Q4 2023 TechTarget Inc Earnings Call

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Matt: Good afternoon. Thank you for attending the TechTarget Reports four quarter and full year 2023 financial results conference call. My name is Matt, and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call to allow an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Charles Rennick with TechTarget. Charles, please go ahead.

Good afternoon. Thank you for attending to take targeted reports fourth quarter and full year 2023 financial results Conference call. My name is Matt and I'll be your moderator for today's call all lines meet it during the presentation portion of the call for an opportunity for questions and answers at the end. If you would like to ask a question. Please press star one on your call.

Their phone keypad.

To pass the conference over to our host Charles Rennick with Tech target Charles Please go ahead.

Charles D. Rennick: Thank you, Matt. And good afternoon, everyone. The speakers joining us here today are Greg Strakosch, our Executive Chairman, Mike Cotoia, our Chief Executive Officer, and Dan Norick, our Chief Financial Officer. Before turning the call over to Greg, we would like to remind everyone on the call of our earnings release process. As previously announced, in order to provide you with an update on our business in advance of the call, we've posted our shareholder letter in the Investor Relations section of our website and furnished it in an 8K. You can also find these materials at the SEC free of charge at the SEC's website at www.sec.gov.

Thank you, Matt and good afternoon, everyone. The speakers joining us here today are Greg straight cost, our executive Chairman, Mike <unk>, Our Chief Executive Officer.

Daniel <unk>, our Chief Financial Officer.

Before turning the call over to Greg we would like to remind everyone on the call of our earnings release process as previously announced in order to provide you with an update on our business in advance of the call. We've posted our shareholder letter on the Investor Relations section of our web.

And furnished it on an 8-K you can also find these materials with the SEC free of charge at the Sec's website at Www Dot SEC Dot Gov.

Charles D. Rennick: The corresponding webcast as well as a replay of this conference call will be made available on the Investor Relations section of our website. Following Greg's introductory remarks, the management team will be available to answer questions. Any statements made today by TechTarget that are not factual, including during the Q&A, may be considered forward-looking statements. These forward-looking statements, which are subject to risks and uncertainties, are based on assumptions and are not guarantees of our future. Actual results may differ materially from our forecast and from these board looks.

A corresponding webcast as well as a replay of this conference call will be made available on the Investor Relations section of our website.

Following greg's introductory remarks, the management team will be available to answer questions.

Any statements made today by tech target that are not factual, including during the Q&A maybe considered forward looking statements. These forward looking statements, which are subject to risks and uncertainties are based on assumptions and are not guarantees of our future performance actual results may differ materially from our forecast and from these forward looking statements.

Charles D. Rennick: Forward-looking statements involve a number of risks and uncertainties, including those discussed in the risk factors section of our most recent periodic reports on Forms 10-Q and 10-Q. These statements speak only as of the date of this call, and TechTarget undertakes no obligation to revise or update forward-looking statements in order to reflect events that may arise after this conference call, except as required by law. Finally, we may also refer to certain financial measures not prepared in accordance with GAAP.

Looking statements involve a number of risks and uncertainties, including those discussed in the risk factors section of our most recent periodic reports on forms 10-Q and 10-K.

Statements speak only as of the date of this call and tech target undertakes no obligation to revise or update forward looking statements in order to reflect events that may arise. After this conference call, except as required by law.

We may also refer to certain financial measures not prepared in accordance with GAAP. A reconciliation of certain of these non-GAAP financial measures to the most comparable GAAP measures to the extent available without unreasonable effort the company as our shareholder letter and with that I'll turn the call over to Greg.

Charles D. Rennick: The reconciliation of certain of these non-GAAP financial measures to the most comparable GAAP measures, to the extent available without unreasonable effort, accompanies our, And with that, I'll turn the call over to. Good. Thank you, Charlie.

Great. Thank you Charlie.

Gregory Strakosch: So the big news since our last earnings fall was the announcement we made on... We entered into a definitive agreement with Informa to combine TechTarget with Informa.com. The combined company will have increased scale with over 8,000 customers in over, first-party purchasing intent data from over 220 leading digital brands and a permissioned audience of over 50 million people. The combination increases our PAM by over, as we will enter 18 new vertical markets with a unique end-to-end solution across the go-to market. The combination creates a company with a strong financial profile. We expect 2024 pro forma revenue to be over $500 million.

Well the Big news since our last earnings call was the announcement, we made on January <unk>.

We entered into a definitive agreement with Informa tech target within former pack.

Digital business.

The combined company will have increased scale with over 8000 customers in over 20 countries.

First party purchase intent data from over 220, leading digital brand and a permission audience of over 50 million people.

The combination increases our Tam by over 10 times as we go after 18, new vertical markets with a unique end to end solution across the go to market.

The combination creates a company with a strong financial profile.

We expect 2024 pro pro forma revenues would be over $500 million.

Operator: Within five years, we expect revenue to grow to over $1 billion and at least 35% EVA. We structured the deal so our shareholders will get some immediate benefit by receiving an $11.75 bonus, sent her share in cash, and long-term benefit for providing the opportunity for shareholders to participate in the value creation through a 43% stake going forward. In regards to the current environment, we came slightly ahead of the high end of our Q4 guide. This reflects a macro technology environment in which customers remain cautious regarding their sales and marketing investments. We expect this dynamic to continue throughout. Alan E. Brynjolfsson, I will now open the call. If you would like to ask a question, please press star 1 on your telephone keypad. If, for any reason, you would like to remove that question, please press star followed by 2.

