8-K/A
TechTarget, Inc. (TTGT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 29, 2024
TECHTARGET, INC.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 001-42428 | 99-2218610 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br>Identification No.) |
| 275 Grove Street | ||
| --- | --- | |
| Newton, Massachusetts | 02466 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (617) 431-9200
Toro CombineCo, Inc.
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, $0.001 Par Value | TTGT | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note.
On December 3, 2024, TechTarget, Inc. (formerly known as Toro CombineCo, Inc.) (“New TechTarget”), filed with the Securities and Exchange Commission (the “SEC”) a Current Report on Form 8-K (the “
Initial 8-K
”) to disclose that the Company had completed the previously announced transactions contemplated by the Agreement and Plan of Merger, dated January 10, 2024, by and among TechTarget Holdings Inc. (formerly known as TechTarget, Inc.) (“Former TechTarget”), New TechTarget, Toro Acquisition Sub, LLC, Informa PLC (“Informa”), Informa US Holdings Limited and Informa Intrepid Holdings Inc. (such transactions, the “Transactions”). This Current Report on Form 8-K/A amends the Initial 8-K to include (i) the historical audited financial statements and unaudited interim financial statements of Former TechTarget and the digital businesses of Informa’s Informa Tech division contributed as part of the Transactions (the “Informa Tech Digital Businesses”), (ii) the pro forma combined financial information required by Item 9.01(b) of Form 8-K, and (iii) Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Informa Tech Digital Businesses as of and for the years ended December 31, 2023 and 2022 and for the year ended December 31, 2021 and as of September 30, 2024 and for the three and nine month periods ended September 30, 2024 and 2023 for each of the Informa Tech Digital Businesses and Former TechTarget, which should be read in conjunction with the Initial 8-K.
The pro forma financial information included in this Current Report on Form 8-K/A has been presented for informational purposes only, as required by Form 8-K. It does not purport to represent the actual results of operations that Former TechTarget and the Informa Tech Digital Businesses would have achieved had the companies been combined during the periods presented in the pro forma financial information and is not intended to project the future results of operations that the combined company may achieve after the acquisition.
Except as described above, all other information in the Initial 8-K remains unchanged.
| Item 8.01 | Other Events. |
|---|
On December 2, 2024, New TechTarget issued a press release announcing the consummation of the Transactions. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
New TechTarget’s Risk Factors, New TechTarget’s Business Section and Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Informa Tech Digital Businesses for the years ended December 31, 2023 and 2022 and as of September 30, 2024 and for the nine month period ended September 30, 2024 and 2023 and Former TechTarget for the years ended December 31, 2023, 2022 and 2021 and as of September 30, 2024 and for the three and nine month periods ended September 30, 2024 and 2023 are filed herewith and attached hereto as Exhibits 99.2, 99.3, 99.4, 99.12, 99.5 and 99.6, respectively, and incorporated herein by reference.
No Offer
This Current Report on Form 8-K does not constitute an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than historical facts, are forward-looking statements, including: statements regarding the expected benefits of the Transactions, such as improved operations, enhanced revenues and cash flow, synergies, growth potential, market profile, business plans, expanded portfolio and financial strength; the competitive ability and position of New TechTarget; legal, economic, and regulatory conditions; and any assumptions underlying any of the foregoing. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “plan,” “could,” “would,” “project,” “predict,” “continue,” “target,” or the negatives of these words or other similar terms or expressions that concern New TechTarget’s expectations, strategy, priorities, plans, or intentions. Forward-looking statements are based upon current plans,
estimates, and expectations that are subject to risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. We can give no assurance that such plans, estimates, or expectations will be achieved, and therefore, actual results may differ materially from any plans, estimates, or expectations in such forward-looking statements.
Important factors that could cause actual results to differ materially from such plans, estimates, or expectations include, among others: unexpected costs, charges, or expenses resulting from the Transactions; uncertainty regarding the expected financial performance of New TechTarget; failure to realize the anticipated benefits of the Transactions, including as a result of integrating the Informa Tech Digital Businesses with the business of TechTarget; the ability of New TechTarget to implement its business strategy; difficulties and delays in New TechTarget achieving revenue and cost synergies; evolving legal, regulatory, and tax regimes; changes in economic, financial, political, and regulatory conditions, in the United States and elsewhere, and other factors that contribute to uncertainty and volatility, natural and man-made disasters, civil unrest, pandemics, geopolitical uncertainty, and conditions that may result from legislative, regulatory, trade, and policy changes associated with the current or subsequent U.S. administrations; New TechTarget’s ability to meet expectations regarding the accounting and tax treatments of the Transactions; market acceptance of New TechTarget’s products and services; the impact of pandemics and future health epidemics and any related economic downturns on New TechTarget and the markets in which it and its customers operate; changes in economic or regulatory conditions or other trends affecting the internet, internet advertising and IT industries; data privacy and artificial intelligence laws, rules, and regulations; the impact of foreign currency exchange rates; certain macroeconomic factors facing the global economy, including instability in the regional banking sector, disruptions in the capital markets, economic sanctions and economic slowdowns or recessions, rising inflation and interest rate fluctuations on the operating results of New TechTarget; and other matters included in Risk Factors of New TechTarget attached hereto as Exhibit 99.2 and other documents filed by New TechTarget from time to time with the SEC. This summary of risks and uncertainties should not be considered to be a complete statement of all potential risks and uncertainties that may affect New TechTarget. Other factors may affect the accuracy and reliability of forward-looking statements. We caution you not to place undue reliance on any of these forward-looking statements as they are not guarantees of future performance or outcomes. Actual performance and outcomes, including, without limitation, New TechTarget’s actual results of operations, financial condition and liquidity, may differ materially from those made in or suggested by the forward-looking statements contained in this Current Report on Form 8-K.
Any forward-looking statements speak only as of the date of this Current Report on Form 8-K. None of New TechTarget, its affiliates, advisors or representatives, undertake any obligation to update any forward-looking statements, whether as a result of new information or developments, future events, or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
| Item 9.01 | Financial Statements and Exhibits |
|---|
(a) Financial Statements of Business Acquired.
The audited consolidated balance sheets of Former TechTarget as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023 and the related notes are filed as Exhibit 99.7 hereto and are incorporated herein by reference.
The unaudited consolidated balance sheets of Former TechTarget as of September 30, 2024 and December 31, 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for three and nine months ended September 30, 2024 and 2023 and the related notes are filed as Exhibit 99.8 hereto and are incorporated herein by reference.
The audited combined balance sheets of the Informa Tech Digital Businesses as of December 31, 2023 and 2022, the related combined statements of income and comprehensive income (loss), changes in equity, and cash flows, for each of the three years in the period ended December 31, 2023 and the related notes are filed as Exhibit 99.9 hereto and are incorporated herein by reference.
