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Section 1: 10-Q (10-Q Q2 2020)

ttgt-10q_20200630.htm
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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 June 30, 2020

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 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 July 31, 2020, the registrant had 27,536,786 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, 2020 and December 31, 2019

 

3

 

 

Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2020 and 2019

 

4

 

 

Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019

 

5

 

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019  

 

7

 

 

Notes to Consolidated Financial Statements

 

8

Item 2.

 

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

 

22

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

36

Item 4.

 

Controls and Procedures

 

36

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

37

Item 1A.

 

Risk Factors

 

37

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

Item 6.

 

Exhibits

 

42

 

 

Signatures

 

43

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

TechTarget, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

June 30,

2020

 

 

December 31,

2019

 

Assets

 

(Unaudited)

 

 

(Unaudited)

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

50,390

 

 

$

52,487

 

Short-term investments

 

 

5,023

 

 

 

5,012

 

Accounts receivable, net of allowance for doubtful accounts of $2,028 and $1,899 respectively

 

 

25,568

 

 

 

27,102

 

Prepaid taxes

 

 

 

 

 

1,017

 

Prepaid expenses and other current assets

 

 

1,830

 

 

 

1,813

 

Total current assets

 

 

82,811

 

 

 

87,431

 

Property and equipment, net

 

 

12,951

 

 

 

12,371

 

Goodwill

 

 

97,023

 

 

 

93,639

 

Intangible assets, net

 

 

3,471

 

 

 

710

 

Operating lease assets with right-of-use

 

 

25,485

 

 

 

26,385

 

Deferred tax assets

 

 

616

 

 

 

136

 

Other assets

 

 

903

 

 

 

936

 

Total assets

 

$

223,260

 

 

$

221,608

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,847

 

 

$

2,036

 

Current operating lease liability

 

 

2,769

 

 

 

2,571

 

Current portion of term loan

 

 

1,554

 

 

 

1,241

 

Accrued expenses and other current liabilities

 

 

3,737

 

 

 

2,476

 

Accrued compensation expenses

 

 

1,164

 

 

 

3,679

 

Income taxes payable

 

 

3,217

 

 

 

65

 

Contract liabilities

 

 

5,051

 

 

 

4,335

 

Total current liabilities

 

 

19,339

 

 

 

16,403

 

Long-term portion of term loan

 

 

21,540

 

 

 

22,473

 

Non-current operating lease liability

 

 

26,845

 

 

 

28,170

 

Deferred tax liabilities

 

 

850

 

 

 

1,611

 

Other liabilities

 

 

1,140

 

 

 

 

Total liabilities

 

 

69,714

 

 

 

68,657

 

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; 55,035,081 and 54,903,824 shares issued, respectively; 27,536,786 and 28,142,519 shares outstanding, respectively

 

 

55

 

 

 

55

 

Treasury stock, at cost; 27,498,295 and 26,761,305 shares, respectively

 

 

(199,796

)

 

 

(184,972

)

Additional paid-in capital

 

 

326,194

 

 

 

317,675

 

Accumulated other comprehensive loss

 

 

(399

)

 

 

(319

)

Retained earnings

 

 

27,492

 

 

 

20,512

 

Total stockholders’ equity

 

 

153,546

 

 

 

152,951

 

Total liabilities and stockholders’ equity

 

$

223,260

 

 

$

221,608

 

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,

 

 

 

2020

 

 

2019

 

2020

 

 

2019

 

 

 

(Unaudited)

 

 

(Unaudited)

 

(Unaudited)

 

 

(Unaudited)

 

Revenues

 

$

34,796

 

 

$

34,286

 

$

66,212

 

 

$

64,258

 

Cost of revenues(1)

 

 

8,785

 

 

 

7,952

 

 

16,936

 

 

 

14,964

 

Gross profit

 

 

26,011

 

 

 

26,334

 

 

49,276

 

 

 

49,294

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing(1)

 

 

12,570

 

 

 

13,976

 

 

25,519

 

 

 

26,422

 

Product development(1)

 

 

1,846

 

 

 

2,001

 

 

3,878

 

 

 

3,988

 

General and administrative(1)

 

 

3,267

 

 

 

3,123

 

 

6,622

 

 

 

6,145

 

Depreciation and amortization, excluding depreciation of $221, $56, $392, and $69, respectively, included in cost of revenues

