capital requirements will depend on many factors, including the operations of our existing ~~businesses,~~business, our potential strategic expansion internationally, future acquisitions we might undertake, and any expansion into complementary businesses. To the extent that our cash and ~~cash equivalents,~~ investments, ~~and~~ cash flow from operating activities, and amounts available under our line of credit are insufficient to fund our future activities, we may need to raise additional funds through bank credit arrangements or public or private equity or debt financings. We also may need to raise additional funds in the event we determine in the future to effect one or more additional acquisitions of businesses.

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
	(in thousands)
Cash, cash equivalents and investments	$	52,140	$	35,173
Cash and investments					$	55,413	$	57,499
Accounts receivable, net	$	24,643	$	30,042	$	25,568	$	27,102

Our cash and ~~cash equivalents,~~investments, at ~~September~~June 30, ~~2019~~2020 were held for working capital purposes. We do not enter into investments for trading or speculative purposes.

Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities. The fluctuations vary depending on the timing with which we meet our performance obligations and on the timing of our cash collections, as well as on changes to our allowance for doubtful accounts. We use days sales outstanding (“DSO”) as a measurement of the quality and status of our receivables. We define DSO as net accounts receivable at quarter end divided by total revenues for the applicable period, multiplied by the number of days in the applicable period. DSO was 67 days and 8369 days at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

	Nine Months Ended September 30,
	2019			2018			Six Months Ended June 30,
	(in thousands)						2020			2019
Net cash provided by operating activities	$	29,993		$	17,373		$	21,841		$	18,819	��
Net cash used in investing activities	$	(4,271	)	$	(240	)	$	(8,424	)	$	(2,879	)
Net cash used in financing activities	$	(8,163	)	$	(13,581	)	$	(15,517	)	$	(6,195	)

Cash provided by operating activities primarily consists of net income adjusted for certain non-cash items including depreciation and amortization, provisions for bad debt, stock-based compensation, deferred income taxes, and the effect of changes in working capital and other activities. Cash provided by operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 was ~~approximately $30~~$21.8 million compared to cash provided by operating activities of ~~approximately $17~~$18.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2020.

The increase in cash provided by operating activities was primarily the result of ~~an increase~~changes in ~~revenue~~working capital (driven mainly by a increases in amounts payable for income and ~~a decrease~~payroll taxes as compared to 2019) offset by decreases in amounts collected from accounts receivable.

Cash used in investing activities in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 was ~~$4.3~~$8.4 million and was primarily a result of ~~investments~~the acquisition of substantially all of the operating assets of Data Science Central in February 2020 ($5.0 million) and purchase of property and equipment, primarily for internal-use software, and to a lesser extent, computer equipment~~offset by the maturity of investments.~~. We capitalized internal-use software and website development costs of ~~$1.3~~$3.0 million and ~~$0.7~~$2.6 million for the ~~three~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018, respectively. For the nine month periods ended September 30,~~ 2019, ~~and 2018, we capitalized internal-use software and website development costs of $3.9 million and $2.2 million,~~ respectively.

In the ~~nine~~first six months ~~ended September~~of June 30, ~~2019,~~2020, we used ~~$8.2~~$15.5 million for financing activities, consisting primarily of ~~$0.9~~$14.8 million, for the purchase of treasury shares, $0.6 million for the repayment of principal under ~~our Term~~the Loan ~~$4.6 million for the purchase of treasury shares~~Agreement and related costs and ~~$2.6~~$0.1 million for tax withholdings related to net share settlements. In the first ~~nine~~six months of ~~2018~~2019 we used ~~$13.6~~$6.2 million for financing activities, consisting primarily of ~~$7.5 million for the repayment of principal on our prior loan agreement, $4.0~~$4.7 million for the purchase of treasury shares and related costs, $0.6 million for the repayment of principal on the Loan Agreement, and ~~$3.1~~$0.9 million for tax withholdings related to net share ~~settlements, partially offset by a net $1.0 million received from other financing activities.~~settlements.