The unaudited condensed combined balance sheets of Informa Tech Digital Businesses as of September 30, 2024 and December 31, 2023, the related condensed combined statements of income (loss), comprehensive income (loss), changes in equity, and cash flows for three and nine months ended September 30, 2024 and 2023 and the related notes are filed as Exhibit 99.10 hereto and are incorporated herein by reference.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined balance sheet as of September 30, 2024, and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2024 and the year ended December 31, 2023 are filed as Exhibit 99.11 hereto and are incorporated herein by reference.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TECHTARGET, INC. | ||
|---|---|---|
| By: | /s/ Charles D. Rennick | |
| Dated: December 6, 2024 | Name: | Charles D. Rennick |
| Title: | Vice President, General Counsel, and Corporate Secretary |
EX-99.4
Exhibit 99.4
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE INFORMA TECH DIGITAL BUSINESSES
The following discussion and analysis is based principally on, and should be read in conjunction with, the Informa Tech Digital BusinessesAudited Financial Statements and the Informa Tech Digital Businesses Unaudited Interim Financial Statements for the three and nine months ended September 30, 2024 and 2023 collectively referred to herein as the “combined financialstatements.”
This discussion and analysis includes forward-looking statements. These forward-looking statements are subjectto risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to these differences include, but are notlimited to, those discussed in the Risk Factors filed as Exhibit 99.2 to the Current Report on Form 8-K filed by TechTarget, Inc. with the Securities and Exchange Commission (“SEC”) onDecember 3, 2024 (the “Form 8-K”) and under the heading “Cautionary Note Regarding Forward-Looking Statements” in Item 8.01 of the Form 8-K.
Overview
Background
The Informa Tech Digital Businesses (“the Business”) help technology companies accelerate growth through first party business-to-business (“B2B”) data, market insight and market access, with revenues for the Informa Tech Digital Businesses increasing to over $250 million from 2021 through 2023.
The Informa Tech Digital Businesses have built scale and market presence through a combination of underlying growth and targeted expansion, including acquisitions that brought new capabilities, customer relationships and specialist brands. This included the organic expansion of its specialist tech research business, Ovum, before further scale was added through the acquisition of IHS Markit Technology, which was combined with Ovum to create Omdia. The B2B digital product portfolio was extended through the acquisitions of NetLine in November 2021 (Demand Generation and Buyer Intent), Industry Dive in September 2022 (Specialist B2B Content/Brands), and most recently Canalys in September 2023 (Specialist Tech Research). Alongside this targeted expansion, Informa PLC (“Informa”, “Informa Group”, “Parent”) has made investment in IIRIS, a B2B customer data platform for collating, standardizing and analyzing all of the Informa Group’s first party B2B data. The creation of IIRIS, which remains part of the Informa Group, enabled the development of more audience and data-driven solutions, with the Informa Tech Digital Businesses being the major focus for this investment. New TechTarget will continue to have access to IIRIS through a data sharing agreement with the Informa Group (see TheTransaction section).
Following this period of expansion and growth, the specialist technology research business is now among the largest providers of these services. It employs more than 300 expert analysts to create data-driven intelligence products and advisory services for product managers, corporate strategists and the C-suite, challenging market strategies, sharpening product roadmaps and accelerating time to market and revenue.
Omdia, Industry Dive, NetLine, Canalys and Wards are the foundation of the Informa Tech Digital Businesses, alongside their portfolio of specialist digital media brands. These products inform, educate and influence tech buyers, creating engaged, specialist audiences and delivering approximately 5 million permissioned first party data records.
Targeted access to these specialist audiences is provided through a growing range of data-driven digital products and services that are designed to deliver highly qualified leads, demand generation and buyer intent to technology vendors, connecting them with the right buyers at the right time to maximize return on investment and accelerate growth.
| Selected Informa Tech DigitalBusinesses brands | ||
|---|---|---|
| Specialist Tech Research:<br><br><br>Intelligence & Advisory Brands | Specialist B2B Content: Brand &<br><br><br>Content Brands | B2B Buyer Intent & Demand<br><br><br>Brands |
| Omdia<br> <br>Canalys<br><br><br>Wards | Industry Dive<br><br><br>Information Week<br> <br>Light Reading<br><br><br>Heavy Reading<br> <br>AI Business | NetLine |
Industry Background and Trends
The Informa Tech Digital Businesses sit at the intersection of tech and B2B marketing, each dynamic innovative markets in their own right, with what management believes are compelling structural growth drivers. This provides a strong underpin to the long-term growth ambitions of the Informa Tech Digital Businesses.
Technology transcends all aspects of daily life and work. Enterprise technology, incorporating software and hardware systems used by large organizations for anything from customer relationship management to networking and cyber security, is central to operating effectively and efficiently. The pace of innovation and change is rapid, creating a constant cycle of investment to enhance, upgrade and replace technology.
For the Informa Tech Digital Businesses, investment in innovation and growth in research & development budgets provide a leading indicator of demand for their products and services. Of the top 1,700 corporate R&D spenders in 2022, ICT hardware, software and ICT services were the segments attracting the greatest R&D investment, with software and ICT services increasing 19% year-on-year. This growth in technology-related R&D is driving a new wave of investment and innovation, enhancing existing products and inspiring the next generation of products and services.
Over time, the scale of technology purchasing, particularly enterprise technology, has grown in size, resulting in B2B buying behavior becoming more complex. This complexity has led to longer sales cycles as more research is undertaken on purchasing technology products and platforms. Typically, large technology decisions will involve a number of people across an organization from technology professionals to CIOs, CFOs and often CEOs. This research takes many forms, with an increasing amount conducted online, including by reading specialist content, reviews, information, product profiles and bespoke research, as well as through webinars and online discussions.
According to Gartner, it is estimated that as much as 80% of the B2B buyer journey is now completed before a buyer might make contact with the sales team of a vendor. For technology vendors, online presence and digital brand visibility are therefore critical, leading to more companies focusing spend on branded content services, thought leadership and whitepaper distribution, digital event participation and advertising on the most relevant platforms and media.
Management believes the Informa Tech Digital Businesses are at the center of this shift in B2B buyer behavior, delivering highly relevant content and research to technology buyers that informs, educates and influences them along the different stages of their buyer journey.
These interactions with its content – who reads what, who clicks to find out more, how long buyers spend on specific websites, etc. – and general online behavior, when captured, enriched and analyzed, provide deep insights into who potential customers are, what products and services they might be interested in, where they are in their purchasing cycle and how significant is the intent to purchase.