 

 

1,453

 

 

 

1,146

 

 

2,798

 

 

 

2,276

 

Total operating expenses

 

 

19,136

 

 

 

20,246

 

 

38,817

 

 

 

38,831

 

Operating income

 

 

6,875

 

 

 

6,088

 

 

10,459

 

 

 

10,463

 

Interest and other expense, net

 

 

(10

)

 

 

(253

)

 

(479

)

 

 

(390

)

Income before provision for income taxes

 

 

6,865

 

 

 

5,835

 

 

9,980

 

 

 

10,073

 

Provision for income taxes

 

 

2,092

 

 

 

1,684

 

 

3,000

 

 

 

2,632

 

Net income

 

$

4,773

 

 

$

4,151

 

$

6,980

 

 

$

7,441

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments (net of tax provision of $(24), $0, $13, and $0, respectively)

 

$

84

 

 

$

 

$

(48

)

 

$

 

Foreign currency translation gain (loss)

 

 

21

 

 

 

(58

)

 

(32

)

 

 

(17

)

Other comprehensive income (loss)

 

 

105

 

 

 

(58

)

 

(80

)

 

 

(17

)

Comprehensive income

 

$

4,878

 

 

$

4,093

 

$

6,900

 

 

$

7,424

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.17

 

 

$

0.15

 

$

0.25

 

 

$

0.27

 

Diluted

 

$

0.17

 

 

$

0.15

 

$

0.25

 

 

$

0.26

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

27,533

 

 

 

27,640

 

 

27,768

 

 

 

27,723

 

Diluted

 

 

28,163

 

 

 

28,232

 

 

28,304

 

 

 

28,226

 

 

(1)

Amounts include stock-based compensation expense as follows:

 

Cost of revenues

 

$

71

 

 

$

41

 

$

140

 

 

$

80

 

Selling and marketing

 

 

2,118

 

 

 

2,964

 

 

4,307

 

 

 

4,655

 

Product development

 

 

125

 

 

 

93

 

 

321

 

 

 

186

 

General and administrative

 

 

979

 

 

 

664

 

 

1,953

 

 

 

1,303

 

 

See accompanying Notes to Consolidated Financial Statements.

 

 

 

4


 

TechTarget, Inc.

Consolidated Statements of Stockholders’ Equity

For the three and six months ended June 30, 2020

(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

(Loss)

 

 

Retained

Earnings

 

 

Total

Stockholders’

Equity

 

Balance, December 31, 2019

 

 

54,903,824

 

 

$

55

 

 

 

26,761,305

 

 

$

(184,972

)

 

$

317,675

 

 

$

(319

)

 

$

20,512

 

 

$

152,951

 

Issuance of common stock from restricted stock awards

 

 

123,027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of common stock through stock buyback

 

 

 

 

 

 

 

 

736,760

 

 

 

(14,824

)

 

 

 

 

 

 

 

 

 

 

 

(14,824

)

Impact of net settlements

 

 

230

 

 

 

 

 

 

230

 

 

 

 

 

 

(68

)

 

 

 

 

 

 

 

 

(68

)

Stock-based compensation expense(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,294

 

 

 

 

 

 

 

 

 

5,294

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(132

)

 

 

 

 

 

(132

)

Unrealized loss on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(53

)

 

 

 

 

 

(53

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,207

 

 

 

2,207

 

Balance, March 31, 2020

 

 

55,027,081

 

 

$

55

 

 

 

27,498,295

 

 

$

(199,796

)

 

$

322,901

 

 

$

(504

)

 

$

22,719

 

 

$

145,375

 

Issuance of common stock from restricted stock awards

 

 

8,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,293

 

 

 

 

 

 

 

 

 

3,293

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84

 

 

 

 

 

 

84

 

Unrealized gain on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

 

 

 

 

 

21

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,773

 

 

 

4,773

 

Balance, June 30, 2020

 

 

55,035,081

 

 

$

55

 

 

 

27,498,295

 

 

$

(199,796

)

 

$

326,194

 

 

$

(399

)

 

$

27,492

 

 

$

153,546

 

 

 

(1)

Includes $1.8 million of accrued compensation expense from 2019.

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)

(Unaudited)

 

 

 

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

 

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 exercise of options

 

 

56,207