TTGT - Earnings call transcript Q3 2018

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Operator

Good day, and welcome to the TechTarget Q3 Earnings Release Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Counsel. General Rennick, Charlie ahead. go Please

Charles Rennick

you, Lexie. Thank

of call Before Executive remind Greg process. call our to and turning everyone Mike the to the Chairman; want Cotoia, Strakosch, I release over our earnings our on CEO,

the it As joining Relations on business today have section website update call posted of previously with shareholder us letter call, furnished of the announced, our provide in order Noreck, you on in Dan on Also an our the our advance on an we X-K. to the is and Investor CFO.

SEC. A These undertakes no with TechTarget of the and also Mike's We future update today them. in not Please of to team refer Greg results our accordance not and and are to materially reconciliation most statements GAAP may forward-looking With Following non-GAAP accompanies date prepared from to financial as the of differ measures refer comparable to letter. the available that quarterly forward-looking performance. to Actual in and answer that, Mike. based TechTarget questions. remarks, reports factual made our of on the shareholder management call assumptions turn financial these call, our forecast. obligation statements measures measures I'll this speak only These over will considered GAAP. be statements. to may Any be the may risk are and our factors not are your annual filed with statements our by guarantees Greg

Gregory Strakosch

Adjusted expanded contracts, growth. revenue in to in XX% Engine were revenues double-digit of adjusted to excellent XX% Revenues compared XXXX. our up million, had of in EBITDA Adjusted QX longer-term Charlie. QX growth XXXX of revenue and QX, XX% in revenue XXXX, in EBITDA Revenues XX% QX QX from from derived XX%. XXXX. We grew up $X.X $XX.X EBITDA Priority you, XX%. were Thank with was from million an up XX%. Great. XX% QX

XXXX revenue growth. growth and XX% over preliminary adjusted calls Our forecast for double-digit EBITDA

next I earnings we a up will We about will plan. give February Today, details new questions. further in announcing stock release forecast with for $XX repurchase million now open of our call the XXXX. our XXXX are

Operator

Brian first [Operator you. Instructions] comes Your Please from ahead. question with go Jefferies. Fitzgerald Thank

Brian Fitzgerald

guys. Thanks

you highlighted your largest kind that you I on wanted some if unpack also cautiousness in You model resonating could letter a maybe customers, QX that the behalf that tucked little saw bit. and through that know of bit the the of little was into and was to a guidance.

see were comments Post-yesterday, any was would and GDPR there tariffs Any be would elections. be great. highlighted that in around do a that, midterm up? there questions – there, You great you that around guys, opening

Michael Cotoia

Yes, terms accounts. of with Sure. well. when we see of Alert larger Brian, Deal relates that bit seen and will IT this really in is the some cautiousness see we have the some that a cautiousness it as we as to comes it with the to uncertainties, Mike. investment, and little And core

gen and when fairly Just that quickly. quickly. everything flowing get some those which ratchet that pretty lead short-term cautiousness, brand, or forward, investment and when down rolling like And core are is pickets encounter markets uncertainty on turned they'll is the they

going into was up to end one, in three one some Number peeled mid-term elections, letter: the would anything in would On was results the and mid-term we the what regulations impact there would how them. of have on that cautiousness I get back. did shareholder based was bucket like if the the tax areas elections,

you some I'm saw and markets on that in So today. I I say that believe will but and of provide forward clarity think commenting that some Democratic-Republican, the not over, I is moving will

some showed sign. that So

where around sales could their talks have those ability accounts, the globe, could more into a be and larger rise the happening regions our cost also seen of of lot challenged. with to across We their tariffs, sell

be discussion continue in some lastly, is global will topic we around a there particular, regulations, some larger of that And cautiousness and data are it more uncertainty seeing GDPR. accounts. and So then to of will those impact

our So a approach a on global well accounts as lot generation some are very of data lead the the of larger which regulations, a results these taking as with in efforts. cautious pullback efforts

