10-Q 1 ttgt-20220331.htm 10-Q 10-Q
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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 March 31, 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

 

 

img109047807_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 May 6, 2022, the registrant had 29,550,355 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 March 31, 2022 and December 31, 2021

 

3

 

 

Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2022 and 2021

 

4

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021

 

5

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

 

6

 

 

Notes to Condensed Consolidated Financial Statements

 

7

Item 2.

 

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

 

22

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

Item 4.

 

Controls and Procedures

 

34

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

35

Item 1A.

 

Risk Factors

 

35

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

Item 6.

 

Exhibits

 

36

 

 

Signatures

 

37

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

TechTarget, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

March 31,
2022

 

 

December 31,
2021

 

Assets

 

(Unaudited)

 

 

(Unaudited)

 

Current assets:

 

 

 

 

 

 

Cash

 

$

375,133

 

 

$

361,623

 

Short-term investments

 

 

20,020

 

 

 

20,076

 

Accounts receivable, net of allowance for doubtful accounts of $2,658 and $2,514 respectively

 

 

51,009

 

 

 

51,095

 

Prepaid taxes

 

 

 

 

 

51

 

Prepaid expenses and other current assets

 

 

5,843

 

 

 

5,266

 

Total current assets

 

 

452,005

 

 

 

438,111

 

Property and equipment, net

 

 

19,942

 

 

 

18,720

 

Goodwill

 

 

195,951

 

 

 

197,073

 

Intangible assets, net

 

 

106,457

 

 

 

110,390

 

Operating lease assets with right-of-use

 

 

22,433

 

 

 

23,339

 

Deferred tax assets

 

 

1,738

 

 

 

474

 

Other assets

 

 

638

 

 

 

893

 

Total assets

 

$

799,164

 

 

$

789,000

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,213

 

 

$

3,783

 

Current operating lease liability

 

 

4,157

 

 

 

4,073

 

Accrued expenses and other current liabilities

 

 

13,952

 

 

 

16,638

 

Accrued compensation expenses

 

 

2,755

 

 

 

14,540

 

Income taxes payable

 

 

4,665

 

 

 

474

 

Contract liabilities

 

 

37,707

 

 

 

30,492

 

Total current liabilities

 

 

65,449

 

 

 

70,000

 

Non-current operating lease liability

 

 

22,939

 

 

 

24,021

 

Convertible senior notes

 

 

453,818

 

 

 

453,194

 

Other liabilities

 

 

 

 

 

2,779

 

Deferred tax liabilities

 

 

15,762

 

 

 

16,249

 

Total liabilities

 

 

557,968

 

 

 

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; 57,268,651 and 57,144,740 shares issued, respectively; 29,751,855 and 29,633,898 shares outstanding, respectively

 

 

57

 

 

 

57

 

Treasury stock, at cost; 27,516,796 and 27,510,842 shares, respectively

 

 

(200,119

)

 

 

(199,796

)

Additional paid-in capital

 

 

397,798

 

 

 

383,436

 

Accumulated other comprehensive income (loss)

 

 

(2,466

)

 

 

298

 

Retained earnings

 

 

45,926

 

 

 

38,762

 

Total stockholders’ equity

 

 

241,196

 

 

 

222,757

 

Total liabilities and stockholders’ equity

 

$

799,164

 

 

$

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

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Revenue

 

$

68,165

 

 

$

52,969

 

Cost of revenue(1)

 

 

17,846

 

 

 

15,168

 

Amortization of acquired technology

 

 

745

 

 

 

765

 

Gross profit

 

 

49,574

 

 

 

37,036

 

Operating expenses:

 

 

 

 

 

 

Selling and marketing(1)

 

 

24,255

 

 

 

21,606

 

Product development(1)

 

 

3,118

 

 

 

2,923

 

General and administrative(1)

 

 

7,842

 

 

 

6,435

 

Depreciation, excluding depreciation of $622 and $381, respectively, included in cost of revenue

 

 

1,665

 

 

 

1,221

 

Amortization

 

 

2,012

 

 

 

1,630

 