In November 2018 wethe Company announced that ~~our~~the Board had authorized a ~~$25~~$25.0 million stock repurchase program (the “November 2018 Repurchase Program”) ~~whereby we are~~under which the Company is authorized to repurchase ~~our~~the Company’s common stock from time to time on the open market or in privately negotiated transactions at prices and in ~~the~~a manner that may be determined by management. The Company repurchased 736,760 shares at an aggregate purchase price of approximately $14.8 million during the first quarter of 2020 under the November 2018 Stock Repurchase Program. No amounts were repurchased under this plan during the second quarter of 2020 and the November 2018 Repurchase Program was terminated in May 2020. During the ~~nine~~six months ended ~~September~~June 30, 2019 we repurchased 317,724 shares of common stock for an aggregate purchase price of approximately $4.7 million pursuant to the (“November 2018 Repurchase ~~Program. As~~Program”). The November 2018 Repurchase Program was terminated on May 1, 2020.

On May 1, 2020, the Company’s Board of ~~September 30, 2019~~ ~~approximately $17 million remained authorized.~~

~~In June 2016, we announced that our Board had authorized~~Directors approved a ~~$20~~new two-year $25.0 million stock repurchase program (the ~~“June 2016~~“May 2020 Repurchase Program”)~~, On May 5, 2017, our Board reauthorized the common stock repurchase program to allow us to use the remaining balance~~. Repurchases of the ~~unused authorization~~Company's stock under the ~~2016~~May 2020 Repurchase Program ~~after its original expiration~~may be made in ~~June 2017. The reauthorized program allowed us to repurchase our common stock from time to time on~~ the open market, or in privately negotiated ~~transactions.~~transactions, or pursuant to one or more trading plans. The ~~June 2016~~timing and amount of repurchases, if any, will be determined by the Company's management at its discretion and be based on a variety of factors such as the market price of the Company's common stock, corporate and contractual requirements, prevailing market and economic conditions and legal requirements. The May 2020 Repurchase Program may be modified, suspended or discontinued at any time. No amounts were repurchased under this program ~~expired in August 2018.~~during the second quarter of 2020.

Repurchased shares were recorded under the cost method and are reflected as treasury stock in the accompanying Consolidated Balance Sheets. All repurchased shares were funded with cash on hand.

On December 24, 2018, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Western Alliance Bank as the lender. The Loan Agreement provides for a $25 million term loan facility with a maturity date of December 10, 2023 (the “Term Loan”).

The borrowings under the Loan Agreement are secured by a lien on substantially all of our assets, including a pledge of the stock of certain wholly-owned subsidiaries (limited, in the case of the stock of certain foreign subsidiaries, to no more than 65% of the capital stock of such subsidiaries). The Term Loan must be repaid quarterly, with applicable interest paid monthly, in the following manner: 1.25% of the initial aggregate borrowings are due and payable each quarter for the first two loan years, 1.88% of the initial aggregate borrowings are due and payable each quarter for the third loan year, and 2.50% of the initial aggregate borrowings are due and payable each quarter for the fourth and fifth loan years. At maturity, all outstanding amounts, including unpaid principal and accrued and unpaid interest, under the Loan Agreement will be due and payable.

The borrowings are subject to a leverage ratio, measured quarterly. The Loan Agreement also requires us to make representations and warranties and to comply with certain other covenants and agreements that are customary in loan agreements of this type. At ~~September~~June 30, ~~2019~~,2020, we were in compliance with all covenants under the Loan Agreement.

The ~~Term~~ Loan Agreement bears interest at a floating per annum rate equal to one and three-eighths percent (1.375%) above the greater of (a) the one (1) month U.S. LIBOR rate reported in The Wall Street Journal and (b) ~~and~~ two percent (2.00%).

The ~~Term~~ Loan Agreement may be prepaid at our option without penalty, provided we comply with the notice ~~provisions~~provision of the ~~Loan Agreement.~~document. The Loan Agreement also contains customary events of default, subject to grace periods in certain cases, which may cause repayment of the Term Loan to be accelerated.

