TTGT - Earnings call transcript Q2 2021

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Operator

Good day and welcome to the TechTarget Second Quarter 2021 Earnings Release Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Charlie Rennick, General Counsel. Please go ahead.

Charlie Rennick

Thank you, Betsy and good afternoon.

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

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

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

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

statements any statements no of a the The after Factors and sections those the may that including to our obligation this to number revise company Risk conference arise uncertainties, forward-looking SEC. discussed filings in update with order in of reflect events undertakes refer involve call, also Forward-looking risks law. accompanies the measures reconciliation With I the these financial required financial measures accordance over by GAAP. call We Greg. will of non-GAAP may prepared our A GAAP to comparable shareholder except measures most to with not letter. as turn in that, to or

Greg Strakosch

Thank you, Charlie.

Revenue segments geographies. multiple is year-over-year. into translating and across over the from products, which positive tailwinds, continue momentum customer enjoy We to broad-based strength XX% all quarter grew in

The a Media, range into included letter today, call to today, acquisition announcing the for natural second our vertical forecast I important questions. shareholder will faster growing the upward that of Also we forecasted than is year. adjacent are the Xtelligent this are we which Healthcare today. raising our open we market. and technology are We originally extension now in time we annual an released revised is

Operator

ahead. Please And with first Raymond Aaron go comes question Kessler from the Instructions] [Operator James.

Aaron Kessler

the a congrats you I you on any it’s and of think, then talk acquisition, are kind international guys that little the – I integrating kind the thanks mean, upside. you North plugged the can I see a in more you bit Couple vertical platform, into Thank but maybe versus shareholder maybe that you. you didn’t America details questions. it’s monetization in the Xtelligent on maybe of Hey, plans? healthcare? us maybe nice performance? within if And insights it given said give little XX-Q, bit of different how just first, your can letter,

Mike Cotoia

Thanks, This in Across outpaced momentum international, the for is Thanks performance from industry: saw real The that about and transition question. and the – face-to-face events. talked we we the shareholder tailwinds Mike. Great. letter to. in Aaron. originally the one, the the North had both the than guided in we globe, America

On lot a was market and digital, also the dollars move particular, field events international across driven. in pre-COVID. globe, privacy and and the to international face-to-face has quickly of but pretty always-on and the intent dominant purchase There to data in continue first-party the are to that’s side. regulations being side face-to-face to is compliance events of shift going that allocated been marketing Lot on

and first-party value our so Google’s value and I the XX relevant all all own with to to Priority vehicles, the well geos. their in grew again, intent really will have to and well, numbers, and big K. content. data Priority as brought market, of that own letter, modernize marketing our then driven acquisition, concerns XX% having would there the purchase sales intent during generation focus that monetize again others for And see subscriptions. segmentation, customers segmented across on has to purchase seeing is having the products, opt-in audience in we then are side as we stated as customer intent Engine rolling Global into – permission-based Xtelligent our new across noted departments American all And an driven really privacy a in segments third-party we for see Priority cookies we people letter, I this as first-party shareholder through demand would our year-over-year, our continues first-party large really to the North say we our the this eliminating content opt-in healthcare out the that second and question, the data. I really Engine purchase and engage And be intersects the the our that the good Engine opt-in all with that software across expect our hardware. IT, a customers well intent registration, wanting of that members content, say again, original own your growth would members as active, on opportunity seen data our side, the our have deal to so as and of has data a as and first-party we audience increase. checked with on our this, through announcement now amount right we and and permission-based And boxes, want and do spotlight enhance noted, purchase where with they shareholder as

now data acquisition. We the first-party grow that opportunity right brings Xtelligent have a purchase good with that really intent to untapped

Aaron Kessler

Got it. Great, you. thank

Operator

question next Joshua Please from with Reilly comes The go Needham. ahead.