For B2B sales and marketing teams at technology vendors, this information is critical in targeting the right buyers at the right time, raising brand awareness and positioning products with the right audiences to secure leads that turn into sales. With increasing scrutiny and focus on return on investment, data-driven B2B marketing is becoming ever more relevant given it is typically more measurable, with more efficiency than more traditional advertising and marketing services, helping to increase lead conversion rates, reduce the cost of customer acquisition and generate more revenue per dollar of marketing spend.
Because most of the Informa Tech Digital Businesses clients are B2B technology companies, the success of the Informa Tech Digital Businesses is intrinsically linked to the health, and subject to the market conditions, of the technology industry. The Informa Tech Digital Businesses have recently been affected by macro-economic conditions, in particular the negative impact of rising inflation and interest rates on the technology industry, which has impacted investment levels and overall client marketing expenditure. Further, in 2023, the Informa Tech Digital Businesses were also negatively impacted by the return of physical events following the relaxation of COVID-19 pandemic related restrictions, which led to some rebalancing of marketing budgets away from digital marketing into physical events and is likely to continue into the future. These conditions primarily impact product offerings within marketing, advertising services and sponsorship and are likely to continue throughout 2024 and therefore negatively impact revenue and continuing operations. Although management cannot quantify the impact of macro-economic factors on the Informa Tech Digital Businesses’ future results, any worsening of market conditions could negatively impact its financial position and liquidity. Marketing, advertising services and sponsorship revenue is more immediately impacted by changes in client spending and macro-economic conditions other revenue categories.
Product and Service Offerings
Over the last five years, the Informa Group has been building a portfolio of data-driven solutions that are intended to capitalize on the positive market dynamic described above and meet the evolving needs of buyers and vendors in the technology market.
The portfolio of products that the Informa Group has built, the Informa Tech Digital Businesses, help both buyers of B2B technology with knowledge and intelligence, supporting them through different stages of the buyer journey, and sellers of B2B technology in identifying relevant buyers for their products, who are in-market and with the greatest purchasing intent. These digital solutions fall into a number of categories:
| • | Brand solutions: Brand solutions offer B2B marketers the opportunity to grow brand awareness through direct<br>exposure to specialist technology and business audiences across the businesses’ portfolio of 14 online products and off-network through audience extension programs. Solutions include digital display<br>banners, newsletter sponsorships and email marketing, enabling technology vendors to gain exposure and benefit from association with the businesses’ specialist brands and high quality editorial content amongst our readership base of engaged<br>technology buyers. Brand solutions include the Industry Dive portfolio of more than 35 specialist brands, which deliver high quality business journalism to niche audiences, offering outbound email sponsorship opportunities to vendors looking to<br>build awareness and reach key decision makers. |
|---|---|
| • | Demand solutions: The businesses enable marketers to directly engage prospective buyers through a portfolio of<br>content marketing programs, including webinars, whitepapers, playbooks, virtual events and surveys. Through syndicating these across owned media properties and to NetLine’s publisher network, marketers can influence B2B tech buyers and generate<br>demand for their products and services. The businesses are focused on delivering high-quality leads to marketers by gating their content across properties to maximize return on investment. |
| --- | --- |
| • | Intentive: The Intentive platform, which was built and is operated by NetLine, leverages first-party contact and<br>behavioral data generated across the businesses’ media properties [and live event portfolio to deliver buyer-level intent data to marketers]. The exclusive blend of online [and offline] data is designed to enable clients to identify in<br>real-time who is in-market for their particular solutions, and how they should prioritize their outreach. NetLine can then integrate the outputs from Intentive with leading CRM systems to automate lead<br>generation workflows for clients, enabling closed-loop activation of proprietary insights. |
| --- | --- |
| • | Custom content services: Through StudioID, the businesses support marketers with their end-to-end content strategy, offering proprietary audience research to inform campaigns, strategic design and development, and original content production. Marketers leverage<br>the businesses’ award-winning deep industry expertise to create journalistic, search engine optimized content across 40 different formats and multiple languages, which can then be distributed across our network. The businesses also offer<br>content licensing through Marketplace, whereby marketers curate relevant content from a selection of publishers, and then distribute the content on their own channels to align themselves with top voices in their industries. |
| --- | --- |
| • | Intelligence subscription services: Operating through the Omdia brand, as well as niche brands Canalys and Wards<br>Intelligence, the specialist tech research business is primarily an “intelligence” subscription service, providing clients with a core “data backbone” in addition to qualitative analyst-produced content across the technology<br>industry spectrum. The data is typically comprised of market trackers, market sizing, market share analyses and forecasts, and is complimented by expert industry reports, analyst opinions and an “Ask an Analyst” service. Covering more than<br>3,000 topics and tracking over 12,000 companies, the businesses’ 300+ expert analysts and consultants provide quantitative and qualitative insights that help companies make better decisions,<br>faster.^^ |
| --- | --- |
| • | Advisory: In the consulting business, the businesses work as an extension of client teams, working together to<br>provide strategic support in assessing critical business challenges and providing bespoke solutions. The businesses leverage the breadth and depth of their analyst expertise to evaluate clients’ end-to-end business needs across go-to-market, competitive positioning, new product ideation, market entry and growth<br>strategies. |
| --- | --- |
The Transaction
On January 10, 2024, Informa entered into an Agreement and Plan of Merger (the “Transaction Agreement”) with TechTarget Holdings, Inc. (formerly known as TechTarget, Inc.) (“Former TechTarget”) and certain Informa and Former TechTarget subsidiaries. Pursuant to the Transaction Agreement, Informa and Former TechTarget, among other things, agreed to combine Former TechTarget with Informa Intrepid Holdings Inc. (“Informa Intrepid”), a wholly owned subsidiary of Informa, to create a new US-listed company, TechTarget, Inc. (“New TechTarget”), a leading platform in B2B data and market access (the “Transaction”).
Prior to the closing of the Transaction, Informa undertook certain restructuring transactions to separate the Informa Tech Digital Businesses and as of the closing of the Transaction all Informa Tech Digital Businesses were held directly or indirectly by Informa Intrepid.
The Transaction closed on December 2, 2024 (the “Closing Date”). At the closing, in exchange for an aggregate of 41,651,366 shares of New TechTarget’s common stock, par value $0.001 per share (“New TechTarget common stock”), Informa contributed Informa Intrepid and $350.0 million (collectively, the “Contribution”) in cash to New TechTarget and Informa Intrepid, with the Business, merged with and into Former TechTarget, with Former TechTarget as the surviving corporation (the “Merger”). As a result of the Merger, each issued and outstanding share of Former TechTarget common stock as of immediately prior the effective time of the Merger, were converted into the right to receive (i) one share of New TechTarget common stock and (ii) pro rata share amount of the $350.0 million cash contribution. Informa owns approximately 57% of New TechTarget on a fully diluted basis as of the Closing Date.
