Earnings call transcript Q4 2022

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Operator

Hello and welcome to the TechTarget Reports Fourth Quarter and Full Year 2022 Financial Results Conference Call and Webcast. My name is Lauren, and I will be coordinating your call today. [Operator Instructions].

I will now hand you over to your host, Charlie Rennick, General Counsel, to begin. Charlie, please go ahead.

Charles Rennick

good and Lauren, you, morning. Thank

are Joining Mike our Chairman; Strakosch, our me CEO; today Cotoia, CFO. and Executive our Greg Dan Noreck,

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

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

team will management available Following to questions. Greg's the introductory your be answer remarks,

made today forecast Actual during and which assumptions uncertainties, statements may results from These considered by Any and not TechTarget from on performance. statements. forward-looking these statements, factual, the forward-looking are differ materially that not including are forward-looking and be risks based are subject guarantees to Q&A, our of may are future statements. our

and a of law. forward-looking no These those section revise any our statements filing risks except Forward-looking may with Risk or to events arise call, obligation as in statements by the that in of as only Factors this SEC. uncertainties, after TechTarget reflect involve update undertakes the call, speak and conference of of required including the to number order discussed this statements date

measures, letter. financial our the Finally, of accompanies A GAAP in reconciliation the extent may these to effort, measures of available unreasonable shareholder non-GAAP refer we to to accordance also comparable certain most certain prepared without not with GAAP. financial measures

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

Gregory Strakosch

Thank you, Great. Charlie.

revenue approximately million. million; revenue to adjusted year $XXX.X For $XXX.X GAAP grew XXXX, grew XX% the approximately to full X%

adjusted margin XX% to of increase margin was Net grew XX%. $XXX.X EBITDA was million, income income was an $XX.X adjusted approximately million; EBITDA net XX%; X,XXX%;

from XX%. grew adjusted $XX.X was million, margin operations million. was gross to flow $XX.X of total margin GAAP $XXX.X XX%; revenue. free was flow million; Longer-term Cash revenue cash was representing XX% XX% gross

income million. income was revenue XXX%; margin decreased X%; X% increase an approximately approximately of XX%; Net of GAAP to was adjusted adjusted $XX $X.X million, adjusted QX to Net For $XX.X $XX margin was decreased EBITDA revenue million. million, XXXX, approximately EBITDA a XX%. decrease was X%

was Cash million; was GAAP to revenue. million. operations adjusted gross Longer-term was flow of $XX gross revenue cash X% from representing million, XX%. flow was XX% $XX.X margin grew free $XX.X XX%; margin

I questions. call now will open to the

Operator

[Operator Instructions].

Our KeyBanc. is first question Patterson from Justin from

Justin Patterson

Two, if I can.

just through cycles with environment, been First, to the respect you've macro before.

you could some And you've and on could anxiety that said just environment of the pressure to cycles elongated do bit context give some KPIs last how how and current that a the seen? compares periods past QX? sales that think you long So you of in deteriorated

saw And to talk head then efficiency. I secondarily, in just wanted there. reduction the about I count

office You excess alluded potential some to other space. on savings

have course kind you and you year. the is the walk the So guide today think contemplated further of over where of opportunities what in through savings some

Michael Cotoia

are Great. days, what and -- seen material is it's and I Yes, companies think quick XX of last how and highlighted terms Justin, in been over we've the the documented laying widespread. macro very it's off cycles,

QX earnings very and our in really December deep seeing of the is that call was where after way today the middle a widespread, cuts. started all little but of we November, So quick through bit there signs it and

how in see past material the fast and So and when don't I that we and came. deep they recall -- cuts cuts cycles, the

very quick when customers those made allocating cut So budget, were and there's count, on a to hold behavior element nervous also head any to they on. that where decisions they

QX than a of so partners, off the seeing, even So is everything end is got It that customers, conversations of start worse QX, behavior. of this with some worse. competitors QX because at to our got really the slow brands and bad December,

that's and we elongate to that that's today something currently. And reviews, that. think sales we've that's going on approvals, obviously see as I continuing cycles, in seen So budget

In And a and in terms freeze into the business travel we December count employing for about of that, on this a customer go in customer X% budget workforce. efficiency, freeze imperative of hiring yes, a of as and XX-day only we reduction year, head had we've announced engagement.

