Q4 2024 TechTarget Inc Earnings Call
Hello, everyone and thank you for joining the Informa Tech target reports 2020 for full year financial results.
Amy: My name is Amy and I'll be coordinating your call today.
Amy: During the presentation you can rest your question by pressing star followed by one telephone keypad.
Amy: If you change your mind. Please press star followed by two that's how to think.
Amy: You bet.
Speaker Change: Leave yourself from a question Keith.
Speaker Change: I'll now hand over to your host Charles Rennick General Counsel Informa Tech targets to begin. Please go ahead Charles.
Charles Rennick: Thank you Stephanie and good morning, everyone.
Acres: Acres, joining us here today are Gary <unk>, our Chief Executive Officer, and Dan <unk>, Our Chief Financial Officer before turning the call over to Gary we would like to remind everyone on the call of our earnings release process.
Charles Rennick: They announced in order to provide you with an update on our business in advance of the call. We have posted a press release to the Investor Relations section of our website and furnished it on an 8-K you can also find these materials with the SEC free of charge at the Sec's Web site Www Dot SEC Dot Gov.
Charles Rennick: Corresponding webcast as well as a replay of this conference call will be made available on the Investor Relations section of our website.
Gary: Following Gary's remarks management team will be available to answer your question.
Speaker Change: These statements made today by Informa Tech target 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 performance actual results may differ materially from our forecast and from these forward looking statements.
Speaker Change: Forward looking statements involve a number of risks and uncertainties, including those discussed in the risk factors section of our most recent periodic report filed on Form 10-K.
These statements speak only as of the date of this call and Informa Tech target undertakes no obligation to revise or update any forward looking statements in order to reflect events that may arise. After this conference call, except as required by law.
Speaker Change: Finally, 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.
Gary: As our press release and with that I'll turn the call over to Gary.
Gary: Thank you Charlie good morning from Boston, Massachusetts.
Gary: Q4, investing the time to join US today and for your patient smokes, we walked through the Informa Tech target 2020 for audit and preparations for the 10-K filing we filed a full set of 2020 for financial statements and the annual report on Form 10-K last week on May 28, which is available at <unk>.
Gary: Www Dot Informa tech target don't call.
Gary: Reported results for 2024 reflect the structure of the combination comprising 12 months contribution from the Informa Tech digital businesses and around one month's contribution from the legacy <unk> business.
Gary: Business being the periods from completion of the transaction on December 2nd 2024 through to the year end.
Gary: On this basis reported revenues were $285 million with a GAAP net loss of $117 million last year, reflecting the contribution period offtake target acquisition and integration costs and noncash impairments at the point of combination.
Gary: Adjusted EBITDA was $31 million.
Gary: On a combined company basis, assuming the combination was in effect from January <unk> 2024, we delivered full year revenues of $419 million in line with the previous guidance.
Gary: This equates to broadly flat underlying performance for the year, reflecting the subdued market backdrop with activity levels impacted by geopolitical tensions and macroeconomic uncertainties.
Gary: The combined company net loss was $166 million and combined company adjusted EBITDA was $82 million.
Gary: The lots are included certain non recurring operating costs relating to the combination, including an allocation of the Informa group central costs to the informal take digital businesses in 2024.
Gary: <unk>, which are included in the transitional service agreements entered into on the closing date.
Gary: Our financial position at the year end was strong with cash cash equivalents and short term investments of around $354 million and around $460 million of outstanding convertible senior notes.
Gary: Given the subdued market backdrop, I would describe our performance in 2024 as robust.
Gary: Holding revenues, while improving margins.
Gary: And if you let me come to the future.
Gary: Buying business.
Gary: At the intersection of two attractive and dynamic market technology, and <unk> marketing, representing a $20 billion addressable market.
Gary: This combination we are creating the scale talent and operating platform to nurture and build specialist audiences and deliver increasing value for clients.
Gary: And I am excited and optimistic about the opportunity that we have ahead of us and have that can translate into value for all our stakeholders, including our shareholders and our <unk> colleagues as Informa Tech target.
Gary: In 2025, the foundation year for Informa Tech target our focus is on combining our strengths across brands product go to market and talent to position the business for long term growth.
