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Section 1: 10-Q (10-Q)

ttgt-10q_20200930.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 September 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 October 31, 2020, the registrant had 28,098,707 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 September 30, 2020 and December 31, 2019

 

3

 

 

Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2020 and 2019

 

4

 

 

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

 

5

 

 

Consolidated Statements of Cash Flows for the nine months ended September 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

 

38

Item 1A.

 

Risk Factors

 

38

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

42

Item 6.

 

Exhibits

 

43

 

 

Signatures

 

44

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

TechTarget, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

September 30,

2020

 

 

December 31,

2019

 

Assets

 

(Unaudited)

 

 

(Unaudited)

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

57,408

 

 

$

52,487

 

Short-term investments

 

 

5,064

 

 

 

5,012

 

Accounts receivable, net of allowance for doubtful accounts of $1,893 and $1,899 respectively

 

 

24,380

 

 

 

27,102

 

Prepaid taxes

 

 

3,211

 

 

 

1,017

 

Prepaid expenses and other current assets

 

 

1,706

 

 

 

1,813

 

Total current assets

 

 

91,769

 

 

 

87,431

 

Property and equipment, net

 

 

13,088

 

 

 

12,371

 

Goodwill

 

 

97,174

 

 

 

93,639

 

Intangible assets, net

 

 

3,369

 

 

 

710

 

Operating lease assets with right-of-use

 

 

24,779

 

 

 

26,385

 

Deferred tax assets

 

 

127

 

 

 

136

 

Other assets

 

 

901

 

 

 

936

 

Total assets

 

$

231,207

 

 

$

221,608

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,624

 

 

$

2,036

 

Current operating lease liability

 

 

2,829

 

 

 

2,571

 

Current portion of term loan

 

 

1,706

 

 

 

1,241

 

Accrued expenses and other current liabilities

 

 

4,058

 

 

 

2,476

 

Accrued compensation expenses

 

 

1,298

 

 

 

3,679

 

Income taxes payable

 

 

 

 

 

65

 

Contract liabilities

 

 

6,701

 

 

 

4,335

 

Total current liabilities

 

 

18,216

 

 

 

16,403

 

Long-term portion of term loan

 

 

21,066

 

 

 

22,473

 

Non-current operating lease liability

 

 

26,047

 

 

 

28,170

 

Deferred tax liabilities

 

 

1,757

 

 

 

1,611

 

Other liabilities

 

 

1,865

 

 

 

 

Total liabilities

 

 

68,951

 

 

 

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; 55,608,094 and 54,903,824 shares issued, respectively; 28,098,707 and 28,142,519 shares outstanding, respectively

 

 

56

 

 

 

55

 

Treasury stock, at cost; 27,509,387 and 26,761,305 shares, respectively

 

 

(199,796

)

 

 

(184,972

)

Additional paid-in capital

 

 

327,899

 

 

 

317,675

 

Accumulated other comprehensive loss

 

 

(177

)

 

 

(319

)

Retained earnings

 

 

34,274

 

 

 

20,512

 

Total stockholders’ equity

 

 

162,256

 

 

 

152,951

 

Total liabilities and stockholders’ equity

 

$

231,207

 

 

$

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 Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2020

 

 

2019

 

2020

 

 

2019

 

 

 

(Unaudited)

 

 

(Unaudited)

 

(Unaudited)

 

 

(Unaudited)

 

Revenues

 

$

36,244

 

 

$

33,809

 

$

102,456

 

 

$

98,067

 

Cost of revenues(1)

 

 

9,212

 

 

 

8,047

 

 

26,148

 

 

 

23,011

 

Gross profit

 

 

27,032

 

 

 

25,762

 

 

76,308

 

 

 

75,056

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing(1)

 

 

13,792

 

 

 

12,454

 

 

39,311

 

 

 

38,877

 

Product development(1)

 

 

1,961

 

 

 

2,085

 

 

5,839

 

 

 

6,073

 

General and administrative(1)

 

 

3,355

 

 

 

3,107

 

 

9,976

 

 

 

9,252

 

Depreciation and amortization, excluding depreciation of $274, $94, $666, and $163, respectively, included in cost of revenues

 

 

1,452

 

 

 

1,205

 

 

4,250

 

 

 

3,481

 

Total operating expenses

 

 

20,560

 

 

 

18,851

 

 

59,376

 

 

 

57,683

 

Operating income

 

 

6,472

 

 

 

6,911

 

 

16,932

 

 

 

17,373

 

Interest and other income (expense), net

 

 

91

 

 

 

(409

)

 

(388

)

 

 

(798

)

Income before provision for income taxes

 

 

6,563

 

 

 

6,502

 

 

16,544

 

 

 

16,575

 

(Benefit) Provision for income taxes

 

 

(219

)

 

 

1,151

 

 

2,782

 

 

 

3,783

 

Net income

 

$

6,782

 

 

$

5,351

 

$

13,762

 

 

$

12,792

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized income (loss)  on investments (net of tax provision of $3, $0, $(10), and $0, respectively)

 

$

12

 

 

$

 

$

(36

)

 

$

 

Foreign currency translation gain (loss)

 

 

210

 

 

 

(235

)

 

178

 

 

 

(252

)

Other comprehensive income (loss)

 

 

222

 

 

 

(235

)

 

142

 

 

 

(252

)

Comprehensive income

 

$

7,004

 

 

$

5,116

 

$

13,904

 

 

$

12,540

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.24

 

 

$

0.19

 

$

0.50

 

 

$

0.46

 

Diluted

 

$

0.24

 

 

$

0.19

 

$

0.48

 

 

$

0.45

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

27,781

 

 

 

27,910

 

 

27,773

 

 

 

27,785

 

Diluted

 

 

28,473

 

 

 

28,370

 

 

28,412

 

 

 

28,253

 

 

(1)

Amounts include stock-based compensation expense as follows:

 

Cost of revenues

 

$

121

 

 

$

64

 

$

260

 

 

$

144

 

Selling and marketing

 

 

2,849

 

 

 

1,911

 

 

7,155

 

 

 

6,567

 

Product development

 

 

117

 

 

 

106

 

 

438

 

 

 

292

 

General and administrative

 

 

1,236

 

 

 

849

 

 

3,191

 

 

 

2,151

 

 

See accompanying Notes to Consolidated Financial Statements.

 

 

 

4


 

TechTarget, Inc.

Consolidated Statements of Stockholders’ Equity

For the three and nine months ended September 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

Income (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

 

Issuance of common stock from restricted stock awards

 

 

561,921

 

 

 

1

 

 

 

 

 

 

 

 

 

460

 

 

 

 

 

 

 

 

 

461

 

Impact of net settlements

 

 

11,092

 

 

 

 

 

 

11,092

 

 

 

 

 

 

(3,078

)

 

 

 

 

 

 

 

 

(3,078

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,323

 

 

 

 

 

 

 

 

 

4,323

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

12

 

Unrealized gain on foreign currency exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

210

 

 

 

 

 

 

210

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,782

 

 

 

6,782

 

Balance, September 30, 2020

 

 

55,608,094

 

 

$

56

 

 

 

27,509,387

 

 

$

(199,796

)

 

$

327,899

 

 

$

(177

)

 

$

34,274

 

 

$

162,256

 

 

(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 nine months ended September 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

Income (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