Critical Accounting Policies and Use of Estimates
Preparation of the accompanying combined financial statements requires management to make judgments, assumptions and estimates regarding uncertainties that could affect reported revenue, expenses, assets, liabilities and equity. The most significant areas where management’s judgments, assumptions and estimates impact the combined financial statements are described below. Actual results in these areas could differ materially from management’s estimates under different assumptions and conditions. Significant accounting policies are described fully in Note 2. Significant accounting policies in the Informa Tech Digital Businesses Audited Financial Statements.
Basis of Presentation and Corporate Expense allocations
The accompanying combined financial statements and related notes represent the business referred to as the Informa Tech Digital Businesses. The accompanying combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Informa Tech Digital Businesses have historically operated as part of the Informa Tech division of Informa PLC (“Informa” or “Parent”) and not as a standalone entity and have no separate legal status or existence. As such, the financial position and results of operations have been derived from Informa’s historical accounting records and are presented on a carve-out basis. Intercompany transactions, profits and balances among the Informa Tech Digital Businesses’ entities have been eliminated. Sale and purchase transactions between the Informa Tech Digital Businesses and other Informa affiliates are included in the combined financial statements.
The accompanying combined financial statements reflect charges for costs directly related to the Informa Tech Digital Businesses. The Informa Tech Digital Businesses have been allocated a portion of costs incurred by Informa for certain central functions and other operations that are used by the Informa Tech Digital Businesses, including but not limited to executive oversight, finance, treasury, tax, legal, human resources, technology, marketing and other shared services. All such costs are reflected in the accompanying combined financial statements. These costs are allocated using a methodology that Management believes is reasonable for the item being allocated. Allocation methodologies include the Business’s relative share of revenues, headcount, usage, or functional spend as a percentage of the total. While management believes the methodologies and assumptions used to allocate these costs are reasonable, the combined financial statements do not purport to represent the financial position, results of operations, changes in equity, and cash flows of the Informa Tech Digital Businesses in the future, or what such costs would have been had the Informa Tech Digital Businesses operated as a stand-alone entity during the periods presented.
Revenue Recognition
Revenue is recognized as the Business satisfies a performance obligation, based upon transfer of control of promised products or services to clients in an amount that reflects the consideration to which the Business expects to be entitled in exchange for those products or services. Some of the Business’ performance obligations are satisfied over time as the product or service is transferred to the client. Performance obligations which are not satisfied over time are satisfied at a point in time.
The Informa Tech Digital Businesses enter into contracts that can include various combinations of its offerings which are generally capable of being distinct and accounted for as a separate performance obligation.
When performance obligations are combined into a single contract, the Business utilizes the stand-alone selling price (“SSP”) of each product or service to allocate the transaction price among the performance obligations, which is generally determined based on the prices charged to the clients or using expected cost plus a margin, with any discounts allocated across the performance obligations. Revenue for each category type of revenue is typically fixed at the date of the order and is not variable.
Goodwill andLong-Lived Assets
The Informa Tech Digital Businesses apply the purchase method of accounting to business combinations. All of the assets acquired, liabilities assumed, and contingent consideration are allocated based on their estimated fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the net tangible and identifiable intangible assets acquired and liabilities assumed.
The determination of the fair value of identifiable intangible assets involves significant assumptions and estimates, including, but not limited to, future customer attrition, discount rates, royalty rates, useful economic lives and expected future cash flows. Although management believes the assumptions and estimates to be reasonable and appropriate, they require judgment and are based on experience and historical information from all of the acquired entities. A change in these estimates could cause a materially different value of intangible assets to be recognized with an opposing impact on the goodwill arising from the transaction.
In relation to the acquisition of Canalys in September 2023, the most significant estimate is the customer attrition rate used in the determination of the fair value of customer relationships and the royalty rate used and period over which royalties would be earned in relation to the determination of the fair value of content. Upon acquisition in 2023, a 2% decrease in the attrition rate would result in a $1.2 million increase to customer relationships fair value, while a 2% increase would result in a $1.0 million decrease to the fair value. A 2% increase (decrease) in the royalty rate would result in a $0.8 million increase (decrease) in content fair value. Reducing the period over which royalties would be received by five years would result in a $1.8 million decrease to content fair value, while increasing the period by five years would result in a $3.8 million increase to content fair value.
In relation to the acquisition of Industry Dive in September 2022, the most significant estimate is the customer attrition rate used in the determination of the fair value of customer relationships and the royalty rate used and period over which royalties would be earned in relation to the determination of the fair value of trade names. Upon acquisition in 2022, a 2% decrease in the attrition rate would result in a $15.5 million increase to the customer relationships fair value, while a 2% increase would result in a $13.1 million decrease to the fair value. Reducing the period over which royalties would be received by five years would result in a $14.6 million decrease in the trade names fair value, while increasing the period by five years would result in a $8.3 million increase to the fair value. A 2% increase (decrease) in the royalty rate would result in a $0.6 million increase (decrease) in the trade names fair value.
In relation to the acquisition of NetLine in November 2021, the most significant estimate is the customer attrition rate used in the determination of customer relationships fair value and the royalty rate used in relation to the determination of the fair value of brands. Upon acquisition in 2021, a 2% decrease in the attrition rate would result in a $2.2 million increase to customer relationships fair value, while a 2% increase would result in a $1.9 million decrease to the fair value. A 2% increase (decrease) in the royalty rate would result in a $3.8 million increase (decrease) to the fair value of brands.
The Informa Tech Digital Businesses evaluate long-lived assets, including property, equipment, and intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill is tested annually for impairment in the fourth fiscal quarter, or when events and circumstances indicate an impairment may have occurred.
Among the factors that could trigger an impairment review are a reporting unit’s operating results significantly declining relative to its operating plan or historical performance, and competitive pressures and changes in the general markets in which it operates. In assessing goodwill for impairment, the Informa Tech Digital Businesses may first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If this assessment concludes that it is more likely than not that the fair value is more than its carrying value of a reporting unit, goodwill is not considered impaired and the quantitative goodwill impairment test is not required to be performed.
