Good afternoon. Thank you for attending today's TechTarget Reports Third Quarter 2024 Conference Call and Webcast. My name is Tamia, and I will be your moderator for today's call. All lines will be in mute during the presentation portion of the call. I would now like to pass the conference over to your host, Charlie Rennick, General Counsel. You may proceed.

Thank you, Tamia and good afternoon, everyone. The speakers joining us here today are Greg Strakosch, our Executive Chairman; Mike Cotoia, our Chief Executive Officer; and Dan Noreck, 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 have posted our Shareholder Letter on 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 website. 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 your 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 that are not guarantees of our future performance. Actual results may differ materially from our forecast and from these forward-looking statements. 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-K. These statements speak only as of the date of this call and TechTarget 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. 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, accompanies our Shareholder Letter. With that, I will turn the call over to Greg.

Great. Thank you, Charlie. We are encouraged to report modest year-over-year revenue growth for the second quarter in a row. We think it’s clear that the worst of the downturn is behind us. We expect to continue to see similar revenue growth in Q4 and into the early part of 2025. We have several reasons to be optimistic including a better interest rate environment, the certainty that comes with the election behind us, and the expectation that there will be a new technology investment cycle around AI. We used our strong balance sheet to invest during the downturn to strengthen our leadership position. This strength will be increased with the proposed combination with Informa Tech's digital business. We expect this deal to close this quarter. I will now open the call to questions.

All right. Thank you. Great. Two if I can. First, you've had a lot of product innovation this year. I'd love to hear just how customers are adopting some of these new products and what could be in the pipeline for 2025. So that's the first question. And then secondly, Greg, I just wanted to come back to that point you talked about. There's going to be an AI investment cycle here. I know it is something we are all trying to work through the pace of. When you look at page views on your site, content being consumed, any signs that we are now closer to seeing some of that monetization come in? Thanks so much.

Great. Justin, this is Mike. Regarding product innovation, we've been very proactive in developing our overall platform for the market. At the end of Q2, we launched our Account Insights Feed, a subscription service that is part of the Priority Engine. This offering specifically targets first-party intent signals at the account level, which is crucial for us as we traditionally focused on prospect-level intelligence for sales and marketing. Our customers have expressed a strong need for account-specific intent feeds to enhance their go-to-market strategies, such as account-level targeting, creating ABM lists, and prioritizing accounts based on first-party insights. We also announced a partnership with 6sense and Revenue AI, allowing customers to access our account insight feeds, with the condition that vendors only access our intelligence if they subscribe, ensuring seamless integration into the 6sense platform. Another product we introduced is Market Monitor, offering real-time market dynamics data to assist clients with content investments, marketing efforts, and sales outreach. This product helps identify accounts researching specific solutions, the personas within those accounts, as well as providing insights on high-performing content and competitive engagement. Our product strategy aims to connect insights across our offerings, enabling customers to identify where to invest for optimal engagement with buyers. The Priority Engine demand product ties together insights from all our solutions, all driven by first-party intent signals, allowing us to evolve and revolutionize demand generation strategies through customized content operations and insights into buying groups. We also utilize IntentMail AI to efficiently reach the right buying groups and provide real-time analytics on content and demand performance. These investments are pivotal as we approach the new company launch in 2025, and we're pleased with the progress made. As for the AI investment cycle, we are observing many customers significantly investing in R&D, especially for enhancing existing products and developing new ones. Eventually, these investments should generate a return regarding revenue growth and market presence. As we move past the R&D investment phase, we anticipate customers will drive growth in their sales and marketing efforts and effectively convey the value of their solutions.

Thank you.

Hi guys. Thanks for taking my questions. Maybe just starting off on the macro. I guess you guys have been running this business for a long time and have seen a lot of cycles. Are you seeing any trends in how this cycle has developed relative to past cycles that can kind of give you confidence that spending will improve in a more material way next year, kind of in line with your commentary from the Shareholder Letter?

