TTGT - Earnings call transcript Q1 2020

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Operator

Good afternoon, and welcome to the TechTarget Q1 2020 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 Charles Rennick, General Counsel. ahead. go Please

Charles Rennick

and Grant, Thank good you, afternoon.

here our Strakosch, me Noreck, CFO. are Officer; Greg Chairman; Mike our remotely Executive Cotoia, Dan Joining and today our Executive Chief

remind over release earnings I'd Before of process. to the the call call like turning to everyone on our Greg,

business an posted section announced, the on our furnished on Investor order Relations Shareholder our update in the website it of previously provide you Letter advance As an call, of and with X-K. to on in we have the

introductory by Greg's team may differ materially be are performance. Following and These the remarks, will forecast. assumptions not our Any from factual on statements. are available management future questions. Actual your guarantees forward-looking results statements to based our statements be not TechTarget may answer considered forward-looking made are today that of

risk this reconciliation the with Shareholder of Please may not non-GAAP accordance financial measures in refer our A SEC. the comparable with and prepared only accompanies to financial in refer these to to them. call, date GAAP obligation TechTarget speak the These Letter. our reports most our no to update as measures GAAP. periodic filed measures of of also factors statements We undertakes

the to call With that, I'll turn Greg. over

Greg Strakosch

hope Great. Thank you, I healthy. everyone Charlie. is

proud are We very team. of the TechTarget

and $X.X to was adjusted EBITDA. very QX X% of X% in free grew spirit We million, high for as EBITDA million, from adjusted resilience grew $X.X are Revenue home. by XX% cash positive to the grateful productivity working representing has remained million, adjusted flow $XX.X

$XX million XXX,XXX TechTarget debt, the stock of only repurchase for in strong quarter, debt the In new with $XX rest million plan. loan announced stock. $X.X Our we is of but the million and remains purchased a we of balance $XX due cash Today, shares sheet million XXXX. of term

now will to questions. the open call I

Operator

question-and-answer James. Instructions] question go ahead. session. now Our with Raymond will We Please Aaron from [Operator Kessler the first will begin come

Aaron Kessler

you're during One, questions. you of period. A especially seeing, an size guys. maybe Great, what thanks customer performance, if us just this give there, can the couple on update

of on the Second, we third, of the more seeing controls, you. sort – some lines – of display what Thank advertising just of what business which pressure type see that side you with products? maybe And expense maybe the are just the in? should

Mike Cotoia

Hey, Aaron, Right. you're This well. I hope Mike. is doing

this In terms typically three break of the customer all we XX, customer segmentation and different down the the next performance, size Global XXX groups, to others.

to all to I why about call, reason of the I in say and moving we XXXX XX that the the think down depending can others. all and into and Global in that two of is classes be we talked forth during consistent this the quarter-over-quarter others only breaking next last probably we're customers the where back and XXX quarter. when And this Global is going And and back February, the then XX flip their on because within growth the decline cohort year-over-year, report customers, their

into two more we've make consistent down XXXX, We that until moving we to on customers easier it bring and to to think before. break said do understand, I So what forward. got won't had clarity probably that with that but

larger in XX%. had primarily saw customer North other the declined large we accounts of terms what North what in But And was we up were our performance, accounts is global In size America all them employees America the year-over-year. see in campaigns, revenue of America, headquarters a their you might larger their overall brand North and percentage see most North perform customers of based campaigns. programmatic campaigns, America, where have in those is large

at a period, paused a or dealing with get just pullback, of or a reduced during this into get when you'll see enter you programs like So a lot be all COVID-XX of those small time level. we're

collaboration – large global still global campaigns lot sales together as the that little there's field of on they're stalled leveraging and data out Now working up there's face-to-face that. there's those field but term, marketers, the a or in are – those more not some, of in were after the communication seen the the in there's international always And going reverse around so on actually and regional brand Those has organizations of marketers a not accounts lot employed by Also, markets, a and more side, events. bit again, pure lot internationally. on campaigns. primarily offices short opportunities, a which events advertising you've

comes there's later an comes back it We to TechTarget. opportunity on? know. know, level? much but If certain don't for How a back We don't that think we

And So to X,XXX spenders of top with America. on the North have and terms really say, remember we we all would we talk then in saw in accounts, other about close pullback the when small I accounts, XX accounts, global TechTarget.

where And navigate some in, there's a They want these recession-type there pullback again They're going are this, cash. very immediate in it. an say, I'll preserve accounts. accounts play going are to period, to very, want just to like to environment, preserve a small capital, And defense.

