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Section 1: 10-Q (10-Q)

ttgt-10q_20190630.htm

 

 

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 June 30, 2019

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

 

 

 

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 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 per share

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 July 31, 2019, the registrant had 27,652,073 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

 

 

Consolidated Balance Sheets as of  June 30, 2019 and December 31, 2018

 

3

 

 

Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2019 and 2018

 

4

 

 

Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018

 

5

 

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018

 

7

 

 

Notes to Consolidated Financial Statements

 

8

Item 2.

 

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

 

19

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

30

Item 4.

 

Controls and Procedures

 

30

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

31

Item 1A.

 

Risk Factors

 

31

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

31

Item 6.

 

Exhibits

 

32

 

 

Signatures

 

33

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TECHTARGET, INC.

Consolidated Balance Sheets

 

 

 

June 30,

2019

 

 

December 31,

2018

 

 

 

(Unaudited)

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

44,405

 

 

$

34,673

 

Short-term investments

 

 

 

 

 

500

 

Accounts receivable, net of allowance for doubtful accounts of $2,355 and $2,099, respectively

 

 

27,075

 

 

 

30,042

 

Prepaid taxes

 

 

65

 

 

 

1,834

 

Prepaid expenses and other current assets

 

 

2,933

 

 

 

3,069

 

Total current assets

 

 

74,478

 

 

 

70,118

 

Property and equipment, net

 

 

12,001

 

 

 

10,901

 

Goodwill

 

 

93,683

 

 

 

93,687

 

Intangible assets, net

 

 

780

 

 

 

849

 

Operating lease assets with right-of-use

 

 

26,197

 

 

 

 

Deferred tax assets

 

 

405

 

 

 

55

 

Other assets

 

 

945

 

 

 

853

 

Total assets

 

$

208,489

 

 

$

176,463

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,028

 

 

$

1,871

 

Current operating lease liability

 

 

2,298

 

 

 

 

Current portion of term loan

 

 

1,241

 

 

 

1,241

 

Accrued expenses and other current liabilities

 

 

3,083

 

 

 

3,260

 

Accrued compensation expenses

 

 

951

 

 

 

2,432

 

Income taxes payable

 

 

259

 

 

 

176

 

Contract liabilities

 

 

6,486

 

 

 

5,573

 

Total current liabilities

 

 

15,346

 

 

 

14,553

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Long-term portion of term loan

 

 

23,094

 

 

 

23,714

 

Non-current operating lease liability

 

 

28,281

 

 

 

 

Deferred rent

 

 

 

 

 

4,949

 

Deferred tax liabilities

 

 

388

 

 

 

662

 

Total liabilities

 

 

67,109

 

 

 

43,878

 

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; 54,302,468 and 54,117,325 shares issued, respectively; 27,652,073 and 27,791,045 shares outstanding, respectively

 

 

54

 

 

 

54

 

Treasury stock, at cost; 26,650,395 and 26,326,280 shares, respectively

 

 

(182,630

)

 

 

(177,905

)

Additional paid-in capital

 

 

313,110

 

 

 

307,014

 

Accumulated other comprehensive loss

 

 

(232

)

 

 

(215

)

Retained earnings

 

 

11,078

 

 

 

3,637

 

Total stockholders’ equity

 

 

141,380

 

 

 

132,585

 

Total liabilities and stockholders’ equity

 

$

208,489

 

 

$

176,463

 

See accompanying Notes to Consolidated Financial Statements.

3


 

TechTarget, Inc.

Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2019

 

 

2018

 

2019

 

 

2018

 

 

 

(Unaudited)

 

(Unaudited)

 

Revenues

 

$

34,286

 

 

$

31,472

 

$

64,258

 

 

$

58,771

 

Cost of revenues(1)

 

 

7,952

 

 

 

7,124

 

 

14,964

 

 

 

13,849

 

Gross profit

 

 

26,334

 

 

 

24,348

 

 

49,294

 

 

 

44,922

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing(1)

 

 

13,976

 

 

 

11,419

 

 

26,422

 

 

 

22,774

 

Product development(1)

 

 

2,001

 

 

 

2,069

 

 

3,988

 

 

 

4,187

 

General and administrative(1)

 

 

3,123

 

 

 

3,327

 

 

6,145

 

 

 

6,726

 

Depreciation and amortization, excluding depreciation of $56, $0, $69, $0 included in cost of revenues

 

 

1,146

 

 

 

1,140

 

 

2,276

 

 

 

2,248

 

Total operating expenses

 

 

20,246

 

 

 

17,955

 

 

38,831

 

 

 

35,935

 

Operating income

 

 

6,088

 

 

 

6,393

 

 

10,463

 

 

 

8,987

 

Interest and other expense, net

 

 

(253

)

 

 

(644

)

 

(390

)

 

 

(844

)

Income before provision for income taxes

 

 

5,835

 

 

 

5,749

 

 

10,073

 

 

 

8,143

 

Provision for income taxes

 

 

1,684

 

 

 

1,329

 

 

2,632

 

 

 

1,629

 

Net income

 

$

4,151

 

 

$

4,420

 

$

7,441

 

 

$

6,514

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments (net of tax provision of $0,$2,$0, $8)

 

$

 

 

$

8

 

$

 

 

$

12

 

Foreign currency translation loss

 

 

(58

)

 

 

(263

)

 

(17

)

 

 

(129

)

Other comprehensive loss

 

 

(58

)

 

 

(255

)

 

(17

)

 

 

(117

)

Comprehensive income

 

$

4,093

 

 

$

4,165

 

$

7,424

 

 

$

6,397

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.15

 

 

$

0.16

 

$

0.27

 

 

$

0.24

 

Diluted

 

$

0.15

 

 

$

0.15

 

$

0.26

 

 

$

0.23

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

27,640

 

 

 

27,541

 

 

27,723

 

 

 

27,527

 

Diluted

 

 

28,232

 

 

 

28,759

 

 

28,226

 

 

 

28,664

 

(1)

Amounts include stock-based compensation expense as follows:

 

Cost of revenues

 

$

41

 

 

$

31

 

$

80

 

 

$

61

 

Selling and marketing

 

 

2,964

 

 

 

828

 

 

4,655

 

 

 

1,655

 

Product development

 

 

93

 

 

 

20

 

 

186

 

 

 

40

 

General and administrative

 

 

664

 

 

 

635

 

 

1,303

 

 

 

1,260

 

 

 

 

 

 

See accompanying Notes to Consolidated Financial Statements.

 

 

 

4


 

TechTarget, Inc.

Consolidated Statements of Stockholders’ Equity

For The Three and Six Months Ended June 30, 2018

(in thousands, except share and per share data)

 

 

 

Common Stock

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

$0.001

Par Value

 

 

Number of

Shares

 

 

Cost

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

(Loss)

 

 

Accumulated Deficit

 

 

Total

Stockholders’

Equity

 

Balance, December 31, 2017

 

 

53,338,297

 

 

$

53

 

 

 

25,855,182

 

 

$

(170,816

)

 

$

300,763

 

 

$

64

 

 

$

(9,318

)

 

$

120,746

 

Issuance of common stock from exercise of options

 

 

74,375

 

 

 

 

 

 

 

 

 

 

 

 

406

 

 

 

 

 

 

 

 

 

407

 

Issuance of common stock from restricted stock awards

 

 

38,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of common stock through stock buyback

 

 

 

 

 

 

 

 

112,303

 

 

 

(1,613

)

 

 

 

 

 

 

 

 

 

 

 

(1,613

)

Impact of net settlements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(522

)

 

 

 

 

 

 

 

 

(522

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,501

 

 

 

 

 

 

 

 

 

1,501

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Unrealized gain on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

134

 

 

 

 

 

 

134

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,094

 