Joshua Reilly

quarter. guys. my the for taking Hey, Thanks on questions. Congrats strong

kind the the of year that is much here, acquisition, of how at half business if in or the outperforming Xtelligent balanced greater than BrightTALK? think between the core of the second even in TechTarget increase strong you I guidance the So anticipated look maybe for you strength

Mike Cotoia

Thanks, Josh.

operating BrightTALK customer, is same because that to reporting the of doing. are TechTarget some the are and At the guidance terms one Xtelligent beginning year, this same we factor doesn’t number. accounts. really the into provided In selling of – we the under side we guidance and

you XX% They from similar very for growth have but we one last organically. we We guidance to year gave are each BrightTALK on TechTarget other, reporting low mid-teens and the offerings. numbers have of in modeling growth number. and And originally complement

just are again, have are this to accelerate us original at that growth in XX% or the and across all And letter, demand read seeing is you Engine, we across last reiterate, those product just as growth measures. guidance now seeing generation. Priority single-digit forecast We time the year shareholder which was sides,

seeing So, growth we what we based that’s where originally are on the forecasted.

We are accelerants seeing on areas. those the

Joshua Reilly

their switch data sense near-term. maybe for a providers in reevaluate make cause any the Google did – you are the that going the just that’s of on when then the removal year, third-party timeline that a have direct But to is direct going change? building not loss were the And my looking great. of from to delaying customers cookies any going follow-up from Okay, Chrome to they Thanks. pipeline intent to were business

Mike Cotoia

Yes, great question.

delaying topic. their using first-party as shown going competitive to okay, say, is see I customers of this and a year we spotlight overall Google intent third-party strong to it’s very a it all, that we marketing plan would cookies. data a bright cookies First on this around need versus advantage what strategy be see because really

purchase marketing years customers a to aligned intent use next the bears lot conversations of are data, from it fully first-party contextually on of customers We Hello? migrate they that and third-party transitions. year, this us relevant for programs with will cookies over to and X.X well – the having and continue until

Joshua Reilly

Thank you.

Mike Cotoia

You’re welcome.

Operator

Bergin question from with go And Cowen. Bryan the ahead. Please comes next

Zack Ajzenman

Bryan. Couple for on Ajzenman Zack is of This thanks. Hi, questions.

as last First expectations more on Priority like certainly, is guidance on when in was XX% then Priority second you was can a the Engine and points us some maybe it give note, little contemplated and you that second data maybe on on half? trajectory the Express on than Express? about Engine, on And sales quarter, it relates what talk any progress seems adoption half. growth the to for color update share Can there there stronger bit

Mike Cotoia

Zack. Yes, Great.

customers at out and into to generation, QX budget bring our face-to-face of arena terms we the so contextual saw I us – opt-in we Priority as entered contracts. to wanted If really going of active tight Engine, started committing doing you long-term shifting pullback in demand They relevant But event first-party members. what lot syndication. their with quickly you customers got COVID content of to am alignment back a to was last as look

with As we then revenue and XX% plus grew generation clients back and we Engine. sure those of TechTarget investments from We and the and throughout XXXX, engage into subscriptions demand those. When May, exceeded ROI being one them generation efforts the term of spoke of QX playbook annual list demand to the longer make they seeing migrate expect this value be customers, to throughout was XXXX slowly half of our first and are in their powered Priority by subscriptions, we growth. with QX,

migrations shorter doing from term are more generation Our customers demand integrated long-term subscriptions. the to

In high-teens to short-term QX, migrating of that second generation in programs say numbers very to And I terms not terms our with be in pretty are customers to of of XX%. expect of would similar seen term and the in longer we I it demand what also terms from have half, back consistent all subscription.

the the to are continue half on playbook. and against second we in do that very we well So bullish execute and

momentum. in revenue building the Engine launch as seen Express. very still it’s the Priority of In really its terms early good in it’s amount, count. Express We’ve Priority order In high. On base and a insertion very percentage-wise, overall of terms some Engine we mentioned, cycle on in dollar customer

but really sophisticated in those reps sales that a but are should systems, lot elaborate, really inside a and mobilizing and that they really they they cases, about teams companies marketing outside that sales not those accounts against. to it’s accounts or do have their reps, small focused which prioritizing we that we that, really opportunity inside bullish identify of sales which SMB efforts marketing contacts good used within have sales really So want have and market all be confirming force, on are

Zack Ajzenman

just SG&A at pretty flat like But on kind pickup – you should think know, gave in a quarter-over-quarter absolute talk this quarter investments XQ things, How operating forward? and about back bit. model essentially That’s some was looks and dev flat and product can in a basis. leveraging here about should leverage? guidance you Actually, the expenses just looking going will XQ P&L, about stay follow-up, an about and broadly think might I little was a leverage like we we of going just on helpful. into Thanks. forward And this XQ the XQ guardrails more how looks impressive.