lease some a space. and good at looking of are and shape. We buildings that feel subletting we're we the And in office pretty

take really while, the seen by we've for market that during that the where right investments. making even opportunity It's that around we us priorities help, we opportunistic take important covered a which a stay downturn historically an key will to share

we've of it decision but in our margin could, XX%? overall been EBITDA at the because opportunity we We share last over market don't we've to we've to that growth for years the maintained yes, talked So believe advantage take -- have we've think opportunity would down I the have we lowered guidance long-term haven't short-term XX%. about addressing the and right Could terms and trends X the seen changed. overall gain

that in critical really address those during market -- I'll tailwinds it, elements to customers. look sales put a the they and on having this to only away to first-party focus privacy to really to be call downturn prospect And you the the really our modernized, us our but their really data, is and go level, level long-term, access real have -- account macro. long-term first-party When don't and and continue individual compliance at want concerns marketing those departments data, not customers, at go even

So...

Operator

Our James. next Aaron question is Kessler from Raymond from

Aaron Kessler

couple well. Maybe guidance as of kind the a of on questions

terms spend, of is client the that reduction Just all in all sizes? of kind types, kind across in of

in side product second, call Engine, are Priority advertising see you cetera? you et And where areas any out would versus more specifically pressures more the

Michael Cotoia

-- all and I on previous it's been is SMB, seeing mid-market answer, It from customer across really really We're mentioned bases like really enterprise. and quick the deep in to reduction wide Yes. that.

board. across that seen we've So the

their seen than going I what's level I've the previous their manage And costs, in downturns. think customers I've reset highest figure of budget, are to on. trying probably out uncertainty seen

do product actually yes, a mix see and spend product product we of In in mix, terms mix.

we've one back markets And they in past. pulled come brand. back. to will our less side. this the better, When The of overall hard and companies, that's absolutely talked will XX% things probably they really pull thing they increase get first that It's business, measure on first that for than investments about of that back is on, the the brand their and get

also to a reallocation. some We long-term Priority contracts, which see We'll product see might a that reallocated be needs. of might get the Engine, short-term

win do. opportunity want type mix that can the of have of we and that a customers funnel to where qualified form they product, type So to see deal of trying right sales they product are now more our any have they can HQL

mix. So we'll that start seeing

organized that they numbers because a progress very to term. short have still looking pipeline closed to quarter appointment the are progress data setting or it way. right X And We quarters have they for say it's in deals, next see. doesn't to they I is hit. pipeline now, the we typically on And that to orchestrate a would it appear will built for own leverage some is to pipeline where important and had they manage customers see that realize doesn't get talked then customers at to healthy. what to quickly up. that pipeline They over this if really allocated customers try their their What I've be they that into retreat,

first-party flight we've that's there's a -- land not the data our account but this at back next to again, customers' next and level will historically, seen we've predicted And deal. quality. where what prospect our the quick at and intent is path deal, really to the is we only And company's what to the opportunity at level believe quickest truest path happen our

Aaron Kessler

And concept. Great. any Content Can to more can provide bit as you around little letter, or, about you in Services as the well -- in talk just provide the Close details that? it. color Got the you more Content investments a Enablement

Michael Cotoia

what that believe Yes. We is talked the to area, experience next part We that next a today growth those and good a Today's of buyer, the with their business purchase grow. studies buyer. research, majority really and they're a about own dealing their and still in continue our demographics seeing we've in of seeing opportunity. the we're or that, when today's dynamics rep-less of seen buyers want we're multiple

content information, on value around sure of efforts call a years making project-based help the guide focused made really to to to the a our set. their position for our the And customers relevant having They help overall take competitive what have them acquisition we content, engage good their We product, them without rep. and prop want does against that sales mean? ago, that content experience to position company's really couple of relevant a ESG

make to market and for of that are especially well. my solution downturn? And economic the also, share that, buying you Why this, be as customers to validation. there's like capture a now craving taking really we're in we downturn right saying, should need our times But advantage in sure

our back concept: the help prioritize platforms executable buyers, that and part So force through other deals in their buyers that's accounts content of engage Engine helping into the the right then strategy, Priority then right programs and and can sales helping more customers our Close quickly. into all Content build, those this them create we execute that to end-to-end and close right putting messaging content on to

