TechTarget reports that soft IT spending hurt 2013 revenue and earnings results
NEWTON, Mass. – February 12, 2014 — Technology media company TechTarget, Inc. today announced financial results for the three months and year ended December 31, 2013.
I am proud that 2013 is TechTarget’s 10th consecutive year of both positive adjusted EBITDA and cash flow” said Greg Strakosch, TechTarget CEO. “Despite the continued softness in IT spending, we are forecasting a return to double-digit revenue growth in 2014, based on the positive momentum of our new data analytics suite of products, IT Deal AlertTM and the continued 20% plus online revenue growth of our international operations.”
Q4 2013 online revenue decreased by 3% to $22.0 million compared to Q4 2012. Online revenues represented 93% of total Q4 2013 revenues. Q4 2013 events revenue decreased by 37% to $1.7 million compared to Q4 2012 and represented 7% of total Q4 2013 revenues. Total Q4 2013 revenues decreased 6% to $23.7 million compared to Q4 2012. Total 2013 online revenue decreased by 10% to $79.7 million compared to 2012. Online revenues represented 90% of total 2013 revenues. Total 2013 events revenue decreased by 26% to $8.8 million compared to 2012 and represented 10% of total 2013 revenues. Total 2013 revenues decreased 11% to $88.4 million compared to 2012.
Adjusted EBITDA (earnings before interest, other income and expense, income taxes, depreciation and amortization, as further adjusted to eliminate stock-based compensation) for Q4 2013 decreased 37% to $3.6 million compared to $5.8 million for Q4 2012.
Total gross profit margin for Q4 2013 was 72%, compared to 74% for Q4 2012. Online gross profit margin decreased slightly to 74% in Q4 2013, as compared to 75% in Q4 2012. Events gross profit margin decreased to 54% for Q4 2013, as compared to 63% for Q4 2012. Total gross profit margin for full year 2013 was 69%, compared to 72% for full year 2012. Online gross profit margin decreased to 71% in full year 2013 compared to 73% in full year 2012. Events gross profit margin decreased to 57% for full year 2013, as compared to 64% for full year 2012.
Q4 2013 was slightly below break-even, compared to net income of $1.0 million in Q4 2012. Adjusted net income (net income adjusted to eliminate amortization, stock-based compensation expense and the related income tax impact of these charges) for Q4 2013 was $1.4 million compared to $3.1 million for Q4 2012. Net loss per basic share was $0.00 for Q4 of 2013 compared with net income per basic share of $0.03 for Q4 of 2012. Adjusted net income per share (adjusted net income divided by adjusted weighted average diluted shares outstanding) for Q4 2013 was $0.04 compared to $0.08 for Q4 2012. Net loss was $1.8 million for full year 2013 compared to net income of $4.0 million for full year 2012. Adjusted net income (net income adjusted to eliminate amortization, stock-based compensation expense and the related income tax impact of these charges) for full year 2013 was $3.4 million compared to $10.1 million for the full year 2012. Net loss per basic share was $0.05 for full year 2013 compared with net income per basic share of $0.10 for the full year 2012. Adjusted net income per share (adjusted net income divided by adjusted weighted average diluted shares outstanding) for the full year 2013 was $0.09 compared to $0.25 for the full year 2012.
The Company’s balance sheet and financial position remain strong. As of December 31, 2013, the Company’s cash, cash equivalents and investments totaled $33.8 million, and the Company had no outstanding bank debt. In the quarter, the Company used approximately $35.5 million to buy shares of its common stock in a tender offer that was completed on October 25, 2013.
Recent Company Highlights
- 2013 was TechTarget’s 10th consecutive year of posting both positive adjusted EBITDA and cash flow. In 2013, the Company used its healthy cash flow to re-purchase 9.7 million shares for $48 million. In the past 3 years, the company has re-purchased 15.7 million shares returning $84 million to shareholders. The Company has $34 million in cash and investments and no debt.
- IT Deal Alert continues to gain traction in the market with over 100 customers using the service in Q4, generating approximately $2.8 million in revenue in the quarter and $4 million in 2013. The Company forecasts that IT Deal Alert revenue will grow at least 20% sequentially in Q1 and at least triple in 2014.
- International online revenue grew over 20% in 2013, which is the 5th consecutive year of international online revenue growth over 20%, since the company commenced its strategy of migrating from a partnership model to international direct operations. The Company is forecasting international online revenue growth of 20% to 25% in 2014.
In Q1 2014, we are forecasting our return to growth. We expect online revenues will be up between 5% and 10% versus the same period a year ago. For 2014, we expect online revenues will grow in the double-digits. Due to the inherent operating leverage in our business model, we forecast that this revenue growth will translate into at least 50% growth in adjusted EBITDA.
We expect overall revenues in Q1 of 2014 to be between $20.1 and $21.2 million. We expect online revenues to be between $19.3 and $20.3 million. We expect event revenues to be between $0.8 and $0.9 million. We expect adjusted EBITDA to be between break-even and $1.0 million.