Total operating expenses

 

 

38,892

 

 

 

33,815

 

Operating income

 

 

10,682

 

 

 

3,221

 

Interest and other income (expense), net

 

 

(560

)

 

 

(696

)

Income before provision for income taxes

 

 

10,122

 

 

 

2,525

 

Provision for income taxes

 

 

2,958

 

 

 

715

 

Net income

 

$

7,164

 

 

$

1,810

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

Unrealized loss on investments (net of tax provision effect of $(20) and $0, respectively)

 

$

(69

)

 

$

 

Foreign currency translation adjustments

 

 

(2,695

)

 

 

1,034

 

Other comprehensive income (loss)

 

 

(2,764

)

 

 

1,034

 

Comprehensive income

 

$

4,400

 

 

$

2,844

 

Net income per common share:

 

 

 

 

 

 

Basic

 

$

0.24

 

 

$

0.06

 

Diluted

 

$

0.23

 

 

$

0.06

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

29,708

 

 

 

28,141

 

Diluted

 

 

34,414

 

 

 

29,242

 

 

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

 

Cost of revenue

 

$

639

 

 

$

512

 

Selling and marketing

 

 

5,067

 

 

 

3,523

 

Product development

 

 

480

 

 

 

655

 

General and administrative

 

 

3,469

 

 

 

1,911

 

 

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

 

 

 

 

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, 2020

 

 

55,633,155

 

 

$

56

 

 

 

27,510,552

 

 

$

(199,796

)

 

$

363,055

 

 

$

1,611

 

 

$

37,580

 

 

$

202,506

 

Reclassification due to the adoption of ASU 2020-06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,500

)

 

 

 

 

 

233

 

 

 

(30,267

)

Issuance of common stock from restricted stock awards

 

 

24,815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of net settlements

 

 

290

 

 

 

 

 

 

290

 

 

 

 

 

 

(370

)

 

 

 

 

 

 

 

 

(370

)

Stock-based compensation expense(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,425

 

 

 

 

 

 

 

 

 

7,425

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,034

 

 

 

 

 

 

1,034

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,810

 

 

 

1,810

 

Balance, March 31, 2021

 

 

55,658,260

 

 

$

56

 

 

 

27,510,842

 

 

$

(199,796

)

 

$

339,610

 

 

$

2,645

 

 

$

39,623

 

 

$

182,138

 

(1)
Includes $9.1 and $0.8 million of accrued compensation expense incurred in previous year for the three months ended March 31, 2022 and 2021, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

5


 

TechTarget, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

For the Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

Operating activities:

 

 

 

 

 

 

Net income

 

$

7,164

 

 

$

1,810

 

Adjustments to reconcile net income to net cash provided by operating
   activities:

 

 

 

 

 

 

Depreciation

 

 

2,287

 

 

 

1,602

 

Amortization

 

 

2,757

 

 

 

2,395

 

Provision for bad debt

 

 

170

 

 

 

(156

)

Stock-based compensation

 

 

9,655

 

 

 

6,583

 

Amortization of debt issuance costs

 

 

624

 

 

 

327

 

Deferred tax provision

 

 

(1,420

)

 

 

(294

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(174

)

 

 

2,749

 

Operating lease assets (ROU)

 

 

716

 

 

 

680

 

Prepaid expenses and other current assets

 

 

(536

)

 

 

(833

)

Other assets

 

 

252

 

 

 

395

 

Accounts payable

 

 

(1,562

)

 

 

(1,686

)

Income taxes payable

 

 

4,189

 

 

 

891

 

Accrued expenses and other current liabilities

 

 

2,209

 

 

 

(4,703

)

Accrued compensation expenses

 

 

(2,669

)

 

 

(867

)

Operating lease liability (ROU)

 

 

(740

)

 

 

(819

)

Contract liabilities

 

 

7,413

 

 

 

9,372

 

Other liabilities

 

 

(2,778

)

 

 

(1,756

)

Net cash provided by operating activities

 

 

27,557

 

 

 

15,690

 

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment, and other capitalized assets, net

 

 

(3,578

)