see And pullback. some so we'll

to And or I of answered like syndication typically this, programs. that. a when typically of terms there's see type pressure, will think In shorter-term We the of which coming content those dollars, the I more resort from advertising larger they a advertising is back branding the accounts. pullback

branding overall represents our our anywhere But revenue. between XX and again, of revenue XX%

consider charging $XXX banners to our if anywhere you our $XXX between those at sites, branding CPM on revenue, we're CPM. So look

how the advertising effects So on that's really then your address And pressure. to that expense.

what We news coming very the some of the we TechTarget some saw where last expenses and beginning saw in the this saw years. has the We coming. was the of our conversations manage February. this cash positive beginning closely. We on in of for generated flow going XX in

that took left budget at we pulled somebody end the of count, expenses, it. open I immediately froze count open at we discretionary may the in had by If look a have of So we mean middle and was travel the what QX, We all head that backfill, the and racks. QX, we entertainment. didn't a in head backfill racks there

as good very And you see that. can we'll gross EBITDA closely, that we So to continue monitor the by and margins. managed

So questions hopefully, all the that answered three. across

Aaron Kessler

you. great, That's thank

Mike Cotoia

welcome. You're

Operator

will Our from next Eric Street. go with Martinuzzi Please Lake come ahead. question

Eric Martinuzzi

shoots thawing. April. people I've comment off of Yes. the interested digital TechTarget? companies end about heard other budgets fall of as as of far there advertising in the question. May, green sort in at dramatic early in Kind definitely April, March talking of Any and signs But – late the

Mike Cotoia

buckets, share this I out very that now, I overall opportunistic into Eric, situation. that to uncertain that there's now I customers I would are that think fluid what would and right right we one, during and in our And are customers a three are think say Number there share opportunity pandemic. very drive mind an there market revenue. and and take classify see

this we're they a downturn pandemic, but about think right recovery, will in whether be U-shape, talks but know there's it understand a ends, Yes, We're I they end. don't V-shape, know, that's a in now. a will When that. W-shape. they do there

try to So of they we have new are have you They hold might want to very course. that focused not customers to quo. on that. some the things things. status keep want want customers those Then And that

customers. that every celebrated pieces need but They a they of published month, XXth might And We stay in their value content implement every one. and relevant being understand provider year in to being year. every to TechTarget ideas thousands philosophies, not the they want their day anniversary business. from of prospects of front new We cards of our existing of and week,

I sheet early they to have have seed they know So are financial an balance or They there's it really that statements not cash think then the may accounts And of. to might funding. bucket. that And audience had third that the attracts have in bucket and front capital. they need preserve third stay strong that

out what may to play and So they days, look push they're cash pause preservation capital. for trying They XX of may they will us to mode, looking they're defense and for do.

So global those XXXX, business hits was pretty What you our XX, would XX% it TechTarget, really is all back which accounts. XX those last say and at for XXXX that if the was Global to I which of significant, look top I downturn, aligned think folks. across

XX%. then And today, it's approximately

So we're leveraged. better

developing can customer use better the We're customers make products to have it. that sure right all concentration. We

have feel subscription do today data to the combination. and I feel but have also very marketing do a we need that and a long-term to short-term they – pivot that business, to So fortunate our customers and we that appropriate for capability having they

Eric Martinuzzi

Okay.

the I'm the in you're the that not QX? not relief Another there's much guidance. go even though longer in mid Is your Just assumption a your XXXX term. but out, high for or at know level, QX your withdrawn as that way in Is dollars. near XXXX so to is in internally, relief or forecasting you've term, frame question looking there is for I assumption to maybe to

Mike Cotoia

that would in mid so is Yes. is I a tell is transitioning see unpredictable. What to to changing. tough what you you market. say. to just data-driven think it term, be That will long It not on our the market I manage that. that really I

what on well. observed that the very, a of long in data-driven data. plays So foundation the term, business, out and priority we're our purchase And investments real customers very want doing our on our and engine intent

publishes organization at the the is XXX-plus produces when that at that that website, the account position. and in level it right level. GDPR want at the an prospect data want it have level, content, individual they are and And They we and CCPA captures account technology we compliant, builds and individual

optimism. pick really answer back? a So don't in QX, do founded, that. maybe this I know have use I I think things QX But and the comes term on I that up

numbers question. that give hopefully, to are any want don't not just your actual. that So, I answers you