If the aforementioned impairment assessment concludes that it is more likely than not that the fair value is less than its carrying value, the Informa Tech Digital Businesses perform the quantitative goodwill impairment test, which compares the fair value of the reporting unit to its carrying value. Impairments, if any, are based on the excess of the carrying amount over the fair value. The Informa Tech Digital Businesses estimate the fair value of their reporting units primarily using an income approach. The following are key assumptions and values assigned in the fair value calculations:
| • | Projected cash flows: Management used a three-stage valuation approach to project impairment test cash flows. The<br>first stage consisted of approved projected financial information for a period of four years, followed by a transitional period of two years of normalization and declining growth rates and, thereafter, a steady state period of long-term growth.<br>Forecasts for the first and the second stage include management expectations of the reporting unit’s financial performance and represent the best estimate of the future performance of the reporting units. |
|---|---|
| • | Discount rate: The projected cash flows are discounted to their present value using a weighted average cost of<br>capital discount rate methodology. For the cost of debt, the Informa Tech Digital Businesses considered market rates, based on entities with a comparable credit rating. The cost of equity is calculated using the Capital Asset Pricing Model<br>methodology. The discount rates include appropriate risk premiums to reflect additional risks of the specific reporting units being tested. |
| --- | --- |
| • | Long-term growth rate: Long-term growth rates are based on external reports on long-term Consumer Price Index<br>rates for the main geographic markets in which each reporting unit operates and therefore are not considered to exceed the long-term average growth prospects for the individual markets. Long-term growth rates have not been risk adjusted to reflect<br>any of Informa Tech Digital Businesses’ uncertainties noted above, as these uncertainties are already reflected in the discount rates used. |
| --- | --- |
Significant judgments are required in assessing these assumptions. These estimates can be affected by several factors, including general economic, industry, and regulatory conditions; the risk-free interest rate environment; and our ability to achieve our forecasted operating results. Although management believes the assumptions and estimates to be reasonable and appropriate, they require judgment and changes in these estimates and assumptions could materially affect the determination of fair value, whether an impairment exists and, if so, the amount of that impairment.
The Informa Tech Digital Businesses have recently been affected by macro-economic conditions, in particular the negative impact of rising interest rates on the technology industry, which has impacted investment levels and overall marketing expenditure. In 2023, the Informa Tech Digital Businesses were also impacted by the return of physical events following the relaxation of COVID-19 pandemic related restrictions, which led to some rebalancing of marketing budgets away from digital marketing into physical events. As a result, during the first quarter of 2023, when remeasuring the fair value of the contingent consideration related to the acquisition, a reduction was made to the short-term 2023 revenue forecast for the Industry Dive reporting unit. As this was considered to be an indicator of impairment, a quantitative analysis was performed, which concluded that the fair value continued to exceed the carrying value because the long-term projections of the business remained unchanged.
Subsequently, in the second quarter of 2023, with macro-economic conditions remaining challenging, management revised its long-term revenue projections for the Industry Dive business, lowering expectations for its core email and website sponsorship/advertising products to reflect more constrained budgets among its current and expected key customers. Following this change in assumptions, another quantitative impairment analysis was performed for the Industry Dive reporting unit, which indicated that its carrying value now exceeded its fair value. Therefore, an impairment charge of $130.1 million was recognized against the goodwill of the Industry Dive reporting unit.
The fair value of Industry Dive was determined by discounting its projected cash flows at the post-tax discount rate of 12.1% and using a 2.2% long-term growth rate, as determined following the methodology above. A sensitivity analysis considered the impact of changes to several key assumptions that were considered in isolated scenarios, including a hypothetical 10% reduction in all cash flow years including the perpetuity year, a 1% increase in the discount rate, and a 0.50% reduction in the long-term growth rate, with higher total levels of impairment ranging from $142.3 million to $169.2 million under these sensitivities scenarios.
As the macro-economic conditions also impacted NetLine, the Business performed a quantitative impairment analysis for the NetLine reporting unit which indicated the fair value exceeded its carrying value by 14.5%. The fair value of NetLine was determined by discounting its projected cash flows at the post-tax discount rate of 14.1% and using a 2.2% long-term growth rate, as determined following the methodology above. A sensitivity analysis considered the impact of changes to several key assumptions that were considered in isolated scenarios, including a hypothetical 10% reduction in all cash flow years including the perpetuity year which would reduce headroom to $1.8 million, a 1% increase in the discount rate, which would reduce headroom to $3.2 million, and a 0.5% reduction in the long-term growth rate, which would reduce headroom to $7.2 million.
During the annual goodwill impairment test, there were either no indicators of impairment, or where such indicators existed, the results of the December 31, 2023 impairment test showed that fair value exceeded the carrying amount for all reporting units and therefore that no further impairment charge was required.
For the nine months ended September 30, 2024 there were no indicators of impairment and therefore no further impairment charge was required.
Furthermore, no impairment charges were recognized during the 2022 and 2021 annual goodwill impairment assessment tests, as either management’s qualitative assessments did not indicate that it was more likely than not that the reporting units’ carrying amounts exceeded their fair values, or, where a quantitative assessment was performed, that the calculated carrying amount of the reporting units was higher than their corresponding fair value at the respective testing dates.
Business Combinations
Accounting for business combinations requires the Informa Tech Digital Businesses’ management to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed. Informa Tech Digital Businesses use its best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets.
Significant assumptions and estimates used in determination of fair value include future customer attrition, discount rates, royalty rates, useful economic lives and expected future cash flows. Although management believes the assumptions and estimates to be reasonable and appropriate, they require judgment and are based on experience and historical information from all of the acquired entities.
At the acquisition date of a business combination and at each subsequent balance sheet date, consideration contingent on future performance over the contractual earn-out period are remeasured to fair value. Informa Tech Digital Businesses utilizes significant estimates and assumptions in determining the estimated contingent consideration and associated expense or gain at each balance sheet date. The liabilities are measured against the contractually agreed performance targets at each subsequent reporting date with any adjustments recognized in the combined income statement. The estimation of these liabilities requires Informa Tech Digital Businesses to make judgements concerning the future performance of related businesses over the contingent consideration period. The estimation uncertainty risk of payments greater than one year is higher due to the forecast nature of the inputs.
Components of Results of Operations
Total Revenue
The Informa Tech Digital Businesses help technology companies accelerate growth through first party B2B data, market insight and market access (see “Product and Service Offerings” above). The Informa Tech Digital Businesses recognize revenue when performance obligations are satisfied by transferring promised goods and services to clients in an amount the Informa Tech Digital Businesses expect to receive in exchange for those goods or services. The Informa Tech Digital Businesses enter into contracts that can include various combinations of its offerings which are generally capable of being distinct and accounted for as a separate performance obligation.
When performance obligations are combined into a single contract, the Informa Tech Digital Businesses utilize stand-alone selling price (“SSP”) to allocate the transaction price among the performance obligations which is generally determined based on the prices charged to the clients or using expected cost plus a margin.
Revenue is disaggregated into four categories: Marketing, advertising services and sponsorship, Intelligence subscription services, Advisory services and Exhibitor and attendee revenue. A description of the revenue recognition policy for each category of revenue is included in Note 2. Significant accounting policies of the Informa Tech Digital Businesses Audited Financial Statements.