Gary: The combination program to successfully integrate the legacy companies is well underway with all executive and senior leadership appointments completed and reporting length and responsibilities confirmed.
Gary: The restructuring of our sales organization has been accelerated including a unified go to market strategy that gives increased focus to our largest customer accounts through dedicated service teams.
Gary: Product strategy work is advancing well, including a repositioning of the net line product to address the volume end of the demand market.
Gary: And reshaping the intelligence and advisory portfolio to better meet the needs of an evolving although evolving customer requirements.
Gary: We are tracking well ahead of year, one operating cost synergy target of $5 million with a high degree of confidence notability to meet or beat the $45 million overall run rate synergies targeted by year three.
Gary: The business environment remains subdued.
Gary: But our guidance remains in line with previous commentary with a target for broadly flat like for like revenues and an increase in adjusted EBITDA for the year supported by the over delivery of combination synergies and non recurrence of one off combination costs that would included within the 2024 results.
Gary: Beyond the near near term market dynamics and the foundation year, we remain confident in the medium term growth opportunities for Informa Tech target underpinned by innovation and growth and technology and the increasing demand for more efficient data driven <unk> digital services.
Gary: A final note we will be we will update our investor presentation. Following todays coal, which again you will find on www Dot Informa tech target Dot com.
Speaker Change: Thank you I will now pass the call back toward motivates Asami and open the call for any questions.
Speaker Change: Thank you very much.
Speaker Change: Ask a question. Please press star followed by one I wanted to sort of think of you, but if you change your mind. Please press star followed by two.
Speaker Change: I'm trying to ask your questions. Please ensure device is on mute locally.
Speaker Change: Our first question comes from Joshua Reilly from Needham.
Speaker Change: Your line is open. Please go ahead.
Speaker Change: Okay.
Speaker Change: Alright, great. Thanks for taking my question maybe.
Speaker Change: Maybe just start off with now we haven't had a call in a while I think it would be helpful to get an update on how AI is impacting your business, including the risks and opportunities and maybe touch on the trends Youre seeing with your average number of white papers and Webinars that customers are reading and watching before making a <unk>.
Speaker Change: <unk> purchased today versus a.
Speaker Change: A year ago or more win.
Speaker Change: There was less proliferation of Biogen AI tools.
George: Hi, George Thanks for the question.
Speaker Change: Let me maybe think about this.
Speaker Change: Stone into three component parts. The first thing of course is that he has.
Speaker Change: As a technology is a market in and of itself quarter company put out of business.
Speaker Change: So in other words, we are in the position to inform and educate and connect the market the buy side of the market, although the EI technologies and how that can be applied to business.
Speaker Change: And of course within the business and are also the EI companies, who are providing products and services and technologies, but in actually leach those reach those audiences weeks those by Ed Booz buyers and decision makers.
Speaker Change: So that isn't in and of itself a market for us.
Speaker Change: We are addressing and with with enthusiasm.
Speaker Change: You then go to the second thing I think which is <unk>.
Speaker Change: We apply to our business.
Speaker Change: First and foremost to improve upon notice state goodness I note efficiency.
Speaker Change: Again, we have a number of initiatives across the business to do so and we can see this in many areas of our business in.
Speaker Change: Research.
Speaker Change: And intelligence and advisory capabilities, and our editorial and audience development capabilities and indeed in our marketing and sales capabilities in our go to market and we're applying that to our business to improve our efficiency and to improve their effectiveness and indeed to improve quality.
Speaker Change: And we then have the massive applying AI to actually improve the products and bring new products and services to market.
Speaker Change: And of course, you will have that.
Speaker Change: The latter half of last year, you will have had take target and Mike talk about the application of AI to the priority engine product to actually help.
Speaker Change: Sydney steels used cases engage with their customers is a good example of that.
Speaker Change: And then may be finally to your point about and Hi E.
Speaker Change: Is impacting the way in which the marketplace stubhub content and consume content.
Speaker Change: <unk> has informed and educated.
Speaker Change: I would see that and but obviously there will be I think.
Speaker Change: The.
Speaker Change: Application of agenda to the eye in particular.
Speaker Change: It's changing that landscape, but it's generally what we are seeing is that when customers are over and buyers to be precise when buyers are in the market and are looking to make large capital decisions significant investments in their business.