Dan Noreck

it. a And to say thing Eric, I'll color little on put one

you see that at COVID numbers, see look of from very QX you in you our but If then guidance, can still you up obviously, well. normal showed normal increase QX sequential seasonality, finished kind look in we revenue. our And at, if QX,

of both to those to resiliency and the promising line. product things our me, So speak of are well

obviously industry wasn't are just everyone going is this saying data customers our helping having from really say And big about I'd Mike work and us. subscription pretty was resilient. a – toward and switch revenue home our whole, what

and In then uncertainty out But perform well, the how terms of but we'll to the well, I economy we're play seasonality. the is if that virus economy. of so normal we're year, think comfortable half going affects the seeing performs the yes, around how there's second that much

Eric Martinuzzi

the plan. last question do me for to And repurchase Okay. has with

reloaded XXX,XXX first program. now repurchase that shares I that stock understand the quarter. bought You you've in on

the current – in you us. am say was worded then that that's Is would to hey, probably Or prices as that at was price where of made that I There QX, aren't me supportive? think, be the you kind misinterpreting? way average attractive it to purchased more

Mike Cotoia

prices. into ourselves manage in I get Well, to of are, uncertainty, going think, obviously, in period But everyone general, I carefully. not very and necessarily – don't want this to cash

for I don't you'll So extremely smart a aggressive, place. us I in see think but us plan have to think be it's

As you we've know, in very historically, the shares. been buying opportunistic

trading sort they where And of balance some so where if should be, would the of we way act. there's out of think we shares opportunity are then

in always ability want to in cash of I putting mindset reason the a is opportunistic. Just we're think have now. conserving the be general, we in we're place to right But that

Eric Martinuzzi

it. taking questions. you Thank Got for my

Operator

next [Operator with Rodriguez go from Instructions] question Marco ahead. Stonegate. will Our come Please

Marco Rodriguez

my Good your you maybe bit the three talk you about more your I – questions. if buckets could taking afternoon wondering of little guys. for a Thank clients. was

Global for XX You've percent about at provided your XX%. the revenue of

the could you it then or revenue the a relates additional two risks to parse your kind talk buckets? where biggest three if the those buckets. Just of if data bit you wondering year you growth And about revenue can little maybe see the through as other movements to for

Mike Cotoia

in our call, our would the largest, global Global that way we back the XXXX Right. Marco, a accounts, and legacy I confusion with analysts we the defined that may consistent are in we've as and we revenue mentioned onto was we XX, next is and those little call how software bit when others. of and hardware XXX, we have buckets accounts. customer we Then are February, define the talked XX. cohort What's all and November then have back one well, by there's the the identify only Global and bucket think I it caused a

that that quarter. on later in may may have you quarter, then fall we're And So XXX reporting accounts in into next following that when one fall. they the a year actually

that got you possibly. that spent and into XXXX, all $XXX,XXX if So spent into for the and bucket example, other then in they next QX quarter, that fell a $XXX,XXX, they QX fall customer XXX they in would of only

example. an I'm just giving you

drop $XXX,XXX only would they classified But seen leveled and bucket spend, in $XX,XXX in and if have QX second other they there that by increase into into times, then the their fell down. bucket. a spent and in that of So all was up XXXX, was we've got flip customer many would which that $XXX,XXX, side,

account So at because account $XX,XXX that next the by would decrease $XXX,XXX day, end have was of showed XXX of the replaced account. the a $XXX,XXX

all the effect $XX,XXX replaced because account $XXX,XXX increase of would $XX,XXX is the shown account. then was an net a gain. And by $XX,XXX others have And the

So I story, pretty that. and It's through forth. back confusing how start flip-flop talking go the they you all can when about

and and this, it every So going we're – to and into break down asked it into a clearer other investors to us forward, break down we lot XX it our for analysts moving make account. Global both have

bit bit that, of background on that. on I little want clarity of you to a little So a give

see risk. of mentioned In of where terms the we some – you

thing job industry customers. solutions we is and have side, enterprise on are additional side done on great organization the – only side suite and product building well-known of that the of are as a products we the the solutions but side I for execution first and marketing sales a would that an not such say The development reaching

They down down bit can scale go into that and a market. SMB little little bit further

but haven't made revenue. So our used we we've our XX% we've risk, that up of top XX reduced the eliminated risk to – when have absolutely we customers