These products and services are delivered under both short-term contracts that run for the length of a given marketing/sales program, typically less than nine months, and through integrated contracts exceeding 270 days (“longer-term contracts”) covering various client needs. Longer-term contracts include a range of annual subscription products, which are paid for annually in advance. In the three months ended September 30, 2024 and 2023, 39.3% and 39.2% of our revenues were from longer-term contracts, respectively. In the nine months ended September 30, 2024 and 2023, 38.0% and 37.5% of our revenues were from longer-term contracts, respectively.
As a result of the Transaction, Management does not anticipate any significant elements of the Informa Tech Digital Businesses’ revenue to be discontinued as part of post-transaction operations.
Cost of revenues
Cost of revenues primarily consists of salaries and related personnel costs for research, editorial and consulting employees, lead generation expenses, freelance contractor expenses, website hosting costs, and other related overheads.
Selling and marketing
Selling and marketing expenses consist primarily of salaries and related personnel costs, sales commissions, facility expenses, advertising costs, and other related overheads.
General and administrative
General and administrative expenses consist primarily of salaries and related personnel costs, facility expenses and related overheads, accounting, legal and other professional fees, bad debt provision, and stock-based compensation expenses.
Product development
Product development includes the creation of the Informa Tech Digital Businesses’ network of websites and data analytics framework, advertiser offerings and technical infrastructure.
Acquisition and integration costs
Acquisition-related costs that are not part of the purchase price consideration are generally expensed as incurred. These costs typically include transaction-related costs, including those for the Transaction with Former TechTarget, such as finder’s fees, legal, accounting, and other professional costs. Integration-related costs represent costs that relate directly to combining the Informa Tech Digital Businesses and its acquired businesses. Integration-related costs typically include strategic consulting services, employee-related costs, such as retention and severance, costs to integrate IT infrastructure, enterprise planning systems, processes, and other non-recurring integration-related costs.
Depreciation
Depreciation expense consists of the depreciation of property and equipment. Depreciation is calculated using the straight-line method over their estimated useful lives, ranging from three to five years.
Amortization
Amortization expense consists of the amortization of intangible assets. Intangible assets are amortized on a straight-line basis over the estimated useful lives of the underlying assets.
Impairment of long-lived assets and goodwill
Impairment of long-lived assets and goodwill primarily relates to lease impairment and goodwill impairment in one reporting unit as the carrying amount exceeded the fair value.
Remeasurement of contingent consideration
Remeasurement of contingent consideration relates to the fair value adjustment of acquisition related contingent consideration.
Interest income
Interest income is primarily on related-party loans, by reference to the principal outstanding and at the effective interest rate applicable.
Interest expense
Interest expense consists primarily of interest on related-party loans at the effective interest rate applicable.
Other income (expense), net
Other income (expense), net, consists of unrealized/realized foreign currency exchange losses and one-time gains and losses and other miscellaneous income and expense items unrelated to core operations.
Income tax benefit
The Informa Tech Digital Businesses’ current and deferred taxes are computed on a separate return basis as a carve-out of Informa. The Informa Tech Digital Businesses account for income taxes using the asset and liability method under GAAP, whereby deferred income taxes are recognized for the tax consequences of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Income tax expense reflects income earned and taxed, in jurisdictions in which the Informa Tech Digital Businesses conduct business, which mainly include the United Kingdom and United States federal and state income taxes.
Results of Operations
The following table sets forth a summary of certain key financial information for the three and nine months ended September 30, 2024 and 2023:
| For the Three Months<br><br><br>Ended September 30, | Percent<br><br><br>Change | For the Nine Months<br><br><br>Ended September 30, | Percent<br><br><br>Change | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| Revenue | 62,742 | 59,404 | 5.6 | % | 185,020 | 176,318 | 4.9 | % | ||||||||||
| Cost of revenues | (23,814 | ) | (22,474 | ) | 6.0 | % | (74,484 | ) | (70,026 | ) | 6.4 | % | ||||||
| Gross profit | 38,928 | 36,930 | 5.4 | % | 110,536 | 106,292 | 4.0 | % | ||||||||||
| Operating expenses: | ||||||||||||||||||
| Selling and marketing | 14,217 | 13,274 | 7.1 | % | 42,096 | 40,896 | 2.9 | % | ||||||||||
| General and administrative | 18,205 | 18,683 | (2.6 | %) | 53,909 | 50,327 | 7.1 | % | ||||||||||
| Product development | 2,571 | 2,305 | 11.5 | % | 8,499 | 8,399 | 1.2 | % | ||||||||||
| Depreciation | 386 | 156 | 147.4 | % | 1,173 | 454 | 158.4 | % | ||||||||||
| Amortization, excluding amortization included in cost of revenues | 8,131 | 7,687 | 5.8 | % | 24,414 | 22,806 | 7.1 | % | ||||||||||
| Impairment of goodwill | — | — | — | — | 130,132 | (100.0 | %) | |||||||||||
| Impairment of long-lived assets | — | — | — | 2,019 | 159 | 1,169.8 | % | |||||||||||
| Acquisition and integration costs | 8,438 | 3,195 | 164.1 | % | 38,086 | 5,285 | 620.6 | % | ||||||||||
| Remeasurement of contingent consideration | (300 | ) | (2,400 | ) | (87.5 | %) | 2,363 | (100,910 | ) | (102.3 | %) | |||||||
| Total operating expenses | 51,648 | 42,900 | 20.4 | % | 172,559 | 157,548 | 9.5 | % | ||||||||||
| Operating loss | (12,720 | ) | (5,970 | ) | 113.1 | % | (62,023 | ) | (51,256 | ) | 21.0 | % | ||||||
| Interest expense | — | (4 | ) | (100.0 | %) | — | (4 | ) | (100.0 | %) | ||||||||
| Interest expense on related party loans | (5,761 | ) | (6,109 | ) | (5.7 | %) | (18,554 | ) | (18,179 | ) | 2.1 | % | ||||||
| Interest income | 873 | 745 | 17.2 | % | 4,422 | 2,019 | 119.0 | % | ||||||||||
| Other income (expense), net | (1,731 | ) | 471 | (467.5 | %) | (1,360 | ) | (520 | ) | 161.5 | % | |||||||
| Loss before provision for income taxes | (19,339 | ) | (10,867 | ) | 78.0 | % | (77,515 | ) | (67,940 | ) | 14.1 | % | ||||||
| Income tax benefit | 3,682 | 860 | 328.1 | % | 6,542 | 7,079 | (7.6 | %) | ||||||||||
| Net loss | (15,657 | ) | (10,007 | ) | 56.5 | % | (70,973 | ) | (60,861 | ) | 16.6 | % | ||||||
| Basic and diluted net loss per share* | $ | (0.38 | ) | $ | (0.24 | ) | $ | (1.70 | ) | $ | (1.46 | ) |
Supplemental Pro Forma Information
| For the Year Ended December 31, | For the Six Months<br><br><br>Ended June 30, | For the Three Months<br><br><br>Ended March 31, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2021 | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Basic and diluted net income (loss) per share* | $ | (1.26 | ) | $ | 0.08 | $ | 0.43 | $ | (1.33 | ) | $ | (1.22 | ) | $ | (0.49 | ) | $ | 1.84 |
| * | Net income (loss) per share is calculated utilizing the 41,651,366 shares of New TechTarget common stock that<br>were issued to Informa in exchange for the Contribution. The total number of shares issued to Informa is being utilized for the calculation of both basic and diluted earnings (loss) per share for all periods presented. | |||||||||||||||||
| --- | --- |
Comparison of the Three Months Ended September 30, 2024 and 2023
Revenue
| Three Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||
| Marketing, advertising services and sponsorship | $ | 35,369 | $ | 35,147 | $ | 222 | 0.6 | % | |
| Intelligence subscription services | 18,773 | 16,056 | 2,717 | 16.9 | % | ||||
| Advisory services | 8,215 | 7,902 | 313 | 4.0 | % | ||||
| Exhibitor and attendee | 385 | 299 | 86 | 28.8 | % | ||||
| Total Revenue | $ | 62,742 | $ | 59,404 | $ | 3,338 | 5.6 | % |
Revenue for the three months ended September 30, 2024 was $62.7 million, an increase of $3.3 million, or 5.6%, compared to the three months ended September 30, 2023. This reflected growth in the subscriptions business due to the impact of the Canalys acquisition, which was acquired in September 2023.