Speaker Change: Meeting deep research into the subject and are looking for content, which comes from authoritative.
Speaker Change: And unbiased and northern sources.
Speaker Change: So we're not really seeing any changes in the pattern of that what I would call a serious buyer research.
Speaker Change: Got it that's very helpful. I appreciate that.
Speaker Change: So you mentioned in the release that the cost synergies are on plan or ahead of expectations in terms of timing.
Speaker Change: As you've now had some time to review of the combined company can you just comment on how you feel about the total $45 million in cost and revenue synergies in both terms of timing and then is that still a total number that youre comfortable with going forward.
Speaker Change: I can say I can confirm that I am comfortable with the total number.
Speaker Change: Certainly the intention to meet or exceed over the periods.
Speaker Change: And I think we will certainly on the <unk>.
Speaker Change: The synergies of $45 million of broken down into both cost synergies and revenue synergies in particular, we feel confident in our ability to accelerate the cost synergy side of that equation on the revenue synergies stated that accretion we're confident that we will be on track.
Speaker Change: Got it and then maybe I'll just throw one more out there you talked about some short term disruption to the business in January and February maybe you can just discuss you know what.
Speaker Change: Happen, there and how you remedied that pretty quickly within a quarter to be executing moving forward. Thanks guys.
Speaker Change: Largely that.
Speaker Change: <unk> approaching implementing a combination plant Josh obviously, when we bring two companies together.
Speaker Change: Lots of work to be done on processes and systems on the operating model and organization design.
Speaker Change: Talk to you later on.
Speaker Change: Accelerating our go to market strategy and the adjustments in the sales organization et cetera et cetera.
Speaker Change: An element of disruption associated with that but we felt it was important that we get ahead of the curve and that we we execute with peace and.
Speaker Change: And then get ourselves into the position to anticipate the market opportunity.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Jason <unk> from Craig.
Speaker Change: <unk> column.
Speaker Change: Your line is open. Please go ahead.
Speaker Change: Wonderful thanks.
Speaker Change: Thank you for taking my questions.
Speaker Change: So Gary you talked about kind of a subdued markets.
Speaker Change: You are seeing right now so I'm wondering if you could just give more details on what that means maybe more external you talked about kind of the internal disruption.
Speaker Change: More details on the macro would be great and then just as a follow up your guidance kind of called for.
Speaker Change: More of a decline in the near term with.
Speaker Change: More momentum as we get into the back half of the year can you talk about what gives you the confidence in that and what Youre hearing from customers that gets you to that conclusion. Thank you.
Speaker Change: Yes of course, Jason. Thank you for that question I think I would use the we used attempts subdued market and I think that's reflective of what we experienced in 2024 as well so I suppose what I'm. What we're really saying is is that we're seeing a continuation of the pattern in 2024 and Thats why.
Speaker Change: So neither neither would see a significant improvement or for that matter. The deterioration would be my description of that.
Speaker Change: In terms of them what gives me confidence in the improving in the back half of the year is largely around the investments that we're making so the us pressing ahead with their combination.
Speaker Change: Getting ourselves in a position to anticipate the market more effectively in the second half of the year through.
Speaker Change: You go to market models through the product strategy and the product toward map that we've created.
Speaker Change: And I'm.
Speaker Change: Generally leveraging if you like.
Speaker Change: The thesis that was the combination and the Fox, Please which is bringing these two companies together.
Speaker Change: A company that has breadth and scale and in doing so and that breadth and scale will clear in the marketplace and win in the marketplace, particularly with the larger customers in the market who have scale requirements and then we have the ability to meet those scale requirements.
Speaker Change: Gary can you call out any opportunities in the near term where you think.
Gary: In the early stages of this integration you can see more success with the cross sell or areas, where you're already seeing some success in cross sell.
Gary: I can tell we see that at present I would say I would say that in two weeks, we certainly seen what I would describe it.
Gary: <unk> success with the cross sale as we've taken the customer relationships that we had from both sides of the combination and leveraging them to drive incremental revenues.
Gary: Turning to sales and incremental revenues and we've already seen some success of that through the first quarter.
Gary: Separate and distinct from that that was what I would describe as maybe more of a strategic cross sale, which is actually owed ability to much larger proposals in front of our customers.