good a two mentioned position competitive in as last advantage as long-term back for well a in and we we're in calls August, we've believe the May it's in As TechTarget. earnings very

consent-based where us customers. and has everything be with when engage a policy, have opt-in We subscribers our with to tick-and-tied accurately,

that offices having are and is that globe and governing and seeing are their that would legal policies have then we're additional an customers, our privacy around some additional EMEA, the opt-in. include who largest However, throughout own

have after there's that's and opt-in, can laws, and that, the an clarity lead also hope that's we accounts. compliance requesting sizable So we create more larger in as will the for Again, are bit a a programs. our a we're additional But they in on we drive opt-in generation that overall It efforts. some those into experiencing. XXXX with fulfilling of now, pullback head cost what

Brian Fitzgerald

that some talked then large the internationally ability a churn almost talked there about we triage And talking were about rapidly. accounts bit small little quarter, we situation and about – accounts to and Great. there. fix maybe Last and then

with out this any call small quarter? to so notable respect accounts dynamic to And

Michael Cotoia

Yes.

of August, of Core Priority the in we announced the to with accounts with back that smaller we the saw and Engine relating Online. a So churn our integration some little bit

numbers than the two areas, of revenue greater and other terms – XX next our top our XXX%. and renewal our In XXX, are

their couple teams and we cases to into tougher the customers really longer-term the time products. core want do measure we really they results, measure dashboard able sales What resources, customers Priority some and waving there consulting the with to that them will integration our with that help we smaller a that with fewer combined product help focus be assist team to as program engage when they less to was our moment make with on infrastructure a has and accounts as accurately consistently, those along way. led be of mobilize to reduce the smaller key and it announced that sign getting to our that with who to the accounts. we lot new KPIs onboarded those started these of be use through with client our going and our the to sure features some well subscriptions will churn. We're What smaller will Engine the for are announced help been identified a sold So be our on those have of

Brian Fitzgerald

Mike. Thanks Great.

Michael Cotoia

You’re welcome.

Operator

you. Thank

Marco Please Markets. ahead. comes from next with Rodriguez Your Capital Stonegate question go

Marco Rodriguez

slowdown little And Online Just the you're European I you of for prior kind talk some kind a or there thinking of about about clients. Dealer seeing from far wanted afternoon. are we follow-up of your the opt-in. additional taking IT you impacting GDPR, thoughts Good the the kind through Can of as with thank the how internationally? of Maybe with that you bit as can talk of my the your on question Core more that? your questions. specifically that to

Michael Cotoia

us. what give everything. we larger lead-generation accounts, Core customers have in I and we some with – customers would a of of in to of we a it have little have to be to programs that lead-generation trying want opt-in. taking immediately, them e-mail generate they've the impacts of absolutely very careful just And Online our they already them Marco. an Where but of Sure, box them, TechTarget, provided subscribers already transition you an background, for we consent visible terms approve to have where the opt-in say all check opt-in, programs TechTarget The approach, out global they to lay to policy our to are with. to continue that over to how not then box provides taken our them, so have conservative lot there's they've that's have very and a they is they've because like, additional most a our partners, to we engage data done check consent their get which and that for where another and bit

tele-follow-up So in they opt-in. for we additional when investing cases, that been those second to obtain in us services that opt-in, some ask have help

taking those helping I that's on pullback business. of the they but Core are fulfill on – mean, a data some the definitely So us programs,

as your sure our get agree of we it, lot your own registration that a any customers but our issues. to navigate and ourselves understand through business, base, they don't too and it we're take we compliance these we into your As these we a process, navigate the consent internally. opt-in is, feedback little a are we data starting and get regulations as that relates bit to and approach very these I see it. laws that They mean, the from with conservative make we get they policies understand

a become more that subside. But little those our seeing regulations bit short-term hope uncertainty clarified people would understand we as are we how lays So out, and that with of in would and compliance process the rules folks.

