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<ACCESSION-NUMBER>0001564590-20-036840
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>78
<PERIOD>20200630
<FILING-DATE>20200805
<DATE-OF-FILING-DATE-CHANGE>20200805
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<COMPANY-DATA>
<CONFORMED-NAME>TechTarget Inc
<CIK>0001293282
<ASSIGNED-SIC>7389
<IRS-NUMBER>043483216
<FISCAL-YEAR-END>1231
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<ACT>34
<FILE-NUMBER>001-33472
<FILM-NUMBER>201077632
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>275 GROVE STREET
<CITY>NEWTON
<STATE>MA
<ZIP>02466
<PHONE>617-431-9200
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<STREET1>275 GROVE STREET
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Section 1: 10-Q (10-Q Q2 2020)

ttgt-10q_20200630.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, 2020

☐	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

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.

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.

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.

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		—		—		—			—