America, mean as across And as international. in we've so again, I a and is well that board, North good that's that thing done, the

when you bit you this, customers. very, I little go up like periods think brought earlier a small have on and the I through call, it very

need PPP to different doing now this. They're of time. navigate lot this to They and navigate they need right need They're to to they for preserve loans. preserve applying and cash trying through payroll. They to make capital, things a through are

for discretionary want long-term data term. to spend don't a, deals the the term; short to, they So in even on commit b, spending or long

brand, of there's think also component. well, brand that banner hat if advertisements cautiousness I I bit would the their brand. a that money really our the is cautiousness when of Again, might I a global mentioned there's on where sites, turn toward on on on accounts, those of can are little some and And the on at drop come market extra bit So then little end. a of they those that doing say throw

they good They will up. might pullback brands, they North lessen that But scale have brands, incur want to when that and have well-known a America. you they like this, in

and see look I in still over where But have and when we years, that's couple of whole, the take the market last so again, you the one that constant thing And the it. at one very a prospect want a seen are real we early as data-driven at innings marketing purchase to the and want a this, they organization, the intent to the is level. customers of and our data number to at and need of sales data observed transition account and type

see growth. really alleviate what helped some and we've risk long-term that's that of So

Marco Rodriguez

you thus then impact of revenue on the just standpoint, And a it terms in here as in saw what guys Understood. far you different to April, you've relates from touch maybe can regions? seen the

Mike Cotoia

see to a – but customers this probably – take you where think the they been And opportunistic through of it of – advantage it. very the been mean, I say particular now, – with that are still not month they've April the over through situation, there's have I place and they've pandemic. ranges downturn this impact want they again, and an I first that Yes. in before, breakout been the that COVID would I whole through some and terms right being all they was see that again, full

have going lot do that course. of You a stay are and like the customers to hold serve

and the they you I numbers our can they're to are international a and and QX. very might keep that don't going growth think play you things I navigate days. been customers lot, have then defensively increase tell level, going in saw we over good little just XX bit to – have next a that

We continue that.

about a regions, are international lot say those there's to and which regional very I event-focused events. event-centric, think

standstill. a And drive out need there have and pipeline They Those People a need. and marketing to are those complete lot events offices. to offices again, are sales of still revenue opportunity. come and that

will is to I and been come And there's digital, a be face-to-face how and of transitions well focus, don't on new behind digital but this a quick think couple in the transition business and their reduction purchase know focus big a get a an intent-driven down, not media. So things because typically of may digital they're accelerate back that short there may only forced years that America. I some events because event term, norm settled there's a when opportunity bigger North a

Marco Rodriguez

Got last it. quick And question here.

a such by sequential drivers of decline decline. should be a sort a how very there surprised And you about there or that model, what that as highly the any little operate variable margin, guys a year? were and or bit You Can items? little bit about if thinking the we talk maybe we year-over-year the through one-time progress are gross

Mike Cotoia

a good It's question. Yes.

I'd a X.X%. data-cleansing gross really, our umbrella. is put I we our about would have very So on big data that dropped under what margin and quality, And focus say

and append our data because first-party us matters important up will some So email collecting there resources data. of or our they're those hire pretty data-cleansing employees. we if field is are third-party and again, help resources, that quality for full-time We it's to And to we And our efforts. that's the and cleanse data of that can on need misspelling in an manage down. typically invest carefully, third-party not a missing or we a not complete,

customers, sure able and have Salesforce, focus just with into – marketing quality name appended and updated not the control whether with it's sure customers, we systems data you on to on focus a and upcoming have priority on record, be it. quality and but where drive that data be releases is we sales we're and accurate We quality the very of to of cleansed even their make to integrated of the going big And assurance. the Eloqua, to most also Marketo, data – make that our to some But want going engine, available. the

X% not on X.X%, right because that, to we yes, is our rounded quality eye to substitute going So it are that going We're data down was the financials. keep but on systems. it's customers' into an going

Dan Noreck

part of of And Yes. revenue. amount that also the a function is just of

QX always lowest is So margin and our revenue our it's gross lowest quarter, quarter. always

we is made So – mass revenue quarter just of lowest said, of that data also additional function have we in the year. part investment some some the of like Mike have cleansing but a

Marco Rodriguez

cleansing it. Or the is Got some through continue individuals of And are expectation that remainder to there sometime data they an mid-year? the those stopping will work year?

Mike Cotoia

may back XXXX, resources. in on this I data recall monitor – very of folks. year, mean, the we Yes, the we'll that you some Oceanos the have back We plans those see throughout append August may we'll and acquired if of – take would company that and pull we focuses seriously. have and called we really a

back. demand that in of revenue on the to may we see we grow we So pulled may see the hit thresholds. the even data that some product being it We based continue increase have. the certain and of And

Marco Rodriguez

thanks your time. a it, Got lot. Appreciate

Mike Cotoia

You bet.