Operator

from next Reilly is Our Joshua Needham. from question

Joshua Reilly

the for trends still you guidance just dynamic improve pattern seasonal Do roughly QX the business base, of expect that quarters? include revenue XXXX strongest imply XX%. in should of revenue your in that a What this typically The XXXX, in to seasonal implies implying where that decline in normal overall typically off are for QX out an QX? lower QX revenue sequential below does and play normal sequentially

Michael Cotoia

Joshua. question, Good Yes.

talked the because what you customers the And their that. that on to cutting. some and And and lower pattern Jan, of we the as budgets In based of stay we see that's of consistent our So layoffs gates of that's cost it's earlier, massive seasonality. lot than what normal we're QX, pretty seen. a now, right out just navigate seeing really end on see, December about account we've of their obviously, in trying should

our would up consistent when a XXXX. look even will out would you that with QX last you QX, to expect But for And take QX quarter. to still and year's compare that shake be And we comps, slightly. relatively at pattern QX then it believe maybe grow. we be biggest

Joshua Reilly

impressive number. And super XXXX, helpful. look if really customer at pretty a That's then strong you XXX additions of in the that's it. Got

the in technology how they to this expectations on spending outlook is slower And well? the the spending going us here the added as profile last the customers on brought Given spend year? your you color you size? either customers of for that vertical any give can these in new Or just you less terms or are lower that of in year, include XXXX, terms of

Michael Cotoia

Yes.

customers in all across the I that of of spreads think our it terms added, segmentations. customer new we

customers our midsized we're well. customers then add market. some into So be on going And a added going a and we've and lot and they're of larger also guidance what baking the of but everything in -- of XXXX, through in as of too customers behavior we small what know today the seeing customers few to the those we're throughout

also customers -- wide make will coming of stay out will gate, So where to and identifying have those with us. on that managing the pipeline. of the expenses And those they're decisions terms a of lot then customers in budget believe we

Some may delay may reduce some their some their spend, will grow, spend.

have, this so every leverage think I within back the continue day to we you in what with to in even last much what has identify XX do one is we've we're that's quality. it currently their XXXX. to past that in days, happens, seen when terms the expect But or trying progressing not mean to sure. customers market is that of they and the theme we downturns a see I But fight own see pipeline not current into going and When layoffs. announcements there data massive changed common

Operator

Bergin from Our Cowen. Bryan next question is from

Zack Ajzenman

Zack for Ajzenman Bryan. on

question guidance visibility. and on First

on considerations underlying you're embedding what's the the And curious 'XX Just here Priority calendar macro the that Engine outlook. for assumption? growth

Michael Cotoia

XX last I days, look guidance. reality. we what is we've baked at or right in and we're taking macro today's Like a our what considerations know into the taking that days seen we're we've XX that's what think the now,

the As so I see in cuts. the can moved you of days. see and depth mentioned, see announcements, cuts, mean I you can last it's breadth fast can of XX the the you

know we're on only what can experiencing and we So today. what based we predict

that the in to And year that's to not on contracts. doing side what of where we a turn the pickup in that because navigate down. people side, that. We couple product a when to that. the expect first through slow I see the terms long-term on on business we're quarters down deceleration might Priority seen development side, past things see of only in expect it slow commitment after revenue around, this We've for Engine, a booking And the on again, might we

during you're see really think customers and We've going beginning the that's right with a it at decline I December based And what to the behavior with that So of now we of customer the on all behavior. end the little year. seen our today's bit dealing was what and are of January.

Zack Ajzenman

follow-up metric. It same then in And at sales Understood. a on the customer XXX% XXXX. stood

embedded the XXXX So for it metric year? the sales sense to you customer about XQ to months in flattish. same And X of metric. of give stood same was what of first the changed sense Just what's this after in sales a as Can outlook? the get us assumption relates customer trying where it the a

Michael Cotoia

basis. only or ago, we X these the X years started we that's on providing that And annual it So years annual when an ago on numbers basis. was disclose

want we there'll say basis. I So be XXXX. the that to in on don't But quarterly pressure number disclose that would on some

We and their disclose bit little a of each quarter, pressure on current short-term don't there'll behavior would just monitor on say based pullback We but today's budgets. be customer it I just it.

Operator

from Our next Bhavin Deutsche question Shah is from Bank.