Greg Strakosch

Yes.

So, this is Greg.

that will gets terms a in it’s – about But response. reviewed basis employee is half. of the on – half long-term some about are versus to base increases in January, where So cost sales, half up it’s half so of July our go increase There do incremental is operating second model. gradually compensation the and a We first in bottom OpEx in very gross revenue model most will incremental little the line. leverage, great so drops of on a

around So, incremental to at we XX% least EBITDA target margin. a

reinvest the us half incremental So to allows revenue. that

model a at it’s at reinvest So, and are expand able rate a healthy same time. where margins we the to

quarter you type will leverage see you can you of years going – see what year to several will and you this forward. this past for in and operating So, the seen what with this pretty consistent you have us that expect see is in

to are – – as we we adjusted scale scale revenue long-term, have we as we to in said as achievable. we we EBITDA in revenue, margins are term. going continue So, the past, adjusted XX% margins the the near XX% are that And think, if EBITDA see as

Zack Ajzenman

you. Great. Thank

Operator

Colville Please The Deutsche Patrick Bank. next with go ahead. question from comes

Unidentified Analyst

strong early on shareholder the Great. BrightTALK. the on Thanks for mentioned so Patrick. cross-selling is [indiscernible] efforts well quarter. you with in much. performance some Michael, going This Congrats your in the letter, are you maybe drive to you revenue on maybe a seeing some and really today are the you elaborate on success Can What synergies? product side additional bit? what’s where left this –

Mike Cotoia

earlier, their the content, they in more as really just system the sense reasons a mentioned create made that within even create platform all generate importantly, it acquisition they generation content, complementary platform, talked of Right. platform. I Bob, BrightTALK a the videos, that the offerings, focus But on complete promote where data. audience engine terms for as of in product efforts, customers well cross-selling purchase intent webinars, about demand can talks, first-party we the yes, all-inclusive own on as the

maybe great but one job reps not the product, accounts organization, all BrightTALK level. account the not a want are is working active it Our I do have and mix with out a reps process, the they to walking BrightTALK there reps we’re into And buyers are well. factor customers. this a – throughout there make media, with our they heavily and on the high, of are reps right research spending working to continue into well be TechTarget with reps solutions. where huge in vehicles And on entire content, North It’s those BrightTALK sure TechTarget, but spending walking engage spending as at BrightTALK that material They America. get might to TechTarget the from of is the combination the

We’re well. really was second what good throughout the We’ve on out doing I’m question we’re success. this you EMEA, in – had and as it What seen product with rolling was it sorry, APJ side? the

Unidentified Analyst

features you product product drive the No. of side left to come Is there with? out synergies additional terms in new to need really any anything that on

Mike Cotoia

good. very Yes,

it Priority intelligence that Engine. the – of works just BrightTALK members well on on which has their marketing I an Xx we long-term to what as in have level BrightTALK platform short-term call which Priority use to map. sales with. would Again, gen are that that from looking the sales case are demand BrightTALK strategic we road the that an our refer territories there are that and the active of lot a product within accomplish a in average customers force and the product on Engine across from in double at amount our – community account Priority all-inclusive I been able they have Recently, that We We has BrightTALK the as Central sales. to really the into now this has their respective So side accounts can short-term, the we’re engage creation did obviously focus Engine synergies to as platform, just allowed marketers. vehicle announced for content launched and

that you first-party now, with data the accounts together. a So more of with territory TechTarget model reps on creates and more our which and engagement signals, near intent BrightTALK coming larger purchase within data have accounts, a the calling active are consumption

account So right we’re the keeping on now. level that

Priority Central. on from about map terms that. on working as a I We’re the mentioned, future Engine in platform, BrightTALK long-term and well really are excited both of working road closely Teams as and we’re strategies together, as short

Unidentified Analyst

to little thus that And of thus just some the How maybe it. that question, data provide within Priority to Engine? points sales relative has your adoption seen That’s customers any adoption Got just bit use nicely you been the far to some about my of helpful. larger your expectations? can of case second you’ve super And segue highlight you can far? talk a