Within five years, we expect revenue to grow to over $1 billion in revenue and at least 35% EBITDA margins constructed the deal. So our shareholders will get some immediate benefit by receiving an $11 79.

<unk> per share in cash and long term benefit broker, providing the opportunity for shareholders.

Participate in the value creation grew 43% stake going forward.

In regards to the current environment. We came in slightly ahead of the high end of our Q4 guidance.

This reflects a macro technology environment, which customers remain cautious regarding their sales and marketing investment levels.

We expect this dynamic to continue throughout 2024 because of uncertainty surrounding inflation interest rates the presidential election, and geopolitical issues internationally I will now open the call to questions.

If you would like to ask a question. Please press star one on your telephone keypad. If for any reason you would like to remove your question. Please press star followed by two again to ask a question press Star one as a reminder, if youre using a speakerphone. Please remember to pick up your handset before asking your question. We will follow a few briefly as questions are registered.

Operator: Again, to ask a question, press star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question is from the line of Jason Creer with Craig Hallam. Your line is now open. This is Kyle Bardizal on behalf of Jason.

The first question is from the line of Jason career with Craig Hallum. Your line is now open.

Great. This is Kyle Barnes on for Jason.

Michael Cotoia: First one for me, I was wondering if you could just talk a little bit about the AI capabilities across TechTarget and Informa. You know, if there are any kind of differences and approaches between the two companies and how complementary, you know, those kinds of things are. Craig Cowell, this is Mike.

First one for me I was just wondering if you could just talk a little bit on the AI capabilities across tech target in Informa.

There is any kind of differences in approaches between the two companies and how complementary those capabilities come together.

Greg This is Mike I'm going to focus on the AI capabilities with tech target right now.

Michael Cotoia: I'm going to focus on the AI capabilities with TechTarget right now because we've been working on generative AI capabilities and roadmaps for the last year plus. So I really want to focus on that. And I see this really as four areas that we are seeing the benefits of generative AI and, you know, creating measurable impact for the. On the first side, I'd say it would be on our product side. In Q4, we launched our Intent Mail AI, which is under our Personal Assist product suite. And what that does is hyper-personalize and auto-generate emails for sales reps to leverage for outreach, sales reps who work for our customers. So what we're doing on that, it leverages AI to blend TechTarget's prospect level, purchase intent, insights, and behavior, along with what we call recent product-aligned customer information to personalize a rep's outreach. And what this does is it increases response time and reduces the time to create the emails.

Because we've been working with us.

General AI capabilities and roadmap at a loss.

Plus.

Really want to focus on that and I see there's really four areas that we are.

Well, we see the benefits of generative AI and creating measurable impact on the business.

On the first side I would say it would be on a product side.

Q4, we launched our intent.

Which is under our personal assist product suite.

This hyper personalize.

To generate E mails for sales reps to leverage for their outreach.

Those reps.

Who work for our customers. So what we're doing that it leverages AI to blend type targets plastic level purchase intent insights and behavior.

Long with we call recent product line customer information.

Plus the lives of reps outreach, but what this does is it increases response time reduces the time to create the emails and as part of our products. We also have different entry points or points of interest at the individual prospect level. So a rep can build a cadence that has multiple entry points to engage with a plus.

Michael Cotoia: And as part of that product suite, we also have different entry points or points of interest at the individual prospect level. So a rep can build a campaign that has multiple entry points to engage with a prospect that he or she is targeting. We've seen good adoption in terms of reps leveraging that, reducing their time to create emails, and leveraging the first-party prospect-level intelligence. We also see it internally, you know, leveraging it across our internal functions within TechTarget. You know, we have a content marketing department whose goal is to help promote customers' content to our audience and to their prospects. And everything that we do is 100% indexed by topic and by content.

That's the day he or she is targeting we're seeing good adoption in terms of reps leveraging that reducing their time to create emails and leveraging the first party prospect level intelligence.

We also see an internally.

Leveraging that across all internal functions within tech target, yes, we have a constant marketing department.

To help promote customers content.

Our audience into their prospects and everything that we do with 100% index by topic by content, we wait the performance the promotions. So what we've done and that is we built a model that now where instead of hiring more Julia copy writers.

Michael Cotoia: We rate the performance, and the promotions. So what we've done in that is we've built a model that now we're, instead of hiring more junior copywriters, we're taking our more experienced copywriters, and helping train the models to help do the promotion and subject lines for the white paper and, you know, webinar assets that we want to promote to our customers. So we've taken that, we've seen success with that, and now we're evaluating and rolling out, you know, Gen AI for internal controls, for internal procedures, and processes across four or five other different functional areas. I think in terms of members and audience, in creating a better user experience for our members who come to our sites. We built a private LLM driven out of our own content and first-party data, which is all behind firewalls, to provide what I would call a micro-experience, which will be driven by prompt intelligence.