Bhavin Shah

count? one marketing have. some depending here Or that guys can customers in the in completely that spend and that Priority terms to brand you seeing And products do they're is might head they solutions are But quickly on being maybe as the understanding look Just different macro. as something you're reducing pretty what Engine? that upon renewal? quick reducing of maybe the such proactive shift one trends that of Are

Michael Cotoia

shift bit. We're some on renewals seeing you to We're product as from of look again, land their they Priority XX to on have those, -- XX want just don't commit Bhavin, customers But of much it close opportunities qualified deals, annual They piece products on days. because or I them sales delay little lot in pipeline land the think terms the in a the over at the to Priority a current our you seeing about of place. brand shift and the deals. because, deals help Engine information to cut talked a the those have of out turning and for some to people that want HQL and it. they Engine. multiyear some They identify pressure new that will next to

continue we'll some of to So see shifts. those

earlier, speaking and back now. we in mentioned of said, looking lot see setting putting and back at appointment we'll I because hold short-term actually numbers. right be quarters, on we're a some customers or to they listen, we're We'll stuff a X to quarter couple of a need we're in

terms you at more is, of negatively a that XX-day turn approach can looking impact pipeline, XX-day You this that on than in or and the a your and to you be over -- period. really have

budget. reallocate their might customers So

of But lot terms will want of content tight over the you the or more quarter, of us marketing, where to terms QSOs. need this buying of be a content customers a I next of in short-term in may that they shift with syndication, in a We customer possibly a front budgets gratification, X have see or to reduced, get prospect ASAP. to reallocate stay

that back will flight produces, our need Where to before, back not customers. communities team they're analyst get But customers research and the our sites back front and produces my The to editorial and of in the in swings TechTarget with quality. this prediction. pendulum that our come to team me? on seen -- when the we've that I and are

Bhavin Shah

Super Got helpful. it.

one quick follow-up. Just

Or you you seeing some stable? terms your purchases? less what just kind content what you your are Have on decline of in traffic In in terms make real of of are users terms just of registered remain seen enterprises more IT are maybe of you as seeing in mentioned apt a that trends websites, change time? -- or to

Michael Cotoia

Actually the positive. It's very -- been it's actually opposite.

traffic our increased XX% organic So year-over-year.

customers, tells information. are their me our their get that prospects sites our So customers to that to and going

may make elongated they technology well, the like at leveraging the decision and researching extended. get Now these get actively as might seeing they our But they're time, right because just right our we were deals know they're customers. to with It sites. have

rankings. shown also that's been our And in Google Search

We that on have million X Google. rank terms search X.X X Page of

the So Google of based organic proven we're really And seeing and are, are to your research with that of traffic customers the on TechTarget. terms ranked your in growth activity million there. said what on existing And our Page is key X organically. and that we've X.X customers XX% prospects

Bhavin Shah

helpful. Super it. Got

number. quick January? about in that XQ a just annual or clarification. That in looked seeing think Just what you're like an to trajectory what way XX%, that's Any even

Michael Cotoia

We report it year-over-year.

So in XX% positive I mean, that XXXX, trends. some still which, QX last up was from

Operator

question is from Jason from Craig-Hallum. Our next Kreyer

Jason Kreyer

related canceled. wondering, to just Just instances any comments to degree I'm those there's are outright being any -- churn those where paused just or what on if being long-term are I'm contracts? curious

Michael Cotoia

Jason, some delayed. are Yes. being

the of budget We're some we're canceled have then But products. seeing. buying of them And cuts We that are beginning some year with mean . to seeing long-term XX I we're the getting just reallocated being with days. goes to the that seeing that the last contracts. this are over whole people are it think back uncertainty still I also there the other

ever, XX business a you seen a days can I've been long period in of correct more the many that more versus in if a enterprise And so it's tech reduction. predictable time, me and I'm if times wrong, forecasted

of we're So the it terms Priority to as contracts the in relates churn what on long-term seeing that's Engine.