Cost of Revenues
| Three Months EndedSeptember 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||
| Cost of revenues | $ | 23,814 | $ | 22,474 | $ | 1,340 | 6.0 | % |
Cost of revenues for the three months ended September 30, 2024 was $23.8 million, an increase of $1.3 million, or 6.0%, compared to the three months ended September 30, 2023. The increase is primarily due to the impact of the Canalys acquisition.
Operating Expenses
Selling and marketing
| Three Months EndedSeptember 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||
| Selling and marketing | $ | 14,217 | $ | 13,274 | $ | 943 | 7.1 | % |
Selling and marketing expenses for the three months ended September 30, 2024 were $14.2 million, an increase of $0.9 million, or 7.1%, compared to the three months ended September 30, 2023. This was primarily due to increased digital marketing spend in Industry Dive to support a product mix change.
General and administrative
| Three Months EndedSeptember 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | ||||||
| General and administrative | $ | 18,205 | $ | 18,683 | $ | (478 | ) | (2.6 | %) |
General and administrative expenses for the three months ended September 30, 2024 were $18.2 million, a decrease of $0.5 million, or 2.6%, compared to the three months ended September 30, 2023, which is broadly in line with prior period’s expense as management continues to monitor costs closely.
Product development
| Three Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||
| Product development | $ | 2,571 | $ | 2,305 | $ | 266 | 11.5 | % |
Product development expenses for the three months ended September 30, 2024 were $2.6 million, an increase of $0.3 million, or 11.5%, compared to the three months ended September 30, 2023 due to a slight increase in employees in Industry Dive.
Depreciation
| Three Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||
| Depreciation | $ | 386 | $ | 156 | $ | 230 | 147.4 | % |
Depreciation expense for the three months ended September 30, 2024 was $0.4 million, an increase of $0.2 million, or 147.4%, compared to the three months ended September 30, 2023. The higher depreciation was a result of investment in office space across the Asia Pacific region in the fourth quarter of fiscal year 2023.
Amortization
| Three Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br><br><br>(Decrease) | Percent<br><br><br>Change | |||||
| Amortization, excluding amortization in cost of revenue | $ | 8,131 | $ | 7,687 | $ | 444 | 5.8 | % | |
| Amortization included in cost of revenues | 158 | 21 | 137 | 652.4 | % | ||||
| Amortization | $ | 8,289 | $ | 7,708 | $ | 581 | 7.5 | % |
Amortization expense for the three months ended September 30, 2024 was $8.3 million, an increase of $0.6 million, or 7.5%, compared to the three months ended September 30, 2023. The increase was due to the amortization of acquired intangible assets of Canalys following its acquisition in September 2023, as well as movements in foreign exchange rates, specifically U.S. dollars (“USD”) versus Great British Pounds (“GBP”).
Acquisition and Integration Costs
| Three Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||
| Acquisition and integration costs | $ | 8,438 | $ | 3,195 | $ | 5,243 | 164.1 | % |
Acquisition and integration costs for the three months ended September 30, 2024 were $8.4 million, an increase of $5.2 million, or 164.1%, compared to the three months ended September 30, 2023. Of the increase, $5.5 million is due to acquisition costs incurred in the three months ended September 30, 2024 relating to the Transaction with Former TechTarget, including legal, professional accounting and advisor costs. This is partially offset by lower integration costs in the current period relating to the acquisitions of Canalys in 2023 and Industry Dive in 2022.
Remeasurement of Contingent Consideration
| Three Months Ended<br>September 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | ||||||||
| Remeasurement of contingent consideration | $ | (300 | ) | $ | (2,400 | ) | $ | (2,100 | ) | (87.5 | %) |
Remeasurement of contingent consideration for the three months ended September 30, 2024 was a gain of $0.3 million, a change of $2.1 million compared to a gain of $2.4 million recorded for the three months ended September 30, 2023. In the three months ended September 30, 2024, the remeasurement gain is primarily driven by a change in the short-term 2025 revenue forecasts of Industry Dive.
Interest Expense
| Three Months Ended<br>September 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | ||||||
| Interest expense | $ | — | $ | 4 | $ | (4 | ) | (100.0 | %) | |
| Interest expense on related party loans | 5,761 | 6,109 | (348 | ) | (5.7 | %) | ||||
| Total interest expense | $ | 5,761 | $ | 6,113 | $ | (352 | ) | (5.8 | %) |
Interest expense for the three months ended September 30, 2024 was $5.8 million, a decrease of $0.4 million, or 5.8%, compared to the three months ended September 30, 2023. The interest expense in both periods primarily relates to a related party loan used to fund the acquisition of Industry Dive in 2022, which was settled in August 2024 resulting in lower interest expense in the three months ended September 30, 2024.
Interest Income
| Three Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||
| Interest income | $ | 873 | $ | 745 | $ | 128 | 17.2 | % |
Interest income for the three months ended September 30, 2024 was $0.9 million, an increase of $0.1 million, or 17.2%, compared to the three months ended September 30, 2023. The increase in interest income is primarily due to interest received on higher cash balances.
Other Income (Expense), Net
| Three Months Ended<br>September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||||
| Other income (expense), net | $ | (1,731 | ) | $ | 471 | $ | (2,202 | ) | (467.5 | %) |
Other income (expense), net, for the three months ended September 30, 2024 was a net expense of $1.7 million, a decrease of $2.2 million compared to a net income of $0.5 million in the three months ended September 30, 2023. The decrease was due to changes in foreign exchange rates, specifically U.S. dollars (“USD”) versus Great British Pounds (“GBP”).