Operator

National Klee go from Securities Corp. Allen Please come with ahead. last question Our will

Allen Klee

Yes, hello. questions Couple alert Priority first of on off.

implement year. were you a of beginning the to planning increase price in the think I

And adding past you've additional linking Salesforce.com. If to how any about you then on gone? talked more features that's the some in it comment have

MSP pie Engine or services. during about, way going a the talking which targets managed a out still you're product, to about you focus just that I that is – quarter, target you track? expands market use Verified Targeting, was Priority on And the is to the that already think better of had wondering, rolled kind then on after? Maybe the And

Mike Cotoia

You're welcome, Allen.

me the a questions Let time. at answer one

increase calendar increase, fiscal price the pricing. year, our lot we don't at of year, when know. increase really as terms We pushback our you the a typically which beginning our each we pricing is of of get In

think had we new net price when environment, and drive increase that to has we an don't in that Obviously, sudden customer the recession-type during put impact. tried acquisition in, January I customers a

overall an the is on that. think macro I having impact

really to additional in continue different Priority we see will of don't to road and I leveraging increases we going pricing sorts. will be issue functionality bring a And So an warrant Engine the data because features feel that with that a down increase. the lot we're

that In which, and the company is – that and investment one of Salesforce to features terms features marketing I sales were – in and some systems, strategies system Yes, we've as the market cases, up mentioned they Salesforce.com. had do. lot into the workflow. in when the most some the in And is functionality communicated launching get our tie you of big of we in key comes we've to a technology a Salesforce, their record, goals that world, customers' reckon takes share CRM a of the of the it around integration

early to to forward that think beta we're terms are middle version continuing of the it, fall. Priority the at take coming summer. of move some updated doing. of out the you end at those I summer, the on a of We're with look planning of we're if in going investments an this Engine And We in

very workflow, do an contacts we historically, right can marketing departments. And and ABM in And help continue their we where then and still whether helping nurture going build customers strategy, systems it's that net develop enterprise that. going we're their selling that and focused our is to are. new And been on get to strategy, a their have be into to they

around those I Again, in identifying account-based strategy. – strategy, what to Salesforce. integration they're going to should of should step our additional very an lot making marketing into an within on user like those market We're they our ABM marketers, be that back, accounts accounts. interface, investments expand focused a there's some However, and

more at provide going not be the use stack in we're where the and ranking account, to of team but able account to no terms and we're And account to sales able members, matter the to what only stacking buying in. look they're be we're going rank to cases individual

So case yes, we get created with case we with Engine, that if can marketing focus investment into triple gets Priority is Engine a you've and Priority our big for the then have advertising the threat. and use a and us content everything, big that a because use sales business integrated

And in MSPs, some personnel. that sites as as around it publisher we didn't data have MSP, on relates Managed wanted that the a were we as Verified hired were in before. the Engine had market that group, we Providers. tying to And we Service into community that our made make MSP went out because investments to and a we well sure in the Priority We

So some to around make – about. to solution the that had, monetize an – audience that it's extension, on we we MSP is needed investments MSP an and we a needed Verified that's build but better, what

Allen Klee

if should you March, anything is early Science the acquisition in meaningful about the that about? And I little just of of there's just this we then kind in terms Data of a we tuck-in should more think wondering if or Central. And helpful. think announced was very That's contribution that as

Mike Cotoia

have And machine – data I'm the They it at and was didn't Data was audience great looking about look a privacy, play. for immaterial immaterial. mean, artificial to Science I go intelligence, say finance. audience. play a or That's really not so revenue didn't analytics. it have enterprise learning, as audience and was It good Central, it that Yes. EBITDA that. after We about their terms at revenue aligns or predictive an question. If of with a reporting in that I – We

sites site based had audience and active. play. on audiences. been members our have The it a has of They're analytics on business those that are wonderful an search audience big We In very – around communities our heading, enterprise great an a are absolute we our on audience where too markets really and TechTarget AI see acquisition. opportunity

aligns strategy overall that business focused, with and is. our really what a They're

So be I to large financially, it large tuck-in long-term. I position very going very that a into a long-term capacity, a as good acquisition that in look to – but short at for small expect and we're it's we market grow and think – in the in

Allen Klee

adjusted is last you talk forgot My when that? just just question cash about define free how I you definitional. do flow,

Mike Cotoia

are will that, Dan, Dan let I take on? you our CFO.

Dan Noreck

Yes.

free change we and in means debt So operating purchases And capitalized assets other equipment less cash, actually – we of our definition the the define repayment. shareholder disclosed adjusted cash and letter. flow in

Allen Klee

Thank wonderful. you so much. Okay,

Mike Cotoia

Allen. Thanks

Dan Noreck

Thank you.

Operator

concludes Thank This conference. and presentation. today’s Q&A our for attending you

now disconnect. You may

TechTarget (TTGT) 9 May 202020 Q1 Earnings call transcript