On July 2, 2020, the Company and the Bank entered in a Loan and Security Modification Agreement (the “Modification Agreement”) amending the Loan Agreement between the Company and the Bank. Among other things, the Modification Agreement added or amended certain definitions in the Loan Agreement, added a new asset coverage ratio financial covenant of no less than 1.0 to 1.0 tested as of the end of each quarter, and provided the Company with a new revolving line of credit facility of $20,000,000 (“Line of Credit”). The Line of Credit allows the Company to request non-formula advances in an aggregate principal amount not to exceed the Line of Credit and to use the proceeds of such advances until the facility matures on July 2, 2022. Advances under the Line of Credit bear interest at a floating rate equal to one-quarter percent (0.25%) above the Prime Rate (as published in the Money Rates section of the Western Edition of The Wall Street Journal, or such other rate of interest publicly announced from time to time by Western Alliance as its Prime Rate); provided that at no time shall the interest rate on such advances be less than three and one half percent (3.50%). Additionally, the Modification Agreement includes language providing for the Company and the Bank to mutually agree upon a LIBOR replacement if LIBOR ceases to exist or is no longer available.

We have made capital expenditures primarily for computer equipment and related software needed to host our websites, internal-use software development costs, as well as for leasehold improvements and other general purposes to support our growth. Our capital expenditures totaled ~~$4.8~~$3.3 million and ~~$4.5~~$3.4 million for the ~~nine~~six month periods ended ~~September~~June 30, ~~2019~~ 2020 and, ~~2018~~2019 respectively. A majority of our capital expenditures in the first ~~nine~~six months of ~~2019~~2020 were for internal-use software and website development costs and, to a lesser extent, computer equipment and related software. A majority of our capital expenditures in the first six months of 2019 were for leasehold improvements and internal-use software and website development costs and, to a lesser extent, computer equipment and related software. We capitalized internal-use software and website development costs of ~~$3.9~~$3.0 million and ~~$2.2~~$2.6 million for the ~~nine month~~six months ended ~~September~~June 30, 2020 and 2019, ~~and~~ ~~2018~~, respectively. We are not currently party to any purchase contracts related to future capital expenditures.

There were no material changes to our contractual obligations and commitments described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019.

This Quarterly Report on Form 10-Q 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 Quarterly Report 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,~~” “will,” “should,” “expects,” “plans,” “anticipates,” “going to,” ~~"could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential,"~~“could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or ~~"continue,"~~“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 Quarterly Report 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, ~~2018.~~2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q. 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.

Item 3. Quantitative and ~~Qualitati~~veQualitative Disclosures ~~About~~about Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign exchange rates and interest rates. We do not hold or issue financial instruments for trading purposes.

We currently have subsidiaries in the United Kingdom, Hong Kong, Australia, Singapore, Germany and France. Approximately ~~25%~~30% of our revenues for the ~~three~~six months ended ~~September~~June 30, ~~2019~~2020 were derived from customers with billing addresses outside of the United States and our foreign exchange gains/losses were not significant. We currently believe our exposure to foreign currency exchange rate fluctuations, is financially immaterial and therefore have not entered into foreign currency hedging transactions. We continue to review this issue and may consider hedging certain foreign exchange risks through the use of currency futures or options in the future. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Our continued international expansion increases our exposure to exchange rate fluctuations and as a result such fluctuations could have a significant impact on our future results of operations.

At ~~September~~June 30, ~~2019,~~2020, we had cash and ~~cash equivalents,~~investments of, ~~$52~~$55.4 million. The investments were in a bond fund. The cash and ~~cash equivalents were in deposit accounts. The cash and cash equivalents~~investments were held for working capital purposes. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value as a result of changes in interest rates. Declines in interest rates, however, would reduce future investment income.

Our exposure to market risk also relates to interest expense on borrowings under the Loan Agreement. The borrowings under the Loan Agreement bear interest at an annual rate of 1.375% plus the higher of the one-month U.S. LIBOR rate reported in the Wall Street Journal or two percent (2.00%) (see Note 8 to the consolidated financial statements). At ~~September~~June 30, ~~2019,~~2020, there was ~~$24.0~~$23.1 million of aggregate principal outstanding under the Loan Agreement.

We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) as appropriate, to allow timely decisions regarding required disclosure.

In connection with the preparation of this Quarterly Report on Form 10-Q for the period ended ~~September~~June 30, ~~2019,~~2020, management, under the supervision of the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), conducted an evaluation of our disclosure controls and procedures as of ~~September~~June 30, ~~2019.~~2020. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control, that occurred during the ~~third~~second quarter of ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are not currently a party to any material legal proceedings and we are not aware of any pending or threatened litigation against us that could have a material adverse effect on our business, operating results or financial condition.

