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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number: 1-33472

 

 

img109053572_0.jpg 

 

TECHTARGET, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

04-3483216

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

275 Grove Street Newton, Massachusetts

02466

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (617) 431-9200

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

 

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 Par Value

TTGT

Nasdaq Global Market

 

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

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

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

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

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

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

As of November 4, 2022, the registrant had 29,323,520 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

TABLE OF CONTENTS

 

Item

 

 

 

Page

 

 

 

 

 

PART I.

 

FINANCIAL INFORMATION

 

 

Item 1.

 

Financial Statements (unaudited)

 

3

 

 

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

 

3

 

 

Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2022 and 2021

 

4

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021

 

5

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021

 

7

 

 

Notes to Condensed Consolidated Financial Statements

 

8

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

24

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

37

Item 4.

 

Controls and Procedures

 

38

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

39

Item 1A.

 

Risk Factors

 

39

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

40

Item 6.

 

Exhibits

 

41

 

 

Signatures

 

42

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

TechTarget, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

(Unaudited)

 

 

(Unaudited)

 

Current assets:

 

 

 

 

 

 

Cash

 

$

364,269

 

 

$

361,623

 

Short-term investments

 

 

19,991

 

 

 

20,076

 

Accounts receivable, net of allowance for doubtful accounts of $4,233 and $2,514 respectively

 

 

60,720

 

 

 

51,095

 

Prepaid taxes

 

 

 

 

 

51

 

Prepaid expenses and other current assets

 

 

4,877

 

 

 

5,266

 

Total current assets

 

 

449,857

 

 

 

438,111

 

Property and equipment, net

 

 

21,833

 

 

 

18,720

 

Goodwill

 

 

189,887

 

 

 

197,073

 

Intangible assets, net

 

 

93,843

 

 

 

110,390

 

Operating lease assets with right-of-use

 

 

21,104

 

 

 

23,339

 

Deferred tax assets

 

 

2,272

 

 

 

474

 

Other assets

 

 

639

 

 

 

893

 

Total assets

 

$

779,435

 

 

$

789,000

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,207

 

 

$

3,783

 

Current operating lease liability

 

 

3,775

 

 

 

4,073

 

Accrued expenses and other current liabilities

 

 

12,375

 

 

 

16,638

 

Accrued compensation expenses

 

 

2,412

 

 

 

14,540

 

Income taxes payable

 

 

2,621

 

 

 

474

 

Contract liabilities

 

 

31,330

 

 

 

30,492

 

Total current liabilities

 

 

59,720

 

 

 

70,000

 

Non-current operating lease liability

 

 

21,257

 

 

 

24,021

 

Convertible senior notes

 

 

455,068

 

 

 

453,194

 

Other liabilities

 

 

 

 

 

2,779

 

Deferred tax liabilities

 

 

13,552

 

 

 

16,249

 

Total liabilities

 

 

549,597

 

 

 

566,243

 

Leases and contingencies (see Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized; 57,740,251 and 57,144,740 shares issued, respectively; 29,520,589 and 29,633,898 shares outstanding, respectively

 

 

57

 

 

 

57

 

Treasury stock, at cost; 28,219,662 and 27,510,842 shares, respectively

 

 

(245,025

)

 

 

(199,796

)

Additional paid-in capital

 

 

417,745

 

 

 

383,436

 

Accumulated other comprehensive income (loss)

 

 

(16,121

)

 

 

298

 

Retained earnings

 

 

73,182

 

 

 

38,762

 

Total stockholders’ equity

 

 

229,838

 

 

 

222,757

 

Total liabilities and stockholders’ equity

 

$

779,435

 

 

$

789,000

 

See accompanying Notes to Condensed Consolidated Financial Statements.

3


 

TechTarget, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2022

 

 

2021

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

(Unaudited)

 

(Unaudited)

 

 

(Unaudited)

 

Revenue

 

$

77,412

 

 

$

69,751

 

$

224,453

 

 

$

186,431

 

Cost of revenue(1)

 

 

19,118

 

 

 

16,805

 

 

56,715

 

 

 

49,087

 

Amortization of acquired technology

 

 

654

 

 

 

766

 

 

2,097

 

 

 

2,307

 

Gross profit

 

 

57,640

 

 

 

52,180

 

 

165,641

 

 

 

135,037

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing(1)

 

 

25,982

 

 

 

25,403

 

 

75,035

 

 

 

69,108

 

Product development(1)

 

 

2,791

 

 

 

2,790

 

 

8,990

 

 

 

8,247

 

General and administrative(1)

 

 

8,520

 

 

 

13,432

 

 

24,051

 

 

 

26,075

 

Depreciation, excluding depreciation of $704, $503, $1,980 and $1,330, respectively, included in cost of revenue