 

 

(3,131

)

Purchases of investments

 

 

(33

)

 

 

 

Net cash used in investing activities

 

 

(3,611

)

 

 

(3,131

)

Financing activities:

 

 

 

 

 

 

Tax withholdings related to net share settlements

 

 

(4,382

)

 

 

(370

)

Purchase of treasury shares and related costs

 

 

(323

)

 

 

 

Payment of earnout liabilities

 

 

(5,206

)

 

 

(1,032

)

Net cash used in financing activities

 

 

(9,911

)

 

 

(1,402

)

Effect of exchange rate changes on cash

 

 

(525

)

 

 

68

 

Net increase in cash

 

 

13,510

 

 

 

11,225

 

Cash at beginning of period

 

 

361,623

 

 

 

82,616

 

Cash at end of period

 

$

375,133

 

 

$

93,841

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for taxes, net

 

$

137

 

 

$

90

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

6


 

TechTarget, Inc.

Notes to Condensed Consolidated Financial Statements

(In thousands, except share and per share data, where otherwise noted, or instances where expressed in millions)

1. Organization and Operations

TechTarget, Inc. and its subsidiaries (collectively, the “Company”) is a global data and analytics leader and software provider for buyers of purchase intent-driven marketing and sales data for enterprise technology vendors. The Company’s service offerings enable technology vendors to better identify, reach and influence corporate information technology (“IT”) decision-makers actively researching specific IT purchases. The Company improves vendors’ ability to impact these audiences for business growth using advanced targeting, analytics and data services complemented by customized marketing programs that integrate demand generation, brand advertising techniques, and content curation and creation. The Company operates a network of approximately 150 websites and 1,020 webinars and virtual event channels, which each focus on a specific IT sector such as storage, security or networking. IT and business professionals have become increasingly specialized, and they have come to rely on the Company’s sector-specific websites and webinars and virtual event channels for purchasing decision support. The Company’s content platforms enable IT and business professionals to navigate the complex and rapidly changing IT landscape where purchasing decisions can have significant financial and operational consequences. At critical stages of the purchase decision process, these content offerings through different channels meet IT and business professionals’ needs for expert, peer and IT vendor information and provide platforms on which business-to-business technology companies can launch targeted marketing campaigns which generate measurable return on investment. Based upon the logical clustering of members and users’ respective job responsibilities and the marketing focus of the products being promoted by the Company’s customers, the Company categorizes its content offerings to address the key market opportunities and audience extensions across a portfolio of distinct market categories: Security; Networking; Storage; Data Center and Virtualization Technologies; CIO/IT Strategy; Business Applications and Analytics; Application Architecture and Development; and ANCL Channel.

2. Summary of Significant Accounting Policies

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these Notes to Condensed Consolidated Financial Statements. The Company’s critical accounting policies are those that affect its more significant judgments used in the preparation of its condensed consolidated financial statements. A description of the Company’s critical accounting policies and estimates is contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and in this note to the condensed consolidated financial statements.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, TechTarget Securities Corporation (“TSC”), TechTarget Limited, TechTarget (HK) Limited (“TTGT HK”), TechTarget (Australia) Pty Ltd., TechTarget (Singapore) Pte Ltd., E-Magine Médias SAS (“LeMagIT”), TechTarget Germany GmbH, and BrightTALK Limited and its wholly owned subsidiary, BrightTALK, Inc. (together “BrightTALK”). TSC is a Massachusetts corporation. TechTarget Limited is a subsidiary doing business principally in the United Kingdom. TTGT HK is a subsidiary incorporated in Hong Kong in order to facilitate the Company’s activities in the Asia-Pacific region. TechTarget (Australia) Pty Ltd. and TechTarget (Singapore) Pte Ltd. are the entities through which the Company does business in Australia and Singapore, respectively; LeMagIT and TechTarget Germany GmbH, both wholly-owned subsidiaries of TechTarget Limited, are entities through which the Company does business in France and Germany, respectively. BrightTALK are the entities through which the Company does business for the BrightTALK webinar and virtual event platform.