 

 

2,094

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,232

 

Balance, March 31, 2018

 

 

53,450,852

 

 

 

53

 

 

 

25,967,485

 

 

 

(172,429

)

 

 

302,148

 

 

 

202

 

 

 

(7,224

)

 

$

122,750

 

Issuance of common stock from exercise of options

 

 

81,000

 

 

 

1

 

 

 

 

 

 

 

 

 

477

 

 

 

 

 

 

 

 

 

478

 

Issuance of common stock from restricted stock awards

 

 

13,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of net settlements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(213

)

 

 

 

 

 

 

 

 

(213

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,514

 

 

 

 

 

 

 

 

 

1,514

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Unrealized loss on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(263

)

 

 

 

 

 

(263

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,420

 

 

 

4,420

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,165

 

Balance, June 30, 2018

 

 

53,545,739

 

 

$

54

 

 

 

25,967,485

 

 

$

(172,429

)

 

$

303,926

 

 

$

(53

)

 

$

(2,804

)

 

$

128,694

 

 

See accompanying Notes to Consolidated Financial Statements

 

5


 

 

 

TechTarget, Inc.

Consolidated Statements of Stockholders’ Equity

For The Three and Six Months Ended June 30, 2019

(in thousands, except share and per share data)

 

 

 

Common Stock

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

$0.001

Par Value

 

 

Number of

Shares

 

 

Cost

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

(Loss)

 

 

Retained

Earnings

 

 

Total

Stockholders’

Equity

 

Balance, December 31, 2018

 

 

54,117,325

 

 

$

54

 

 

 

26,326,280

 

 

$

(177,905

)

 

$

307,014

 

 

$

(215

)

 

$

3,637

 

 

$

132,585

 

Issuance of common stock from exercise of options

 

 

10,000

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

 

 

 

23

 

Issuance of common stock from restricted stock awards

 

 

112,545

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of common stock through stock buyback

 

 

 

 

 

 

 

 

220,297

 

 

 

(3,125

)

 

 

 

 

 

 

 

 

 

 

 

(3,125

)

Impact of net settlements

 

 

6,391

 

 

 

 

 

 

6,391

 

 

 

 

 

 

(868

)

 

 

 

 

 

 

 

 

(868

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,179

 

 

 

 

 

 

 

 

 

3,179

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41

 

 

 

 

 

 

41

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,290

 

 

 

3,290

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,331

 

Balance, March 31, 2019

 

 

54,246,261

 

 

$

54

 

 

 

26,552,968

 

 

$

(181,030

)

 

$

309,348

 

 

$

(174

)

 

$

6,927

 

 

$

135,125

 

Issuance of common stock from restricted stock awards

 

 

56,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of common stock through stock buyback

 

 

 

 

 

 

 

 

97,427

 

 

 

(1,600

)

 

 

 

 

 

 

 

 

 

 

 

(1,600

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,762

 

 

 

 

 

 

 

 

 

3,762

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(58

)

 

 

 

 

 

(58

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,151

 

 

 

4,151

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,093

 

Balance, June 30, 2019

 

 

54,302,468

 

 

$

54

 

 

 

26,650,395

 

 

$

(182,630

)

 

$

313,110

 

 

$

(232

)

 

$

11,078

 

 

$

141,380

 

 

See accompanying Notes to Consolidated Financial Statements

 

 

 

6


 

TechTarget, Inc.

Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

 

(Unaudited)

 

Operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

7,441

 

 

$

6,514

 

Adjustments to reconcile net income to net cash provided by operating

   activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,345

 

 

 

2,248

 

Provision for bad debt

 

 

367

 

 

 

501

 

Amortization of investment premiums

 

 

 

 

 

55

 

Stock-based compensation

 

 

6,224

 

 

 

3,016

 

Amortization of debt issuance costs

 

 

4

 

 

 

56

 

Deferred tax provision

 

 

(80

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

2,600

 

 

 

662