Gregory Strakosch

company And position of market. GDPR affecting in base. Yes. best opt-in everyone is positioned been our the we've in this We're terms the because is always

us came just report strength putting Forrester a of out labeling with – ours. that as

customers back-and-forth in So make you new like Mike shaking that is used have second they Then getting are programs. and can when that. the to plays it to it of short-term opt-in, of new deals with response it's when how some our But because sometimes more decreases kind that delays it environment. out rates smaller kind you and do relatively it's want that's customers the on said,

Marco Rodriguez

impact. customers everything have some with steady into services. you've are terms just once else, in double with to Understood, QX as geopolitical you the flavor of trying already far little getting gotten will? this you customer bit through of kind in just opt-in, cycle the and with And if short-term impacts, to the everybody, maybe type holding tariff-type the opt-ins, and get QX? we your touch or Theoretically talking additional of event, touch here the done bleed in basically you on so that end potentials then as opted-in Are potential a after

Michael Cotoia

do are they have set that can opted-in, program – all working through see We to be to to a get that opt-in. a with opt-in. if a QX. I to submit with another that we say that tele person be And forward And person where go follow vendor and wants call be person would double with additional tele vendor will vendor. moving Well, lead-generation that of relates But our we lead and that we that it gather I us would challenge as bleeding that to and in up is into have that definitely able it to there, or out preparing the that this get and to want we're over customers. ours short-term QX has a

a and it also the this most we full do cost-efficient that to best, there's So there's in moderate the we make and that a team, of full accounts. that to XXXX, because a pullback revenue scale sales to the look We're going into to going going impact, follow-up. have ways not and tele a sure cost global all and hire short-term, effective the across to we're outsource staff as and ability go

Marco Rodriguez

Gotcha, Engine. how and Priority kind growth segment your kind you're maybe enter IT and opportunities then if and guess, at little of gears you to for a Deal on between there here XXXX, Alert, that North the international? to switching about fiscal as we America talk of can Can your I start thoughts you bit looking more into specific

Michael Cotoia

Sure.

Engine overall Alert Deal Priority grew So grew XX% XX%. year-over-year and IT

we from saw XXX, customers XXX our customers and net uptick IT from So overall new saw Alert – in quarter. XX we nice Deal a the in

the of from in a QX saw to million. great sequential also $X.X amount We growth QX

progress model the the driver And Engine. Priority of our So with to the we're become revenue and very recurring the and business it's a growth for also pleased catalyst business.

positioned a of shareholder mentioned Engine, think launched product reporting announcing we What as standalone we revenue as product. two when here in we're terms think, between and Priority America sold North Engine, we in well for letter. would the I I first models have been we Core And on say I blurred. becoming that internationally. and Priority well XXXX, When very So in very that's IT, that

we So a well a number. as reported as Core data number

to lead products, toward However, intent IT our Deal Alert our Core of products data infused of and our our has been all generation. to our brand all

as and amount new Core. America are because from everything Engine we and in we as versus integrated. how Deals total packaging we'll on long-term that, products reporting international. on contracts. are two on we as selling in break on well of which online as is our of into to down we fully we'll be XXXX, growth that derive on now products plan releases, And being one the number, report are revenue by within Priority numbers. plan We inclusive get North of And all reporting And Core non-long-term contracts will then IT the So,

Gregory Strakosch

But their continue definitely desire that with seen in more trends into of in to that and to will intent the terms our trend data that become us. demand next data-driven, We that for is will we've continuing. drive of terms and trend customers growth purchase for year know continue

you As in as our being for growth. is our XXXX by know letter, – revenue saw customers initial data. driven for forecast shareholder demand you really the And double-digit that's revenue

Marco Rodriguez

through anything by flow that The income are you're just a you housekeeping it. question the year-end, of here charges of refinancing sort or of Got And item. last that any kind nature to quick anticipating will that close statement? expecting non-cash

Gregory Strakosch

No.