We've taken a more experienced copywriters help train our models to help through the promotion and subject lines for the <unk>.

White paper in.

Webinar assets that we want to promote to our customers. So we've taken out we're seeing success on that and we're now evaluating enrolling out John.

<unk> internal controls up our internal procedures and processes across four or five all the different functional areas.

I think in terms of member and audience.

Clearly a better user experience for our members who come to our sites. We built the private all am driven out of our own content and first party data, which is all behind the firewalls to provide what I would call them micro experience.

It will be driven by crop intelligence, so when a user or a number comes to our sites. We can net them to find out what other information.

Michael Cotoia: So when a user or a member comes to our sites, we can then prompt them to find out what other information would be relevant for them in their research and then guide them to our knowledge base of content, whether it's editorial content, vendor content, panelist-written content, or webinar content to make sure it's a better user experience. And as we create a better user experience for our members, we also gain relevant first-party purchase intent. And then I would say, whenever there's a disruptor or an evolution in the market, that benefits TechTarget quite well. We've seen that, you know, we're celebrating our 25th anniversary.

David that would be relevant for them for their research and then drive them to our knowledge base of content, whether it's editorial content vendor content analysts bring content webinar content to make sure. It's a better user experience and as we create a better user experience for our members. We also gain.

Relevant first party purchase intent signals and then I would say whenever there's a disruptive or an evolution in the market that benefits type target quite well we've seen that.

We're celebrating our 25th anniversary we came into the business storage is big virtualization became a big mover cloud now AI and if you take a look at the content that we produce so we have a thousand number one rankings around the topic of general they pay high and vendors and customers need to cut through the noise because theres a lot of noise.

Michael Cotoia: We came into the business, you know; storage was big, virtualization became a big mover, cloud, now AI. And if you take a look at the content that we produce, we have thousands of number-one rankings around the topic of generative AI.

Michael Cotoia: And vendors and customers need to cut through the noise because there's a lot of noise on how to leverage it, what are the regulatory concerns, and how does it work in enterprise tech. That has always been beneficial and a driver for our TechTarget business. So those are the four areas that I would say that we implemented and continue to implement and evolve around the business. Thanks. And then just last one from me.

On how to leverage it.

What are the regulatory construct how does it work in enterprise stack that has always been a beneficial and a driver for our type target business. So those are the four areas I would say that.

<unk> implemented and continue to implement and evolve around the business.

Perfect. Thanks, and then just last one for me it looks like the guide implies something like a double digit decline in Q1, but 400 better for the year is there anything that you would call out that's kind of signaling that you could see spend free up a little bit in the second half.

Michael Cotoia: It looks like, you know, the guide implies something like a double-digit decline in Q1, but slightly better for the year. Is there anything that you would call out that's kind of signaling that you could see spend free up a little bit? Yeah, so I'd say Q1 is always historically the lowest, and you can correlate this to the technology market. Q1 is always the smallest revenue quarter for the year, and that aligns with the technology market. When you see Q4 to Q1, typically between 10 and 13% decline from Q4 to Q1. You know, we're predicting between 9 and 10%.

Yes, so I would say.

Q1 has always historically the lowest.

Your line is to the technology market.

One is always the smallest revenue quarter for the year and analyzes the technology market. When you see Q4 to Q1 over the history of our business typically between 10 and 13% decline from Q4 to Q1.

And between nine and 10%.

Operator: I think it's still, as we mentioned in the shareholder letter, you know, there are not a lot of them. Please see the complete disclaimer at https://sites.google.com www.techtarget.com. No surprises right now. So, as we've seen this stabilize versus last year going into Q1, we saw a big dip. This is some signs that the market's stabilizing a little bit, and when the pent-up demand is there, there'll be a flight back to quality, and we're putting ourselves in the best position to take advantage of that flight back to quality and focus on the recovery. Thank you for your question. Next question is from the line of Kunal Madhukar with UBS. Your line is now open. Hi, thank you for taking the time to answer my questions. A couple if I could,

I think it's still as we mentioned in the shareholder letter.

There are not a lot of.

Big catalyst in the market right now we've seen a high interest rates the inflation, we have the geopolitical situations going on and we have an upcoming election, but where we are.

Also we're seeing is our customers spend a lot of money in R&D.

And there's always going to be a pent up demand when that shift.

It goes from cost.

Cutting to growth because there will be a pent up demand for technology as well as for marketing and sales typically a flight back to quality and we've seen this through several downturns over the course of 25 years and we were seeing some again very consistent with our November call like pretty stable.

No surprises right now so as we've seen that stabilized versus last year going into Q1, we saw a big dip. This is some signs that says the market stabilizing a little bit and when the pent up demand is that there'll be a flight back to quality and we're putting ourselves in the best position to take advantage of that play back to quality and focus on the recovery.

Perfect. Thank you so much.

Thank you for your question.

Next question is from the line of Kunal Motorcar with UBS. Your line is now open.

Okay.

Alright, Thank you for taking my questions.

If I could one on the permit.

Michael Cotoia: One is the permissioned audience. So what percentage of your traffic in any given month is the permissioned audience? And how much of the permissioned audience have you kind of potentially lost because of all the layoffs? That's one.