7


 

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted (Generally Accepted Accounting Principles or “U.S. GAAP”) in the United States (“U.S.”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. All adjustments, which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown, are of a normal, recurring nature and have been reflected in the condensed consolidated financial statements. The results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim periods or for the full year. The information included in these condensed consolidated financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report and the condensed consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Foreign Currency Translation

The functional currency of the Company’s major foreign subsidiaries is generally the local currency. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component on the Condensed Consolidated Statement of Comprehensive Income. Foreign currency transaction gains and losses are included in interest and other income (expense), net in the Condensed Consolidated Statement of Income. All assets and liabilities denominated in foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at the average exchange rate during the period.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenue, long-lived assets, goodwill, the allowance for doubtful accounts, stock-based compensation, earnouts, self-insurance accruals, the allocation of purchase price to intangibles and goodwill, and income taxes. The Company reduces its accounts receivable for an allowance for doubtful accounts based on its best estimate of the amount of probable credit losses. Estimates of the carrying value of certain assets and liabilities are based on historical experience and on various other assumptions that the Company believes to be reasonable. Actual results could differ from those estimates.

Revenue Recognition

The Company generates its revenue from the sale of targeted marketing and advertising campaigns, which it delivers via its network of websites, webinar and virtual events channels, and our data analytic services and solutions. Revenue is recognized when performance obligations are satisfied by transferring promised goods or services to customers, as determined by applying a five-step process consisting of: a) identifying the contract, or contracts, with a customer, b) identifying the performance obligations in the contract, c) determining the transaction price, d) allocating the transaction price to the performance obligations in the contract, and e) recognizing revenue when, or as, performance obligations are satisfied.

Accounts Receivable

We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the Condensed Consolidated Statements of Income and Comprehensive Income. We assess collectability by reviewing accounts receivable on an individual basis when we identify specific customers with known disputes, overdue amounts or collectability issues and also reserve for losses on all accounts based on historical information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status and make judgments about the creditworthiness of customers based on ongoing credit evaluations.

8


 

At March 31, 2022, the Company’s collectability assessment continues to include the business and market disruptions caused by COVID-19 and estimates of expected emerging credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict, causing variability and volatility that may have a material impact on our allowance for credit losses in future periods.

 

Fair Value of Financial Instruments

Financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, long-term debt and contingent consideration. Due to their short-term nature and liquidity, the carrying value of these instruments, with the exception of contingent consideration and long-term debt, approximates their estimated fair values. The Company classifies all of its short-term and long-term debt investments as available-for-sale. The fair value of contingent consideration was estimated using a discounted cash flow method.

 

Business Combinations and Valuation of Goodwill and Acquired Intangible Assets

The Company uses its best estimates and assumptions to allocate fair value to the net tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date. Any residual purchase price is recorded as goodwill. The Company’s estimates are inherently uncertain and subject to refinement and can include but are not limited to, the cash flows that an asset is expected to generate in the future, and the appropriate weighted-average cost of capital.

During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluates these estimates and assumptions quarterly and records any adjustments to the Company’s preliminary estimates to goodwill provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s Condensed Consolidated Statement of Income and Comprehensive Income.

Recent Accounting Pronouncements

Accounting Guidance Not Yet Adopted

In October 2021, the FASB issued ASU 2021-08 "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which clarified the accounting for acquired revenue contracts with customers in a business combination. ASU 2021-08 requires acquirers to measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606. As a result, it is generally expected that an acquirer will recognize and measure contract assets and liabilities in a manner consistent with how they were recognized by the acquiree in its preacquisition financial statements. The guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. Early adoption in an interim period requires that the amendments be applied retrospectively to all business combinations for which the acquisition occurs on or after the beginning of the fiscal year including the interim period and prospectively to all business combinations that occur on or after the date of initial application. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

3. Revenue

Disaggregation of Revenue

The following table depicts the disaggregation of revenue according to categories consistent with how the Company evaluates its financial performance and economic risk. International revenue consists of international geo-targeted campaigns, which are campaigns targeted at an audience of memb