Marco Rodriguez

I Got lot it, guys. your a time. appreciate thanks

Michael Cotoia

you. Thank

Operator

you. Thank

Malouf ahead. Your Please is next from question Mike go Craig-Hallum. with

Michael Malouf

Thanks taking question. Hi, my for great. guys,

Michael Cotoia

Hey Mike.

Michael Malouf

you if reported a wondering bit quarter. sort sounded just little about better of for than could like lot happened was When the a of August, what business in quarter. I’m the it talk actually doing the the cadence core you

the down hard into it continue seeing why are November, October, and So EBITDA that? end, really slowed sort and at we did that's reflects pretty guidance the that of

Michael Cotoia

this the on Mike, Mike, Core. is of things Yes. couple

on were able comps in capital IT tax expenses also back Deal us year in comps be of along. started lot Results out year, higher in of things The And Recall of our year Alert, QX, lot spending IT with have the First passed, QX are really to terms our they just this in on and Core. global and first their customers in a – but spending were come coming last half starting of going half QX these a spending. spending are one. in QX coming second accounts and all, regulations than expense to XXXX. are

up have referring And the this past, they, are they up they they say the of turn turned lead So that and a very larger very I there, they main to and with. about I'm something we've counts. talked when their They very recognition, it's familiar and quickly brand quickly, can investments. in the their brands, generation have lot

we is a the which As say we around and very was got that there and some that's short-term bit uncertainty at around the tied that GDPR on tariff gone as impact. I as and some we internal seeing that end the later. slowdown And buckets whether the think compliance midterm some QX QX, situation, three little slowdown into And can and of the elections, of I'd cautiousness. started pull and to over, really – a address back where we're the situation debt they and glad cautiousness direct that those are well a and quickly was

Gregory Strakosch

every us. year QX about quarter thing with the is back-ended this more a deal for And mean, Yes. is is, I we that

then have the middle strong of you're much and basically August, So and very and the – materialize typically our was Mike you of didn't basically just October, related, that the through it Day in once the you November, September, as year Labor have this hits, because July way issues customers. you larger really with momentum summer and

And week so that. November, big of period first where in that's September, kind October and of that we saw booking this

Michael Malouf

of some revenue. the I it. understand contracts numbers, And just have can got on then the XX% overall long-term so Okay, the

we that just that's as recurring basically, right in stand terms So million we took revenue now? of million, your $XX $XX.X the

Michael Cotoia

Yes.

Michael Malouf

Priority that $XX.X-or-so percentage that assuming And that's Okay. then, basically Engine? is million that, I'm –

Michael Cotoia

and with Engine. driver to but Priority start But It's and and we'll the Mike, that, a mix, lead Core by is offering our branding of some product driven it. some gen Engine, Priority it's integrating primarily now

Gregory Strakosch

and primarily The non-Priority is the is Priority tied majority revenue Priority Engine to of Engine then any Engine revenue contracts.

it's not So exactly. of the of Priority about – It's while just all a Engine all it. revenue driver

Michael Malouf

I does function more just want certain as how decision are well that's is incorrectly. on reduce you many going obviously are it They to rather sold. being like of you're like was access in mean, it a don't something you than guys to reaction have a focus can that of but like number, to And Okay. the continue and received, to number? release they me very you focusing it think people feel phones obviously, just the their not you iPhones sold, number Apple's say to on tell number

Michael Cotoia

And Mike, intent. did. We introduce of when we Yes, want introduce driver it Mike. to this Priority standalone. Engine, launched as first Priority purchase is as a real The recall, We a Engine. is you we of this that, wanted we part to sold was

drive to it Core. want longer-term And they also we've integrate subscriptions, goal the is go data with hand-in-hand. Our and to

we the the technology account customers, and access Engine, Priority sell purchase segment buying-team all level. our and Our individual customers when by into we're sites at tenant giving