Our business is subject to a number of risks, including those identified in Item 1A – “Risk Factors” of our ~~2018~~ Annual Report on Form 10-K, that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. As of, ~~September 30, 2019,~~ there have been no material changes to the risk factors disclosed in our ~~2018~~ Annual Report on Form ~~10-K.~~10-K except to the risks relating to COVID-19 and EU-US Privacy Shield Framework, as amended below. We may disclose changes to any risk factors presented or disclose additional factors from time to time in our future filings with the Securities and Exchange Commission.

We were adversely impacted by the recent outbreak of the new coronavirus disease (COVID-19) and could experience additional adverse impacts that could be material to the Company’s business, operating results, financial condition and liquidity.

Our business was adversely impacted by the effects of the spread of the new coronavirus disease (COVID-19). We are witnessing the far-reaching impact that COVID-19 is having on our employees, customers, vendors, members, stockholders, and other stakeholders as well as the global economy and society at large. While we have responded proactively to address the effects of COVID-19 and to mitigate its potential impacts to our business, including through the elimination of all non-essential travel, transitioning our entire workforce to a remote work environment, and enhancing access to certain health and safety resources for our employees, beginning in March, 2020 we saw certain customers extend their normal sales cycles and budget shifts as some customers moved from long-term commitments to shorter term marketing campaigns as they began to navigate through the pandemic. To date, we have only experienced a handful of cancellations but we continue to stay close to our customers to ensure they are continuing to see ROI. New customer acquisition became harder as some potential customers were less apt to spend on new products or services.

We believe our strong financial position provides us with the flexibility to weather this period of economic uncertainty and the opportunity to respond quickly to our customers with the content and services they expect. However, the restrictive measures local, state, and federal governments (including in the other countries in which we operate) have implemented to prevent the spread of COVID-19, including restrictions on the operation of non-essential businesses, shelter in place orders, travel restrictions, quarantines, school closures, and other community response and social distancing policies and guidelines, will continue to affect the way we and our customers conduct and operate our respective businesses. We remain open and continue to provide the content and services that are important to our customers. Moreover, our dedicated employees continue to collaborate with each other and our customers and their sales and marketing teams, to deliver high quality, impactful campaigns. While we will continue to actively monitor government restrictions impacting our business and remain focused on business continuity, including reducing expenses and managing liquidity, given the fluid nature of COVID-19, the uncertainty of its duration, the potential for resurgence, and the unknown effects of potential future government actions in response to COVID-19, we cannot estimate the duration or magnitude of its impact on the global economy, our business or our financial results.

Changes in laws and standards relating to marketing, data collection and use, and the privacy of internet users could impact our ability to conduct our business and thereby decrease our marketing and advertising service revenues while imposing significant compliance costs on the Company.

We use e-mail as a significant means of communicating with our members. The laws and regulations governing the use of e-mail for marketing purposes continues to evolve, and the growth and development of the market for commerce over the internet may lead to the adoption of additional legislation and/or changes to existing laws. If new laws or regulations are adopted, or existing laws and regulations are interpreted and/or amended or modified to impose additional restrictions on our ability to send e-mail to our members or potential members, we may not be able to communicate with them in a cost-effective manner. In addition to legal restrictions on the use of e-mail, internet service providers and others typically attempt to block the transmission of unsolicited e-mail, commonly known as “spam.” If an internet service provider or software program identifies e-mail from us as “spam,” we could be placed on a restricted list that would block our e-mail to members or potential members who maintain e-mail accounts with these

internet service providers or who use these software programs. If we are unable to communicate by e-mail with our members and potential members as a result of legislation, blockage or otherwise, our business, operating results and financial condition could be harmed.

We collect information from those who visit or register as members on our websites, co-branded sites, or for services, respond to surveys or, in some cases, view our content. Subject to each member’s permission (or right to decline, which we refer to as an “opt-out”, a practice that may differ across our various websites, depending on the applicable needs and requirements of different countries’ laws), we may use this information to inform our members of services that they have indicated may be of interest to them. We may also share this information with our customers for members who have elected to receive additional promotional materials and have expressly or implicitly granted us permission to share their information with third parties. We also collect information on our members based on their activity on our sites. The U.S. federal government and certain states have adopted or proposed limitations on the collection, distribution and use of personal information of internet users.