Greg Strakosch

question. Yes, that’s good a

Mike Cotoia

well. case going Use is

strategy, are marketers by marketers that the accounts against case So at And strategy, big use for insights historically, marketing this their to has account-based us, where Sales looking at geography. as database. level rolled this use have call we reps, territory increase will in, cadence, they about their if year, that intelligence different case, prospect is they think blitz, named they out want a you sales into. so call they would is account – this been platform where focused focus the into a marketers our a to beginning a have as well an the active do ABM, marketing prospects they’ll a still come and level, by mobilize account the segment of

individual level, be it’s Now, them to the most rank likely prospect enable at first. prioritized to is who

And versus accounts focusing have increase also does done BrightTALK, visit talked Converter call our that but And and on Inbound and will the level. when which A, Monday the just Inbound to customize personalize the application it on from account B ingesting helps focused intelligence number that ones are into, I’m they success your outreach, accounts and demo whether expanded tell the I out what An that be an team Bob, that show and websites. those that call sales individual pages, marry and individual is be the team they which identified sales adoption. websites, if you it’s but press has account Converter. with. the pages? with accounts seen we’ve customers’ within sales number Priority active product and one individual data doing functionality customers’ morning, the we very that by again, on engaging So about use is what pages not is pages, members e-mail we blitz, am Then now we good engaging intelligence prioritize sales what account now only seen technology uses that on around review on that it that call coming member that’s Engine we would two what those accounts. our conversation sites, release, to tied rep the the this reps are a I that In allows expanded active customer Engine identifying individual and Xx, customers’ prospect we I’m recent phone a tracks a or driving, on So to granularity We’ve to case. might to in reach we’re websites. account account buying to into – we’re visit Priority Are are data we’ve accounts the buying probably really

doing which on functionalities latter So our part sales late within should year, on quarter. case websites people on come and next on features the the case deanonymizing rollout on sales fourth will that the what focused of is on are customers’ And the accounts. use the the we reach and the revision, going which a in or those account-based in and success we’re and will out to both our they lot – of to use and seeing on traffic really prioritize are marketing

Unidentified Analyst

down it. or anything slightly Is Got strong could one, of in. managing some there if mix it here Super from note side of the I Last squeeze revenue quick was XQ. performance business? helpful. mix the the on Long-term ticked of impacting just

Mike Cotoia

quarter-over-quarter. The overall up dollars number the grew they revenue and It’s things. you the long-term quarter-over-quarter two overall if associated double-digits with were revenue, materially at look

Greg Strakosch

So it’s much was is a percentage lower just the really so because revenue that higher. little the

Unidentified Analyst

Makes sense. Congrats guys. again

Mike Cotoia

you. Thank

Operator

Burns The from with ahead. Co. Please Greg comes question Sidoti next go &

Greg Burns

revenues and Xtelligent’s afternoon. XX-month What trailing Good was EBITDA? the

Mike Cotoia

intent XX disclosure on that acquisition audience and process. audience – focus employee. was spent Greg, we the here, first-party is intent this the this audience terms for around monetization you member release, the don’t years report press of of and a data and TechTarget – main He the on our that methods acquisition former focused the first-party on on the purchase content, was I opt-in it’s mentioned focus this potential – the purchase to that. monetize tell of content, number the and reasons. acquisition in the we Xtelligent the ability again, the CEO can of The data. and In the focus untapped

we sure not value fair see and disclose We really also seeing around a so around bid. but to that want to don’t process, try try this audience it’s didn’t materiality so competitive are we sure organizations purchase aren’t relationships to – we want to any and first-party to any we threshold. into try – get to we is of we any trying Again, competitors to do good investors. We organizations also have that value, close the how avoid really it, of data. our it make keep We lot again, potential make advantage, best. what the investors We intent industry, content the to have keep reach our we – to so with – a bid really and we

Greg Burns

same healthcare, that to a was them monetization that for plug And technology the able vertical, your any there and of Okay. while? opportunities? be is IT niche into And you something thing, might are kind kind this do had expand of the your platform on eye the other verticals

Mike Cotoia

great Yes, question.

eye adjacent In customers, the on that this IT it’s the vertical and us. opportunities. terms all We hardware is of where a to the healthcare been door in just software, years IT made with for healthcare, a keeping world and security, couple new going intersects open to infrastructure, the to our the believe of and we’ve vertical, sense vertical

even interesting Engine the we mentioned I As space, forward. an verticals, that of now community. they have other data verticals our some something and we’re so that untapped there space, management an an we opportunity bringing And those onto purchase And that and FinTech the and audience in are other in are us definitely when keeping on. asset verticals are we to earlier, believe Priority and have intent BrightTALK, Xtelligent on adjacent acquired revenue moving terms some with eye we’re that keeping eye BrightTALK,

Greg Burns

Okay, you. Thank great.