Yes. That's a good question. So Josh, I'd say we've been in a two-year depressed technology cycle. We've seen that it's not a matter of if, it's a matter of when that will rebound. If you look at TechTarget throughout 2024, if you look at our Q1 results, our expectations were we'd be down high single digits, relatively flat year-over-year, but we're up 1% in Q2 and then we saw a 2% growth in Q3. We're seeing trends that we expect to see in Q3 as we go into Q4 and into the first half of 2025. Other companies have reported double-digit decline in the first half but are seeing less of a decline in the second half. We feel like we're navigating better than many of our competitors. Additionally, during these downturns, we're beginning to see a light at the end of the tunnel. For example, we've seen two interest rate cuts. That always bodes well for the future of the technology market. We also saw a presidential election that we didn't know how it would unfold. It seems like it's come and gone and we are moving forward. There are signs that we believe will benefit the technology market, and what we've seen historically supports this long term growth. In the short term, we want to see consistent movement from decline to growth with two consecutive quarters of growth to establish a pattern of modest low to mid-single-digit growth. That's providing us confidence in the long term. Our focus right now is to close this combination with Informa Tech. We've announced the Informa Tech digital assets. We announced a special meeting date on November 26. We expect it to close shortly thereafter and our focus will be executing on the business and the integration process over the next couple of quarters, capturing the upside when the market does recover.

Got it. That's super helpful. Maybe just following up on that. In the last cycle, a major contributor to your growth was a pretty big increase in the SMB customer count. We know they pulled back quite a bit, particularly during the Silicon Valley Bank crisis. In this next cycle coming next year, do you think that these SMB customers will come back? Or do you think that the growth will be driven more by the enterprise and larger customer cohorts? Thanks.

Yes, no problem. I think the initial growth will be with increased product capability set at the large enterprise and strategic accounts. We now have an ability to go wider and deeper. If you take a look at our own product roadmap and what we're launching, it's been important for us to prepare for 2025. As we combine with TechTarget's assets in the sector, we anticipate opportunities to expand within our existing strategic accounts and enterprise accounts, as well as getting into those vertical markets. I would emphasize that Gartner's most recent information indicates that some of the smaller tech companies—our product offerings can effectively service those smaller accounts. However, I would say the primary growth will be focused on enterprise and those strategic accounts.

Got it. Thanks guys. And good luck with closing the deal.

Great. Thank you. This is Cal on for Jason. So first question from us, can you just discuss how the premerger planning has gone so far? And how do you feel like you're positioned should the merger eventually go through?

Yes. So Cal, we've been working on this since the beginning of the year when we announced it in January 10. We've worked closely with the Informa Tech digital business units, engaging closely with Gary and the business leaders to understand the operating model and how to best set the new organization up for success. The teams work well together. The operational model and organizational structure have been progressing very well. Everyone sees the opportunity and understands the benefits of these two organizations coming together, both in the long term and for getting off the ground quickly. We are focusing on Day one planning, Day 180 planning, all the way to Day 365. The team is aligned on this and I would say that the premerger planning has gone well.

I think that was it for that one. But the second question that I just had here, I just kind of wanted to ask on the competitive environment. You talked about leaning on the balance sheet here and keeping your investments progressing. So how do you see those investments really differentiating yourself versus your competitors who may have had to pull back during the down cycle?

A lot of our competitors are private companies, but we maintain relationships with them and also monitor public companies. Equipped with 25 years of a solid financial profile and a strong balance sheet, we've always invested opportunistically in any downturn, aiming to capture market share and position ourselves well for when a recovery occurs. Even without a recovery, our investments in our products, content, and audiences give us a competitive advantage. Few organizations own and operate the sites and communities that provide access to permission-based audiences, as well as first-party intent. To me, this is the most reliable way to assist sales and marketing efforts, which will enhance their capabilities for driving revenue and market share. We view our investment decisions with a long-term perspective, assessing potential returns over one to three years. I believe we are in a fortunate position due to the model we've built over 25 years. We are disciplined and effective in our investments in the right areas.

Perfect. Thank you and I'll echo good luck here closing the merger.

Thank you.

There are currently no other questions in the queue waiting at this time. This concludes today's conference call. Thank you for your participation. You may now disconnect your line.