Although, to date, our efforts to comply with applicable federal and state laws and regulations have not hurt our business, additional, more burdensome laws or regulations, including more restrictive consumer privacy and data security laws, could be enacted or applied to us or our customers. Such laws or regulations could impair our ability to collect member information that helps us to provide more targeted content to our website visitors and members and detailed lead data to our customers, thereby impairing our ability to maintain and grow our audience and maximize revenue from our customers. Additionally, the FTC and many state attorneys general are applying federal and state consumer protection laws to require that the online collection, use and dissemination of data, and the presentation of website content, comply with certain standards for notice, choice, security and access. Courts may also adopt these developing standards. In many cases, the specific limitations imposed by these standards are subject to interpretation by courts and other governmental authorities. A few states have also introduced legislation that, if enacted, would restrict or prohibit behavioral marketing and advertising within the state. In the absence of a federal law pre-empting their enforcement, such state legislation would likely have the practical effect of regulating behavioral marketing and advertising nationwide because of the difficulties behind implementing state-specific policies or sending targeted advertising to individuals based on their perceived commercial interests. In the event of additional legislation in this area, our ability to effectively target our website visitors and members may be limited. We believe that we are in compliance with applicable consumer protection laws, but a determination by a state or federal agency or court that any of our practices do not meet these laws and regulations could create liability to us, result in adverse publicity and affect negatively our businesses. New interpretations of these standards could also require us to incur additional costs and restrict our business operations.

The EU and its member states, California and Canada have regulations dealing with the collection and use of personal information obtained from their citizens. Regulations in these jurisdictions have focused on the collection, processing, transfer, use, disclosure and security of information that may be used to identify or that actually identifies an individual, such as a name, e-mail address or online identifier (such as an IP address in certain cases). These laws also provide consumers the right to access the information a company has collected on them, correct it, request that it be deleted, or to stop the sale of such information to third parties.

The General Data Protection Regulation (“GDPR”) became effective in May 2018 and was designed to, among other things, harmonize disparate data privacy laws found across Europe. GDPR implemented more rigorous principles relating to the data privacy and data protection, including, among other things, enhanced disclosure requirements regarding how personal information is obtained, used, and shared, limitations on the purpose and storage of personal information, mandatory data breach notification requirements and enhanced standards for data controllers to demonstrate that they have obtained valid consent for certain data processing activities. Its application and scope are extensive and penalties for non-compliance are significant, including fines of up to 20 million Euros or 4% of total worldwide revenue. In the event the Company is deemed not in compliance with GDPR, or fails to maintain compliance, then the Company would be exposed to material damages, costs and/or fines if an EU regulator or EU resident commenced an action. Failure to comply or maintain compliance could cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or members), cause a loss of confidence in our services, and deter current and potential customers from using our services.

Further, the presidency of the council of the EU released a revised draft of the pending Proposal for Regulation on Privacy and Electronic Communications (“ePrivacy Regulation”) which will replace the ePrivacy Directive and is intended to align with the overall EU data privacy and protection framework, including GDPR. The ePrivacy Regulation was defeated by the council of the EU, but it is expected to be proposed again. The ePrivacy Regulation could disrupt the Company’s ability to use or transfer data or to market and sell its products and services, which could have a material adverse effect on our business, financial condition, and operating results.

Our customers may implement compliance measures that do not align with our services, which could limit the scope and delivery of services we are able to provide. Our customers may also require us to take on additional privacy and security obligations,

causing us to incur potential disruption and expense related to our business processes. If our policies and practices, or those of our customers, are, or are perceived to be, insufficient or if our members, website visitors or customers have concerns regarding our data privacy and data protection practices, particularly with respect to GDPR or the pending ePrivacy Regulation, then we could be subject to enforcement actions or investigations by regulators or lawsuits by private parties, member engagement could decline and our business could be negatively impacted.