Mike Cotoia

Yes.

Operator

The Martinuzzi Markets. next Capital question Lake Eric with Street comes from

Unidentified Analyst

This is Thanks my on questions. taking for for Kevin Eric.

Just get or vertical market stuff, with and up more it could a are I the trying on acquisition, I of and of to? you kind in you give us was they had of of, players what relationship was you audience on maybe IT color content the this larger for what of and out terms last quality to is a putting size healthcare, in really the stuff I’m the briefly know the know, terms in the one the touched little maybe just Founder question, but but the there? it

Mike Cotoia

untapped this of is and with but purchase players out the the a was the This data. big are audience target – the the focused on – the opportunity and the size, content and the on monetizing not play There couple of there. intent quality

can fits so TechTarget part that This mirrors do terms of and over which market. just happen Becker And we enterprise We eliminating the think Xtelligent. nonprofit we audience purchase We with the reason cookies, know the market. the what’s intent of why know third-party talk is in that the is HIMSS I really well we they the healthcare to type about the has quality of at amount a see – every an permission-based and of of would opportunity IT that organization targeted event monetize approach, going and Again, a their value really folks what to large opt-in, big members. the the generate insights was the this year. due on to sites content data. Health third-party focus

Unidentified Analyst

question Thanks. touched it I do the from see it. of continued just you then know kind on here, but in in-person Got And online, letter, a you to bigger the migration events going? but that I there or earlier in-person you of you mentioned call, that any in Has flurry been the any events? of international see more no? soon know, coming back anytime

Mike Cotoia

coming I things to use was when don’t of where see before There that. – is moves it couple difficult that the near internally really being really scalable, somebody it it’s or digital, But back from you type a go from anywhere is driven analogy less that also back it’s measurable and costly. go first-party to online to it’s opportunities, of intent face-to-face when to events more analog. it’s analog to we

of office XX wherever Las or to travel to is these while, done booths, X of and And on really CEOs we make more COVID Vegas scale have the can to people are sending with grow capitalize that. people that think all have up this it to for effectively. accelerated that that, out transformation, I have you’re measure We need costs. but organizations set digital we days, seeing

moving forward trend see really as very for organization. I this and built a manner positive well what again, bodes in an this we’ve So

Unidentified Analyst

guys. Thanks

Mike Cotoia

You are welcome.

Operator

ahead. go Please KeyBanc. with Patterson Justin from comes question next The

Justin Patterson

can. you. Two, I if Great. Thank

the and a still after environment, the going Even off still First, M&A the the forward just balance on cash M&A available? opportunities we of how think and cash. should have pace acquisitions, of about lot throwing are sheet on you

like. just what should new got growth We about be So normalized TechTarget strong. for Thank the Engine forward? secondly, just coming future curious, what should in. think How businesses Priority looks that the Then rate is you. we growth going pipeline

Mike Cotoia

Right.

on Justin, M&A, and a years. of in we’ve there this for the activity market, of going of is seen couple last in the lot terms

on BrightTALK, really at, looking that purchase a that. are that boxes have model. focuses solutions very and/or registered model we members, complementary check organizations And We that fit four first-party we model at content, on active that opt-in intent other like look and data BrightTALK in

a get of will We lot organizations.

to going on that. continue XX, selective and for to done, we’ve we’ve we’re selective to would choose, going to needs I what very at probably say be it are fit We every we’re and on looked that. acquisition

forward, and focused going business. make decision terms a of to really really got – in figured again, year, strategy to on the we and growth, short in make It’s what beginning long-term as normalized provided just we’re a not And to of fit that the decision. We’re a we we XX% the and the BrightTALK you they I moving mid-teens low continuing, if TechTarget. plus would it It’s trends at early, say, model of would mid-teens but to look in how executing. continue way continue on and are we’re to growth execute this mid we high-teens. be to

Justin Patterson

you. Thank Great.

Operator

This concludes our question-and-answer session and concludes the presentation. conference attending today’s call. Thank you for

disconnect. now may You

TechTarget (TTGT) 5 Aug 212021 Q2 Earnings call transcript