Audience, so what percentage of your traffic and I think you've been month as commission audience and how much of the provision the audience have you kind of maybe potentially.

Because of all the new Yorks that's one.

Michael Cotoia: Second, with regard to the guide, I wanted to understand seasonality and what's going into your guide in terms of the one cue that you've given explicitly and the fourth cue, what are the cured Q over Q trends in revenue that you're kind of anticipating? Thank you. Okay, I'm going to talk a little bit about the permission-based audience side, and I would reflect that on our organic traffic. And so, we saw an increase of 14% year-over-year in organic traffic, Mal. And that's actually coming off a high watermark for Q4 and Q22, where we saw 51% growth the previous year. So in terms of audience and permission-based audience, whenever we run a program for our customers in terms of lead generation or delivering prospect-level intelligence, 100% of our audience is permission-based.

Second is with regard to the guide one thing to understand.

Novelty.

What's going into your guide in terms of the bundle that you're doing exclusively and the <unk>. What are the Q1 Q2 trends in revenue that you're kind of anticipating thank you.

Okay well that's.

Talking about the on the permission based audience side I would I would reflect that through our organic traffic.

So we saw an increase of 14% year over year organic traffic miles and that's actually coming off.

That's actually coming off a high watermark for 'twenty to Q4 in 'twenty, two where we saw 51% growth the previous year.

In terms of audience and permission based audience whenever we.

On a program for our customers in terms of lead gen or delivering cost per global intelligence, 100% of our audience is permission based in terms of the lay offs, but we're seeing layoffs at the vendor side not necessarily at the at the time.

Michael Cotoia: In terms of layoffs, what we're seeing are layoffs on the vendor side, not necessarily on the buying team. So the announcement that you see, you know, continuously throughout 2023 and even into 2024 are tech vendors doing a lot of layoffs around sales and marketing because of their numbers and their demand that they have, and that doesn't really impact what we see in terms of the traffic of the permission-based audience. On your second question in terms of seasonality, I'm going to go back to historically what we've seen, and you can go back into our finances for the last, you know, 16 years, 17 years of being public, is that Q1 is typically the smallest revenue quarter because vendors are not done finalizing their budgets. A lot of the vendors are year-end, are December year-end, so budgets might not get finalized until February or March. So, in terms of their world, that's typically their lowest revenue quarter. In Q2, it ramps up.

The buying team side, so the announcement that you see.

Continuously throughout 2023, and even into Q1 of 2024, our tech vendors with a lot of lay offs around sales and marketing because of their numbers and their demand that they have and that doesn't really impact what we see in terms of the traffic of the permission based audience.

On your second question in terms of seasonality when you go back historically, what we see and you can go back into our financials for the loss.

16 years 17 years of being public is that Q1 is typically the smallest revenue quarter vendors are not finalizing their budgets.

A lot of the vendors are yearend or just some year end budgets might not get finalized until February or March.

And in terms of their world. That's typically the lowest revenue quarter in Q2. It ramps up you see a lot of product releases and updates being presented by customers Youll see them at more trade shows in April and May.

Michael Cotoia: You see a lot of product releases and updates being presented by customers. You'll see them at more trade shows, you know, in April and May. Q3 levels off with Q2, typically.

Q3 levels off with Q2, typically you have some of the summer months, especially in Europe, where people are taking vacations and then Q4 is typically our largest revenue quarter for us to target, but that directly aligns the enterprise tech market as well so you know where.

Michael Cotoia: You have some of the summer months, especially in Europe, where people are taking vacations. And then Q4 is typically your largest revenue quarter, both for us at TechTarget, but that directly aligns to the enterprise tech market as well. So, you know, we're starting to see some signs that it's coming back slowly in terms of those patterns, and that's what we're focused on in terms of our investments and the opportunity to get back. Thank you.

We're starting to see some size where that is coming back slowly in terms of those patterns and that's what we're focused on in terms of our investments and the opportunity to get back to.

Thank you.

Yes.

Thank you for your question next.

Operator: Thank you for your question. The next question is from the line of Justin Patterson with KeyBank. Your line is now open. Thank you, and good afternoon, if I can.

Our next question is from the line of Justin Patterson with Keybanc. Your line is now open.

Great. Thank you and good afternoon to if I can first just going back to guidance. When you think about just a.

Michael Cotoia: First, just going back to get it. When you think about just the... www.techtarget.com pricing impacts around Priority Engine and the rest. So that's question number one. And then question number two, just philosophically, the product portfolio you have today is very different from what you've had in the past. Downturn, https://www.techtarget.com Great, Justin. I'm going to start with your second question first, because you bring up a good point: the product portfolio today is much different than it was three years ago, five years ago, even two years ago, and That's been part of our strategic roadmap. It's very important, and what we've been very conscious about, is making sure, whether it's through our organic capabilities and launches on our product side, or through acquisitions, we want to be the premier provider to help our customers with their end-to-end go-to-market strategies. So, when the recovery comes back, you're going to have customers that are going to increase their demand for content marketing. They need really relevant content to talk about their technical or economic validation and positioning within the market to engage with the right buyers.

It kind of that kind.

A bit of recovery over the course of the year is that driven primarily by customer growth within there or are you, making some assumptions in terms of.