Gary: And therefore, we are seeing.
Gary: One or two really interesting examples of us putting large largest size proposals in front of our customers and our customers buying into that and of course, the ability to increase our average deal size with our customer base over time is an important part of our strategy.
Gary: Alright, Thank you I appreciate it.
Gary: As a reminder to ask a question. Please press star followed by one telephone keypad.
Speaker Change: Our next question comes from Eric Eric Maass, Newsy Lake Street.
Speaker Change: Your line is open. Please go ahead.
Speaker Change: About a third of your business.
Speaker Change: Scripps in or at least that's the.
Speaker Change: Number I have from.
Gary: It might have been 2023, I'm not sure if that still applies for the 2024 numbers, but just wondering if you could comment on how renewables when.
Gary: Over the past.
Gary: <unk> so in comparison to a year ago, and whether kind of the net revenue retention or a gross renewals just curious to know how the subscription business as Scott.
Gary: Thank you.
Gary: The largest element of our subscription businesses in the intelligence and the volumes of the space.
Gary: And obviously, if I recall really year on year.
Gary: Volume.
Gary: Renewal rates are holding.
Gary: Holding flat as I would say year on year was my observation.
Gary: Similarly, then I think we have other subscriptions in the Bryan to demand portfolio.
Gary: Sure.
Gary: Obviously, a little bit.
Gary: Flat year on year to a little bit down from a volume perspective in some areas.
Gary: But generally speaking I am comfortable in the quality of the product and our ability to.
Gary: And to drive growth in those costs over the long term with them.
Gary: Of the year.
Gary: Okay.
Gary: So I assume as well.
Gary: Better youre expecting better in the second half of 'twenty five and in the first half.
Gary: I think I would say.
Gary: Expect so yes, I would say that in terms of growing the subscription businesses and holding Rev and holding the renewal rate is obviously, a strong part of that strategy.
Gary: Improving the modestly, but really I think the acquisition of new customers and growing the beast within their existing customers.
Gary: These statements you upsell to the subscription or new subscription customers is a core part of the strategy.
Gary: Okay.
Gary: And then you talked about.
Gary: Product side repositioning net line to the volume ended the market how is that.
Gary: That process has been going.
Gary: Certainly we're very encouraged with the Q1 expedience, so taking that product to the end of the marketplace and the market acceptance.
Speaker Change: Alright, and then what exactly do you mean by the reshaping of the intelligence and advisory portfolio to better meet evolving customer demand could you give an example.
Gary: This was largely a boat.
Gary: Taking the portfolio of services in particular, the intelligence services within the intelligence and advisory portfolio on.
Gary: And then.
Gary: Maybe what you might describe as packaging them into a fewer number of larger packages.
Gary: And then also aligning those packages with the segments in the marketplace.
Gary: And that we see the segments being enterprise.
Gary: <unk> and <unk>.
Gary: Thus feel.
Speaker Change: The telecommunications and service provider. So it was really about product packaging.
Speaker Change: And I'm thinking packages, which I think we are more suited to the needs and the requirements of the marketplace and.
Gary: In addition to that Ben and bringing.
Gary: And the enterprise strategy group business and joining with the OMB and the awards and the <unk> business and intelligence in advisory with no clue to consulting.
Gary: Consulting capabilities, one which is the strategy consulting capability and the other which is the go to market strategy consulting capability and I think that creates so much cleaner offering in the marketplace to those corporate stoppages and analysts relations product business unit leaders product managers and Proto marketers.
Gary: Got it.
Gary: And then lastly, Dan what can you tell us about the.
Gary: The latest for the cash and debt balances either a March 31 update.
Gary: Or maybe in the end of May update.
Gary: Cash and debt.
Gary: Sure Eric I mean from a net debt position, we are fundamentally in the same place right because we use the cash that was on hand, plus we drew down $135 million on the revolving line of credit.
Gary: To fund the repayment of the convertible notes, but fundamentally the net debt position is.
Gary: Name.
Gary: Got it thank you.
Gary: Yes.
Gary: We currently have no further questions.
Gary: We would like to thank you all for joining US today. This concludes today's call you may now disconnect your lines.
Gary: [music].
Gary: Okay.