Jason Kreyer

been like It really have I that opportunity successful in sounds past know leaning into then guys you're gaining you now. And recoveries, share.

you investment more the you specifically other macro position you what or for are end gain on of share do of Just key areas can that this kind curious the think uncertainty. what of

Michael Cotoia

Yes.

we're to business without savvy that be You making able to help and the what? who we're Enablement the X impactful with engage we're sure buyers. to there's and Because tech areas relevant the purpose-built, one on. These our content, content. not know investing I and right going buyers. laser-focused enterprise need the really with think customers is really are resources that Content functionality Number in

be mentioned of It's dealing the They deep, those gate. I As XX% couple earlier, experience. technical the mentioned to don't information. teams sales past and to of in a with information see, of that's need earnings pretty out they close vendors' term. want type calls, buyers want I rich, to relevant, ROI, TCO want got the relevant be They we of long what metrics And over information. the rep-less

those are going and those and not not days. back the buyers old And demographics they're changed, to

this So we're opportunity really towards We've with tight Enablement a teams, to terms Content Priority in business. They're in that. platform our -- of customers' workflow. talked reallocated going about terms our invest the continue of we've to good technology process Engine integrations into having in

the visual that. prospect increased XXXX. not We visualization really important, first-party but And to But customers' going that's really out first-party better also have them of some the later resources data over months data in the our see the Dashboards the ROI XX%-plus and our by automation, working first highlighting that at we're showing capabilities. about on and level. coming in identify half in announcements our you're our account, that And and only integration, with out and in at by marrying the attribution development last really team X clearly to help

We've also our work of platform. lot BrightTALK a into around the channel put enhancements

to net We coming close are we stay to customers customer deal. to saying, customers, existing Our retention. today that gosh, need new have our -- find we to need need us they're and to

content overall what also a part platform. that capabilities leverage way of conversion, And And webinar customers we've platform your stay they and engagement in focus front show get stay customers, information, will into that a through on a episodic we'll our big conversions there's built them. integrate and their better it can help release of to through to what so effectively

a that a share manage areas really you've when covered we typically come gain X of right are us and strong and terms it's we're And share. market for cost long other quick, again, out dip, key those time. the and market on end. been focused do And structure gaining things, So the seen on we've opportunistic, stay in our

Operator

from Our Street. comes Eric Lake final Martinuzzi question from

Eric Martinuzzi

I get detail commentary. wanted greater the to of little bit on a geographic

EU X%; up up You talked U.S., about in X%. QX,

your is of revenue Just decline for how geographies? that weighted between we QX and guidance about at as look the a XX%,

Michael Cotoia

the I We a don't weighted, how are disclose little would America. shape worse that that's Eric, international but markets tell North than you,

seen that. we've So

the all You've news couple quarters. over watched of the EMEA last in

it getting little a bit more. saw You hit they're And coming.

will So but America markets, than I think be terms in it's international the North of to hold up more consistent that fairly little a bit going the ratio.

Eric Martinuzzi

the cuts, then the freezes? And geographies, same issues budget sales Okay. both in elongated cycles,

Michael Cotoia

marketers regional mean going the a America it. are folks the back. seeing that, the of to they're the and have and I saying and field of green teams in corporate, mandates quickly to Absolutely. for for corporate getting A marketers lot go. they're regional and sales they're to lot back are that budgets, pull still and wait the They're North light pull those going on offices from

progression it quality. and to now pipeline, what a I they're flight doing like impact to back So of pipeline, all goes of back then said,

quarter. across a And then accelerate have each going flight numbers pipeline there'll it's happen, to there'll and if my it's If to to quality, back quarter, it's region. and hit to be back a a they quarters flight -- X know So all be that. a it's we because

Eric Martinuzzi

then Got the to it. buyback. do And last has question my with

in $XXX You assumed, announced in flow That million plan cash free buyback say, of I XXXX. $XXX to of want XXXX. million a November

then what the XXXX? Given cash in XXXX, buyback? for on the flow are to going is less expectation reduction be free for outlook new And the we aggressive

Michael Cotoia

the our out. the on to very buyback buyback that this. think we be stick overall organization. for laid And continue the for want the and the aggressive history it's to continue to accretive of I buybacks, shareholders the on and approach we answer I'll to seen We've been plan over

the a the that's our price XX% in we close at believe We've and where business, over the we taken very can bring And to future the attractive. we in shares believe out time of business. of

don't of any the know on we cash I terms free flow, if that. In gave guidance

So you numbers and based cash can last some for what we on free this year's assumptions do guidance make flow. year's

Operator

you. Thank

further today's no This have We questions. Thank joining. call. concludes for you

your lines. disconnect now may You

TechTarget (TTGT) 9 Feb 232022 Q4 Earnings call transcript