Pricing impacts around priority engine in Nebraska. So that's question number one.

And then question number two just philosophically.

The product portfolio you have today is very different than what you've had in the past coming out of downturns, whether it's ESG or even just a bright talk asset. So if you kind of look at the tech target that exists today, how do you think a recovery might and enterprise recovery might differ today versus what you've seen in the past. Thanks.

Josh I'm going to start with your second question for Us because you bring up a good point the product portfolio portfolio today is much different than it was three years ago five years ago, even two years ago.

That's been part of our strategic roadmap is very important and what we've been very conscious about is making sure whether it's through our organic capabilities and launches on our product side or through acquisitions, we want to be the premier provider to help our customers with you and go to market strategy. So when the recovery comes back.

You're going to have customers that are going to increase their demand all around content marketing any really relevant content to talk about the technical or the economic validation and positioning within the market.

To engage with the right buyers. So now getting into that end to end go to market strategy earlier with not only the ESG capabilities, but the right torque capabilities through a multimedia format, making sure. We can do this through webinars.

Michael Cotoia: So now getting into that end-to-end go-to-market strategy earlier, with not only the ESG capabilities, but the BrightTalk capabilities, so a multimedia format, making sure we can do this through webinars, we can do this through PDF, we can do this through infographics to make sure that we're helping our customers earlier in their go-to-market scheme, then being able to take that content, and put those into very effective programs that will be delivered and put in front of, Prospect and buying teams that we know who they are, we know that they're permission-based, we know everything that they're looking at, and then being able to capture all that intent to deliver both to the sales and the marketing organizations to help them prioritize not only accounts, but the individual prospects within those accounts. So combining that together, and then being able to plug into the healthcare vertical with Extelligence and create additional peripheral content, that's been really important for us, and that's a big focus. So when you have an opportunity.

We can do this through PD up we can do this through.

Info graphics to make sure that we're helping our customers earlier in their go to market stage, then being able to take that content and.

Put those into very effective programs that will be delivered and put in front of.

Prospect level prospect and buying teams that we know who they are we know that their permission based we know everything that theyre looking at and then being able to capture all of that intent to deliver both for the sales and the marketing organizations to help them prioritize not only accounts, but the individual prospects within those accounts. So.

We have together and then being into being able to plug into the health care vertical with Astellas <unk> and create additional peripheral content.

That's been really important for us and that's a big focus so when you have an opportunity.

Michael Cotoia: To participate in the whole end-to-end go-to-market strategy for a vendor, you put yourself in a really good position. In terms of your first question, how we see, you know, the modest growth, I think it's a combination. So, like we reported, the number of customer accounts was down, and that reflected in terms of pretty close to the decline in revenue for this year. But we started seeing that overall revenue per customer leveled up was actually up a little bit. And I think it's a combination of, yes, there will be some customers that are coming back to NetNew. I think there are some pricing capabilities that we have in our technology.

To play in the whole end to end go to market strategy for vendor put yourself in a really good position in terms of your first question how.

How we see the modest growth I think it's a combination. So we reported the number of customer count was down and that reflected in terms.

Close to.

The decline in revenue for this year.

I would say in the overall revenue per customer level that was actually up a little bit, but I think it's a combination between yes there'll be some customers that are coming back to net new I think theres some pricing capabilities that we have on our technology. I also think some of the new products that we'll be launching as part of our roadmap with priority engine some extension.

Michael Cotoia: I also think some of the new products that we'll be launching as part of our roadmap with Priority Engine and some extensions of what we're doing, and having some of these regions that may have... been consolidated into a global strength in North America, as the market starts picking up. I'll be later in the second half, but there's more budget being allocated to field marketing. As we mentioned in the last two audience calls, whenever we see a pullback, budgets get centralized. They tend to take them out of the regions,

So what we're doing and having some of these regions that may have.

And consolidated into our global spend from North America as the market starts picking up.

Public late in the second half, but theres more budget being allocated to field marketing we mentioned in our last two earnings calls whenever we see a pull back but just get centralized.

Take them out of the regions they want to centralize them typically in the U S. Then they allocate some dollars on that while the regions have numbers to hit two they have sales they have field marketers down there. So between yes customer increasing household count some pricing new product solutions.

Michael Cotoia: They want to centralize them, typically in the U.S., then they allocate some dollars to that. Well, the regions have numbers to hit, too. They have sales. They have field marketers down there. So between, yes, increasing customer accounts, some pricing, and new product solutions, that's the approach that we see for 2024, and more importantly, for 2025 and beyond. Thank you very much.

That's that's the approach that we see for 2024 and more important with the 2025 and beyond.

Great. Thank you very much.

Operator: Thank you for your question. Next question is from the line of Josh Riley with Nenum. Your line is now open. Okay. So, you were a little broken up about that.

Thank you for your question.

Next question is from the line of Josh right. We would mean your line is now open.

Hi, This is Robert.

Thanks for taking the question.

Pro forma model.

500 basis points.

Yeah.

The combined company.

Perfect.

Morgan.

Should we expect the margin progression.

Yes.

Yes.

Items.

Hey, good morning.

Okay.