For certain data transfers and processing activities between the EU and the U.S., many companies previously relied on the Department of Commerce Safe Harbor Principles (“Safe Harbor”) and self-certification process in order to lawfully transfer and process the personal data of people in the EU to the U.S. in a manner that the EU deemed adequate to protect the security of such information. On October 6, 2015, the Court of Justice of the European Union (“CJEU”) declared that Safe Harbor was no longer valid. U.S. and EU lawmakers in February 2016 announced a replacement for Safe Harbor, called the EU-U.S. Privacy Shield Framework (“the EU Privacy Shield”). On July 12, 2016, the European Commission deemed the EU-US Privacy Shield adequate to enable data transfers of personal data from the EU to the U.S. Similarly, a Swiss-U.S. Privacy Shield (the “Swiss Privacy Shield”) was announced in January 2017, replacing the former Swiss-U.S. Safe Harbor, enabling data transfers of personal data from Switzerland to the U.S. The Company self-certified to the EU Privacy Shield and Swiss Privacy Shield most recently on March 6, 2020. On July 16, 2020, the CJEU invalidated the EU Privacy Shield. The CJEU upheld the adequacy of EU Standard Contractual Clauses (“SCCs”) issued by the European Commission for the transfer of personal data to data processors established outside of the EU, however, the court made clear that reliance on SCCs alone may not necessarily be sufficient in all circumstances and that their use must be assessed on a case-by-case basis taking into account the surveillance laws and right of individuals in the destination country. The CJEU’s decision takes effect immediately. The CJEU decision does not impact the Swiss Privacy Shield. The Company uses several mechanisms to transfer personal data from the EU to the U.S. (including having previously relied on the EU Privacy Shield) and are evaluating what additional mechanisms may be required to establish adequate safeguards for the further transfer of personal data. If supervisory authorities issue guidance on transfer mechanisms, including circumstances where the SCCs cannot be used and/or start taking enforcement action, we could suffer additional costs, complaints, and/or regulatory investigations or fines. Moreover, if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services and could adversely affect our financial results.

In order to continue receiving personal data from the United Kingdom in reliance on the EU Privacy Shield following Brexit, the Company may be required to meet standards for cross-border transfer imposed by the UK itself.

Our digital properties collect and use data about our website visitors’ and members’ online behavior, and the revenue associated with this activity could be impacted by government regulation and enforcement, industry trends, self-regulation, technology changes, consumer behavior and attitude, and private action. We also use such information to call website visitors and members who have provided their telephone numbers to be enrolled as a member (for free). Our partners may then follow-up to try to sell products or services to such individuals.

We also work with our partners to deliver targeted advertisements based on members and website visitors’ perceived commercial interests. Many of our users voluntarily provide us with contact and other information when they visit our websites. We may utlize data from third-party sources to augment our user profiles and marketing databases so we are better able to personalize content, enhance our analytical capabilities, better target our marketing programs, and better qualify leads for our partners. If changes in user sentiment regarding the sharing of information results in a significant number of visitors to our websites refusing to provide us with contact and other information, our ability to personalize content for our users and provide targeted marketing solutions for our partners would be impaired. If our users choose to opt-out of having their data used for behavioral targeting, it would be more difficult for us to offer targeted marketing programs for our partners. If we are unable to acquire data from third-party sources for whatever reason, or if there is a marked increase in the cost of obtaining such data, our ability to personalize content and provide marketing solutions could be negatively impacted.

The use of such consumer data by online service providers and advertising networks is a topic of active interest among federal, state, and international regulatory bodies, as well as self-regulatory organizations, and the regulatory environment is unsettled. Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing and security of data that we receive from and about our website visitors and members through cookies and other similar technologies. Our privacy policies and practices concerning the collection, use, and disclosure of user data are posted on our websites.

There are new and expanding proposals for laws and regulations regarding “Do Not Track” requirements that protect users’ right to choose whether or not to be tracked online. These proposals seek, among other things, to allow consumers to have greater control over the use of private information collected online, to forbid the collection or use of online information, to demand a business to comply with their choice to opt out of such collection or use, and to place limits upon the disclosure of information to third party websites. Any such laws and regulations could have a significant impact on the operation of our advertising and data businesses. U.S. regulatory agencies have also placed an increased focus on online privacy matters and, in particular, on online advertising activities

that utilize cookies or other tracking tools. Consumer and industry groups have expressed concerns about online data collection and use by companies, which has resulted in the release of various industry self-regulatory codes of conduct and best practice guidelines that are binding for member companies engaged in online behavioral advertising (“OBA”) and similar activities. These codes of conduct and best practice guidelines govern, among other things, the ways in which companies can collect, use and disclose user information for OBA purposes, how companies must give notice of these practices, and what choices companies must provide to consumers regarding these practices.