 

 

1,847

 

 

 

1,454

 

 

5,279

 

 

 

4,063

 

Amortization

 

 

120

 

 

 

1,969

 

 

4,109

 

 

 

5,257

 

Total operating expenses

 

 

39,260

 

 

 

45,048

 

 

117,464

 

 

 

112,750

 

Operating income

 

 

18,380

 

 

 

7,132

 

 

48,177

 

 

 

22,287

 

Interest and other income (expense), net

 

 

(109

)

 

 

(199

)

 

(1,653

)

 

 

(1,381

)

Income before provision for income taxes

 

 

18,271

 

 

 

6,933

 

 

46,524

 

 

 

20,906

 

(Benefit) Provision for income taxes

 

 

3,430

 

 

 

(3,051

)

 

12,104

 

 

 

3,992

 

Net income

 

$

14,841

 

 

$

9,984

 

$

34,420

 

 

$

16,914

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments (net of tax provision effect of $(7), $0, $(66) and $0, respectively)

 

$

(24

)

 

$

 

 

(231

)

 

$

 

Foreign currency translation loss

 

 

(6,456

)

 

 

(3,330

)

 

(16,188

)

 

 

(1,721

)

Other comprehensive loss

 

 

(6,480

)

 

 

(3,330

)

 

(16,419

)

 

 

(1,721

)

Comprehensive income

 

$

8,361

 

 

$

6,654

 

$

18,001

 

 

$

15,193

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.50

 

 

$

0.35

 

$

1.16

 

 

$

0.60

 

Diluted

 

$

0.46

 

 

$

0.32

 

$

1.06

 

 

$

0.56

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

29,637

 

 

 

28,473

 

 

29,640

 

 

 

28,255

 

Diluted

 

 

33,934

 

 

 

32,267

 

 

34,226

 

 

 

32,170

 

 

(1)
Amounts include stock-based compensation expense as follows:

 

Cost of revenue

 

$

744

 

 

$

435

 

$

2,153

 

 

$

1,331

 

Selling and marketing

 

 

6,290

 

 

 

5,305

 

 

16,886

 

 

 

12,363

 

Product development

 

 

391

 

 

 

139

 

 

1,222

 

 

 

915

 

General and administrative

 

 

3,289

 

 

 

8,437

 

 

9,243

 

 

 

12,319

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

4


 

TechTarget, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share data)

(Unaudited)

 

 

Common Stock

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Number of
Shares

 

 

$0.001
Par Value

 

 

Number of
Shares

 

 

Cost

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Retained
Earnings

 

 

Total
Stockholders’
Equity

 

Balance, December 31, 2021

 

 

57,144,740

 

 

$

57

 

 

 

27,510,842

 

 

$

(199,796

)

 

$

383,436

 

 

$

298

 

 

$

38,762

 

 

$

222,757

 

Issuance of common stock from restricted stock awards

 

 

122,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of common stock through stock buyback

 

 

 

 

 

 

 

 

4,614

 

 

 

(323

)

 

 

 

 

 

 

 

 

 

 

 

(323

)

Impact of net settlements

 

 

1,340

 

 

 

 

 

 

1,340

 

 

 

 

 

 

(4,382

)

 

 

 

 

 

 

 

 

(4,382

)

Stock-based compensation expense(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,744

 

 

 

 

 

 

 

 

 

18,744

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(69

)

 

 

 

 

 

(69

)

Unrealized loss on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,695

)

 

 

 

 

 

(2,695

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,164

 

 

 

7,164

 

Balance, March 31, 2022

 

 

57,268,651

 

 

$

57

 

 

 

27,516,796

 

 

$

(200,119

)

 

$

397,798

 

 

$

(2,466

)

 

$

45,926

 

 

$

241,196

 

Issuance of common stock from restricted stock awards

 

 

8,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of common stock through stock buyback

 

 

 

 

 

 

 

 

252,493

 

 

 

(17,169

)

 

 

 

 

 

 

 

 

 

 

 

(17,169

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,135

 

 

 

 

 

 

 

 

 

9,135

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(138

)

 

 

 

 

 

(138

)

Unrealized loss on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,037

)

 

 

 

 

 

(7,037

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,415

 

 

 

12,415

 

Balance, June 30, 2022

 

 

57,276,651

 

 

$

57

 

 

 

27,769,289

 

 

$

(217,288

)

 

$

406,933

 

 

$

(9,641

)

 

$

58,341

 

 

$

238,402

 

Issuance of common stock from exercise of options

 

 

12,500

 

 

 

 

 

 

 

 

 

 

 

 

98

 

 

 

 

 

 

 

 

 

98

 

Issuance of common stock from restricted stock awards

 

 

451,100