Operator: I think you were talking about margin expansion over the years, and what we say is that we, you know, TechTarget's had a really good history of making sure that we manage our margins. And, you know, when you have $500 million, you look at the numbers, and it's approximately $500 million going into 2025, and the ability to take on revenue growth, which we have shown and proven over the history of our time, we have a A lot of that revenue ends up falling on the bottom line. So we'll be able to expand the margins on that side.

You were a little broken up on that I think you were talking about the margin expansion over the years and.

I would say is we.

Type targets at a really good history of making sure that we manage our margins and when do you have a $500 million. If you look at the numbers on a pro forma $500 million going into 2025, and the ability to take on revenue growth, which we have shown improvement in AR over the history of all the time.

And 50% incremental EBITDA margin, it's a lot of that revenue ends up all of the bottom line. So we will be able to expand the margins on that side.

Operator: Getting into the real key to this is a lot of growth from cross-selling and up-selling our platforms to new customers. Also, if we take a look at the two businesses when they combine, there are over 8,000 customers that we have an opportunity to both cross-sell and up-sell the solutions that we have respectively to get a deeper footprint into existing customers. In terms of the Onvia business, which I can't really comment on, that's a new product line, but it really does align with our strategy that we're talking about getting into our customers earlier to help them with their end-to-end go-to-market strategy. So, Pure Revenue Grow. Driving 50% plus incremental EBITDA margins, if you do the math over the five years, you get to your 35% EBITDA margins. But that won't be in year one.

Getting into the.

The real key on this is a lot of growth through cross selling and up selling our platforms into new customers.

So if we take a look at the two businesses when they combine.

There are over 8000 customers that we have an opportunity to both cross sell and up sell the solutions that we have respectively to get a deeper footprint into existing customers.

In terms of the Onvia business, which I can't really comment on them.

That's a new product, but it really does.

Aligned with our strategy that we're talking about getting into our customers' earlier to help them with their end to end go to market strategy. So drove revenue growth.

Driving 50% plus incremental EBITDA margins could you do the math over the five years you get to your 35% EBITDA margin that won't be in year, one that gets over the period of several years to the growth and the opportunities that we have.

Operator: That gets over the period of several years to the growth and the opportunities that we have. Got it, that's helpful. And then regarding some of the products coming from Informa, Industry Dive brings some nice diversification from an industry perspective. While Omdia is solely focused on the tech industry, does it make sense to bring some of Industry Dive's 20 verticals into the business model of Omdia given its pure subscription and expand their business coverage beyond tech verticals? I cannot comment on the informal business and each of their divisions within it.

Got it that's helpful and then regarding some of the products coming from former industry died you know bring some nice diversification from an industry perspective won.

So we probably from the tech industry does it make sense to bring some of industry dies 20 verticals into the business model or bombed here, given it's a pure subscription and expand their business coverage beyond tech verticals.

Yes.

I cannot comment on the Informa business in each of the divisions on it but I can't comment on what our strategy has been and it's been publicly announced although getting into adjacent markets, making sure. We have our content enablement services, making sure. We have an end to end solution and having the platform to reach across all of the opportunities including.

Michael Cotoia: What I can comment on is what our strategy has been and has been publicly announced about getting into adjacent markets, making sure we have our content enablement services, making sure we have an end-to-end solution, and having the platform to reach across all the opportunities, including adjacent markets. So that being said, that's been a vision that we've stated pretty clearly around permission-based audience, first-party insights, and a comprehensive end-to-end go- And so when we have the combination, we'll be able to, when that's finalized and signed, we'll be able to dive into that a little bit more with the public.

Adjacent markets, so that being said you know that.

That's been a vision that we stated pretty clearly around.

Permission based audience first party insights and a comprehensive end to end go to market strategy and so when we have the combination will be able to when that is finalized.

<unk> will be able to dive into that a little bit more with the public.

Operator: Thanks for the call, Eric. Thank you for your question. Next question is from the line of Andrew Murok with Raymond Jeans from the line of the local...

Got it appreciate the color.

Thank you for your question.

Next question is from the line of Andrew Morocco with Raymond James Your line is now open.

Operator: Thanks for taking my question. I wanted to dig in on the customer count a little bit. So that decline seems like it accelerated in 4Q, you know; it was down 103Q, down about 304Q. What do you think is the floor here?

Great. Thanks for taking my question I wanted to dig in on the customer count a little bit so that decline it seems like it accelerated in <unk>.

Down 100 in <unk> down about 300, <unk>, what do you think it's a floor here and I guess to the extent that you know how much of the decline over the course of 'twenty three is kind of involuntary weight companies going out of business versus voluntary cutbacks.

Michael Cotoia: And I guess to the extent that you know, how much of the decline over the course of 23 is kind of involuntary, like companies going out of business versus voluntary cuts? So, I would say the decline, if you look at the overall decline throughout the year... You had a lot of customers that may have signed annual deals in 2022. And it was the second half of 2022, really in Q3, when we started seeing some of the declines, so... You didn't have a lot of folks, a lot of organizations sign up for annual deals going into Q4 of 2022. That's when the market started to send signals that it was slowing down. So that's probably one of the reasons why, you know, Q4 was a little bit higher. People that signed annual deals up to May, June, July that expired. They were dealing with the macro. They pulled back. In terms of, you know, voluntary or involuntary, you got to understand, there are a couple things.