We may be required or otherwise choose to adopt Do Not Track mechanisms, and we may be required to abide by certain self-regulatory principles promulgated by the Digital Advertising Alliance and others for OBA and similar activities, in which case our ability to use our existing tracking technologies, to collect and sell user behavioral data, and permit their use by other third parties could be impaired. This could cause our net revenues to decline and adversely affect our operating results.

We believe that we are in material compliance with all laws, regulations and self-regulatory regimes that are applicable to us. However, as referenced above, these laws, regulations, and self-regulatory regimes may be modified, and new laws may be enacted in the future that may apply to us and affect our business. Further, data protection authorities may interpret existing laws in new ways. We may deploy new products and services from time to time, which may also require us to change our compliance practices. Any such developments (or developments stemming from enactment or modification of other laws) or the failure to anticipate accurately the application or interpretation of these laws could create liability for us, result in adverse publicity, increase our future compliance costs, make our products and services less attractive to our members and customers, or cause us to change or limit our business practices, and materially affect our business and operating results. Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil, criminal or contractual liabilities.

The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q.

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 thereunto duly authorized.

Delaware	04-3483216
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

275 Grove Street Newton, Massachusetts	02466
(Address of principal executive offices)	(~~zip code)~~Zip Code)

Title of each class	Trading ~~Symbol(s)~~symbol(s)	Name of each exchange on which registered
Common ~~stock,~~Stock, $0.001 ~~par value per share~~Par Value	TTGT	Nasdaq Global Market

Item		Page

PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (unaudited)	3
	Consolidated BalanceSheets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~ 2019	3
	Consolidated Statements of Income and Comprehensive Income for the three ~~and nine~~ and six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	4
	Consolidated Statements of Stockholders’ Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	5
	Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019 ~~and 2018~~	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1922
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3036
Item 4.	Controls and Procedures	3036

PART II.	OTHER INFORMATION	31
Item 1.	Legal Proceedings	3137
Item 1A.	Risk Factors	3137
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3141
Item 6.	Exhibits	3242
	Signatures	3343

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term investments:
Bond funds	$	5,084	$	—	$	(61	)	$	5,023
Total short-term investments	$	5,084	$	—	$	(61	)	$	5,023

	As of
	~~September~~June 30, ~~2019~~2020
Weighted-average remaining lease term — operating leases		~~5.6~~5.1
Weighted-average discount rate — operating leases		4	%

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

			Fair Value Measurements at June 30, 2020
	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Short-term investments(1)	$	5,023	$	—	$	5,023	$	—
Total assets	$	5,023	$	—	$	5,023	$	—
Liabilities:
Contingent consideration - current (2)	$	711	$	—	$	—	$	711
Contingent consideration - non-current (2)		426		—		—		426
Total liabilities	$	1,137	$	—	$	—	$	1,137

Years Ending December 31:	Minimum Lease Payments
2019	$	4,180
2020		3,629
2021		3,721
2022		3,397
2023		3,397
Thereafter		21,267
Total	$	39,591


Cash and investments:	$55.4 million
Current portion debt:	$1.6 million
Long-term portion debt:	$21.5 million

Exhibit No.		Description of Exhibit
~~10.1~~		~~Form of Indemnification Agreement.~~

~~31.1~~31.1*		Certification of Michael Cotoia, Chief Executive Officer of TechTarget, Inc., pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~31.2*		Certification of Daniel Noreck, Chief Financial Officer and Treasurer of TechTarget, Inc., pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1~~32.1*		Certifications of Michael Cotoia, Chief Executive Officer of TechTarget, Inc. and Daniel Noreck, Chief Financial Officer and Treasurer of TechTarget, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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	TECHTARGET, INC.
	(Registrant)

Date: ~~November 6, 2019~~August 5, 2020	By:	/s/ MICHAEL COTOIA
		Michael Cotoia, Chief Executive Officer and Director (Principal Executive Officer)

Date: ~~November 6, 2019~~August 5, 2020	By:	/s/ DANIEL NORECK
		Daniel Noreck, Chief Financial Officer and Treasurer (Principal Accounting and Financial Officer)