So their that accounts accounts buying Priority, vendor buying and technology, is those prioritizing by the just rank within technology vendor they around week A are engage thinking it's and have is up they but have to influence critical. their what's with the messaging, fees can branding they and which this it's signed missing The know members component, it's important with and they they're about that vendors because second B. to accounts segment, and within team and and important or are them they engaging those that ranking ranked this whatever are content if those

and and our our to it makes to not integrated hide long-term sales want, which it's Core and It's trying do blurrier want model, anything. product. not the to with data and practices it blurrier, this and together is really efforts our build we best and it's and is what our trying those to our what tying So sense customers products only gets just

Gregory Strakosch

programs the selling contracts. we're our long-term all situation, But model. of products I now focused the very hybrid. integrated that's mean, reality basically are strategic on on So

we'll will intent give to, our say, to I'll you we're we to program purchase to So okay. customer We'll example. an use going branding a data who sell and go and the hey, unit branding serve our identify

with intent basically it's to customer data. we're combination branding and purchase the going of saying, So a

And So the now really them label of to it products how products the do we we to split so just are label that the – a we Do especially identify Dealer? Do doesn't margin. at try it's IT Core? point Do out? the out that have split same as that? where exercise we we're as that make sense, hybrid trying so

scale we're the make in that's doesn't But really situation, way through the a And of running any the strategically, tactically, can So really we that's to margins of the revenue. the as for is, end exercise driving return. real flow expand really reporting our expand business. grow cash go this investment day, recurring terms it revenue, at us the investment And thesis we and longer. sense and what's

So thinking it. that's behind the

Michael Malouf

Got it.

Appreciated. color. Okay. Thanks the for

Michael Cotoia

you. Thank

Operator

Thank you.

Your Goldfarb comes Street ahead. question from go Lake next Markets. Bruce with Capital Please

Bruce Goldfarb

my for Hey guys. Thanks taking call.

medium seen from you've renewal rates that greater you in historically, see than for thus First, change QX? revenue any for QX? XXX%. far, large Did Or customers and

Michael Cotoia

greater still XXX% we those for rates the and customers. seeing renewal revenue than next for are No, XXX XX top

Bruce Goldfarb

Core, And quarter, you growth so, you growth and XXXX? – anticipating And year-over-year much? if your for year-to-date do the you. expect to Thank to in for see X% then how your regard X% are

Michael Cotoia

powered before reporting purchase number intent, Yes, had our by be because one our Core there Bruce, so total these our everything tie really XXXX. were with And mentioned offerings integrate before, as separated, we we're and and standalone. is for looking we to But going on and integrating offerings. data we're for

the quarter and Deal all also to contracts. for amount that the we'll of on do lead which derived as from Alert, On as in the include revenue revenue, long-term the generation base XXXX. going North reporting topline IT And we're America in and international well be brand, will

Gregory Strakosch

to XXXX, growth double-digit for reiterate, plus the And number. XX% and expecting without combined we're revenue growth EBITDA integrated

Bruce Goldfarb

Okay, great.

combined? year, you out, you'll it just for do so next Okay, don't break those

Gregory Strakosch

Correct.

Bruce Goldfarb

Q&A for Thank questions. taking End the of I Thanks you. That’s all had.

Operator

for session. Thank concludes question-and-answer you you. the This participating. our Thank now conference has And concluded.

may You disconnect. now

Charles Rennick	General Counsel
Gregory Strakosch	Executive Chairman
Michael Cotoia	Chief Executive Officer
Dan Noreck	Chief Financial Officer
Brian Fitzgerald	Jefferies LLC
Marco Rodriguez	Stonegate Capital Markets
Michael Malouf	Craig-Hallum Capital Group LLC
Bruce Goldfarb	Lake Street Capital Markets

TechTarget (TTGT) 10 Nov 182018 Q3 Earnings call transcript