So I would say the decline if you look at the overall declined throughout the year.

<unk>.

Yeah.

You have a lot of customers that may have an annual deals in 2022.

It was the second half of 2022 really in Q3, when we started seeing some decline so.

You didn't have a lot of folks a lot of organizations sign up for annual deals going into Q4 of 2022, that's when the market started to send signals that it was slowing down so that's probably one of the reasons why.

Q4 was a little bit higher people that signing annual deals in May June July that expired they were dealing with the math route they pulled back in terms of voluntary or involuntary.

Yeah, I understand there's a couple of things well less than one year out from the Silicon Valley Bank a collapse.

Michael Cotoia: We're less than one year out from the Silicon Valley Bank collapse, and they are 100% focused on technology. So, some of those companies went away. A lot of those companies are still in business, but they are navigating the environment, and they have to make sure they are managing their costs very closely.

Collapsed and they are 100% or 100% focused on technology company.

So some of those companies went away a lot of those companies are still in business, but they are navigating through the environment and they have to make sure. They are managing their costs very closely so as the market picks up as we talked about when the demand picks up which it will it's not a matter of if it's a matter of when a lot of those companies will come back also turn to customer.

Michael Cotoia: So as the market picks up, as we talked about, and the demand picks up, which it will, it's not a matter of if, it's a matter of when, a lot of those companies will come back. Also, during the customer count, and I mentioned this earlier, you might have an organization that's standing in North America for MIA and AIPAC.

And I mentioned this earlier you might have an organization that's spending in North America, EMEA and APAC.

Michael Cotoia: And the APAC region may have cut back, and EMEA may have cut back, but North America was still going. That would decrease our customer count based on those regions that we treat as separate businesses because we're working on separate contracts and agreements. When the market comes back, you typically see that centralized budget flush back into the field. So that's the color that I can give you.

In the APAC region May have cut back and EMEA may have cutback, but north America was still going down.

The decrease our customer count based on those regionals that we treat as separate businesses, because we're working on separate contracts and agreements with.

When the market comes back you typically see centralized budget flush back into the field. So that's the color I can give you I can also tell you. If you look at the total customer count the revenue kind of get the Mou I think the overall revenue per customer was actually up slightly.

Michael Cotoia: I can also tell you, if you look at the total customer account, the revenue, and I have Dan right here, I think the overall revenue per customer is actually up slightly in 2023 versus 2022. So, It's, you know, and again, it's another sign we talked about in November and we're saying now: no major surprises right now. And this is what we're seeing right now and navigating it, and we don't see things all together, and we don't see big catalysts sprucing things up right now in the first half of 2024. I really appreciate the color.

2023 versus 2022 so.

It's and again, it's another side, we talked about.

In November we say no no major surprises right now.

And this is what we're seeing right now in navigating it and we don't see things all up and we don't see big catalyst Sprucing up right now in the first half of 2024.

I really appreciate the color. Thank you that's that's very helpful and one more if I could.

Operator: Thank you. That's very helpful. And one more if I could.

Operator: I mean, I understand that it's very early days right now, and this may not even be that much of a client-facing effort at this point. But has there been any meaningful feedback from your clients so far in terms of the reaction to the announcement of the information? No, not really. I mean... We're not really... allowed to discuss it, but we're really focused on business as usual here and making sure we're doing the right things for the business. But listen, I will tell you this, my own view, which I think is pretty...

Understand that it's very early days right now and this may not even be that.

That much of a client facing effort at this point, but has there been any meaningful feedback from your clients. So far in terms of the reaction to the announcement of the <unk> deal.

No not really.

Well not really.

Allowed to discuss but.

We're really focused on business as usual here and making sure we're doing the right things for the business, but I will tell you this but my own view.

Michael Cotoia: When we talk about our MNA strategy for the last three years, I'm learning that there's a really big high-get it factor, and that's, again, from my own point of view. We've talked about our strategy of driving our first-party purchase intent data, permission-based audience, and content. And so we've been very clear over the last few years about getting into adjacent markets. So, we've been discussing this publicly for the last couple of years as part of our roadmap strategy, and, you know, this is, This is, this is the announcement that's in front of everyone, and they can interpret it how they want it, but, you know, we can't really share what we hear from feedback. Okay, I really appreciate it.

There's a pretty like when we talk about our M&A strategy for the last three years.

I'm wondering if there's a really big high yet it factor and that's again my own point of view, we talked about our strategy.

Driving our first party purchase intent data permission based audience and content and.

So we've been very clear over the last few years and also getting into adjacent markets.

We have been discussing this publicly for the last couple of years as part of our roadmap strategy and this is yes.

This is the announcement with what's in front of every one they can interpret it how they want it but.

We cannot really share what we're here for feedback.

Okay really appreciate it thank you for the color.

Operator: Thank you for the call. Thank you for your question. Next question is from the line of Bruce Goldfarb with Lake Street Airlines, and I will... Hey, thanks for taking my call. With Google Chrome's new treatment of cookies, have you seen any increased lift in budget from long-time customers allocating? more to TechTarget. WikiTrib.net. So, as we all know, Google announced the phasing out of cookies starting in January and accelerating that throughout the end of the year.

Thank you for your question.

Next question is from the line of Bruce Goldfarb with Lake Street. Your line is now open.

Hi, Thanks for taking my call my questions.

Google Crohn's, new treatment of cookies have you seen any increase lifted budget from longtime customers allocating.

More than target spend Bruce legacy Cookie driven spend.

Oh.

So.

Google announced the phasing out of cookies, starting in January and accelerating that throughout the end of the year.

Operator: It was just announced in terms of them putting that into action, definitely part of our playbook. I mean, we're all first-party data, both at the prospect level and as well as at the account level. We're going to, at www.prixprix.com.

It was just announced in terms of then putting that into action definitely part of our playbook. I mean, we are all first party data.

Both at the prospect level and as well as at the account level.

Got it.

Take advantage of that in terms of our go to market strategy and making sure that customers.

We believe and even part of some of our product strategy, which you'll see us announce in Q1.

Operator: And we've identified the accounts that those prospects work in. We have a lot of accounts that a lot of our customers also want modeling, propensity modeling, ABM strategies with account-only information. So as part of our roadmap strategy and our product launches, you're going to see some announcements around our account, insight feeds, which will be at the account level only, and tying that into our first-party data versus... Google, phasing out third-party cookies. We see that as a pretty big competitive advantage. Thank you. And then POST, I don't know if you can answer this, but POST and Formatech combination, should we expect a new board chairman to be elected from the post-closed records, or could it be a new direction? I mean, it could be a new direction. And then, and then lastly, when do you, What do you expect a man like in a legacy?

We'll be yet in Q1 will be.

Now only insights you got to remember.

Most of our customers have always bought prospect level intelligence from us.

And we've identified the path those prospects work and you have a lot of accounts that buy a lot of our customers also want modeling propensity modeling AVM strategies with account all the information. So it's part of our roadmap strategy and our product launches you're going to see some announcements around our account insight beads, which would be at the account level.

Only and tying that into our first party data versus.

Google phasing out third party cookies, we see that as a pretty big competitive advantage.

Thank you and then post I don't know if you can answer this the coast Informa Tech combination should we expect.

The New board chairman it'd be elected from the post close directors or could it be a new director.

I mean, it could be a new director.

It could be okay.

And then and then lastly, when do you when do you expect demand is like in the legacy business to stop contracting.

Operator: Stop contracting, do you think like Q3? Q2 or Q3 or Q4. I mean, you know, like you said, the numbers and the guidance we gave this year relatively slapped up, you know, two percent. Heading into 2024, we still have, you know, the tech industry, the enterprise B2B tech industry, we still have high inflation, high interest rates, and a lot of layoffs. That's still going to get settled.

Do you think like Q3.

Q2, or Q3 or four.

Yes.

Got it.

The numbers in the guidance, we gave this year relatively flat to up 2%.

Mhm.

Heading into 2024.

We'll have you on the tech industry on the enterprise BTB Tech industry, you still have high inflation high interest rates and a lot of layoffs right now that's still going to sell what I do know on this as we have seen pullbacks before.

Michael Cotoia: What I do know about this... We've seen pullbacks before, and we've seen customers who have spent a lot of money and invested a lot of money in R&D. We also see technology initiatives, such as AI, and we've seen it with virtualization and the cloud and other things before, that create pent-up demand. And it's not a matter of if; it's a matter of when the market turns around, where customers turn from, hey, I get to watch everything I do on cost, to I really need to focus on growth through sales and marketing efforts regionally and globally. And when that turns, and I wish I had a crystal ball on that, I mean, we've seen some signs, like I mentioned, over the last couple quarters, some stabilization.

We've seen customers.

Spent a lot of money invest a lot of money in R&D. We also see technology initiatives, such as AI and we've seen it with virtualization and cloud and other things before they create a pent up demand and it's not a matter of if it's a matter of when the market turns around where customers turn from Hey, I got to watch everything I do on costs to Iran.

We need to focus on growth through sales and marketing efforts regionally and globally.

And when that turns and I wish I had a crystal ball on that I mean, we've seen some signs like I mentioned on our last couple of quarters some stabilization.

Michael Cotoia: When that turns, there will be a quick recovery, in my opinion, and we've seen that in the past. And when we see that recovery, and whether that's Q3, 24, Q4, 24, or the beginning of 2025, our goal is to be ready for that recovery to take the upside of that. And that's, as you can see, some of the investments we've made, the analysis that we've made, that is a real focus for us.

When that time there'll be a quick recovery in my opinion, and we've seen that in the past and when we see that recovery and whether that's Q3 'twenty four of Q4, 'twenty four or the beginning of 2025, our goal is to be ready for that recovery to take the upside in that and that's as you can see some of the investments we've made the announcements that we've made.

That is a real focus for us right now.

Operator: Great, thank you. Thank you for your question. There are no additional questions waiting at this time, so that will conclude the conference call. Thank you for your participation. You may now disconnect your line. Thank you, www.microsoft.com.ca

Great. Thank you.

Thank you for your question.

There are no additional questions waiting at this time, so that will conclude the conference call. Thank you for your participation you may now disconnect your lines.

Okay.

Yeah.