Income Tax Benefit
| Three Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||
| Income tax benefit | $ | 3,682 | $ | 860 | $ | 2,822 | 328.1 | % |
Income tax benefit for the three months ended September 30, 2024 was $3.7 million, an increase of $2.8 million compared to the income tax benefit of $0.9 million in the three months ended September 30, 2023. The effective tax rate was 19.0% and 7.9% for the three months ended September 30, 2024 and 2023, respectively. In the three months ended September 30, 2024, the effective tax rate was larger primarily due to an increased full year forecast pre-tax loss in the U.S. as compared to the position at June 30, 2024. In the three months ended September 30, 2024, the pre-tax loss was proportionally larger than the previous quarters, as compared to the three months ended September 30, 2023, which also contributed to a larger benefit being recorded.
Comparison of the Nine Months Ended September 30, 2024 and 2023
Revenue
| Nine Months Ended<br>September 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | ||||||
| Marketing, advertising services and sponsorship | $ | 105,325 | $ | 106,385 | $ | (1,060 | ) | (1.0 | %) | |
| Intelligence subscription services | 56,575 | 48,343 | 8,232 | 17.0 | % | |||||
| Advisory services | 22,498 | 21,030 | 1,468 | 7.0 | % | |||||
| Exhibitor and attendee | 622 | 560 | 62 | 11.1 | % | |||||
| Total Revenue | $ | 185,020 | $ | 176,318 | $ | 8,702 | 4.9 | % |
Revenue for the nine months ended September 30, 2024 was $185.0 million, an increase of $8.7 million, or 4.9%, compared to the nine months ended September 30, 2023. This reflected growth in the subscriptions business due to the impact of the Canalys acquisition in September 2023.
Cost of Revenues
| Nine Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/<br>(Decrease) | Percent<br>Change | |||||
| Cost of revenues | $ | 74,484 | $ | 70,026 | $ | 4,458 | 6.4 | % |
Cost of revenues for the nine months ended September 30, 2024 was $74.5 million, an increase of $4.5 million, or 6.4%, compared to the nine months ended September 30, 2023. The increase is largely due to the inclusion of Canalys results in the nine months ended September 30, 2024, following its acquisition in September 2023, as well as an increase in investment in employees to support product growth.
Operating Expenses
Selling and marketing
| Nine Months EndedSeptember 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | |||||
| Selling and marketing | $ | 42,096 | $ | 40,896 | $ | 1,200 | 2.9 | % |
Selling and marketing expenses for the nine months ended September 30, 2024 were $42.1 million, an increase of $1.2 million, or 2.9%, compared to the nine months ended September 30, 2023. The increase was primarily due to the inclusion of Canalys results following its acquisition in September 2023 and an increase in Industry Dive digital marketing spend, partially offset by a reduction in employees.
General and administrative
| Nine Months EndedSeptember 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | |||||
| General and administrative | $ | 53,909 | $ | 50,327 | $ | 3,582 | 7.1 | % |
General and administrative expenses for the nine months ended September 30, 2024 were $53.9 million, an increase of $3.6 million, or 7.1%, compared to the nine months ended September 30, 2023. The increase was primarily due to the inclusion of Canalys results following its acquisition in September 2023, as well as an increase in payroll costs due to change in employee mix predominantly in the Omdia and NetLine businesses.
Product development
| Nine Months EndedSeptember 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | |||||
| Product development | $ | 8,499 | $ | 8,399 | $ | 100 | 1.2 | % |
Product development expenses for the nine months ended September 30, 2024 were $8.5 million, an increase of $0.1 million, or 1.2%, compared to the nine months ended September 30, 2023 due to slight increase in employees in Industry Dive.
Depreciation
| Nine Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | |||||
| Depreciation | $ | 1,173 | $ | 454 | $ | 719 | 158.4 | % |
Depreciation expense for the nine months ended September 30, 2024 was $1.2 million, an increase of $0.7 million, or 158.4%, compared to the nine months ended September 30, 2023. The higher depreciation was a result of investment in office space across the Asia Pacific region in the fourth quarter of fiscal year 2023.
Amortization
| Nine Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | |||||
| Amortization, excluding amortization in cost of revenue | $ | 24,414 | $ | 22,806 | $ | 1,608 | 7.1 | % | |
| Amortization included in cost of revenues | 403 | 21 | 382 | 1,819.0 | % | ||||
| Amortization | $ | 24,817 | $ | 22,827 | $ | 1,990 | 8.7 | % |
Amortization expense for the nine months ended September 30, 2024 was $24.8 million, an increase of $2.0 million, or 8.7%, compared to the nine months ended September 30, 2023. The increase was due to the amortization of acquired intangible assets of Canalys following its acquisition in September 2023, as well as movements in foreign exchange rates, specifically U.S. dollars (“USD”) versus Great British Pounds (“GBP”).
Impairment of Goodwill
| Nine Months Ended<br>September 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | ||||||
| Impairment of goodwill | $ | — | $ | 130,132 | $ | (130,132 | ) | (100.0 | %) |
Impairment of goodwill for the nine months ended September 30, 2024 was $nil, a decrease of $130.1 million, or 100% compared to the nine months ended September 30, 2023. The decrease was due to the impairment of the Industry Dive reporting unit in June 2023. The decline in fair value of the reporting unit was attributed to revised long-term revenue projections resulting from lower expectations for its core email and website sponsorship/advertising products to reflect more constrained budgets among its key customers.
Impairment of Long-Lived Assets
| Nine Months Ended<br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | |||||
| Impairment of long-lived assets | $ | 2,019 | $ | 159 | $ | 1,860 | 1,169.8 | % |
Impairment of long-lived assets for the nine months ended September 30, 2024 was $2.0 million, an increase of $1.9 million, or 1,169.8% compared to the nine months ended September 30, 2023. The increase was mainly due to the exit from and associated impairment of Industry Dive’s Washington, DC office in March 2024.
Acquisition and Integration Costs
| Nine Months EndedSeptember 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | |||||
| Acquisition and integration costs | $ | 38,086 | $ | 5,285 | $ | 32,801 | 620.6 | % |
Acquisition and integration costs for the nine months ended September 30, 2024 were $38.1 million, an increase of $32.8 million, or 620.6%, compared to the nine months ended September 30, 2023. Of the increase, $32.5 million is due to acquisition costs incurred in the nine months ended September 30, 2024 relating to the Transaction with Former TechTarget., including legal, professional accounting and advisor costs. The remaining increase reflects the continuation of integration costs following the acquisition of Canalys in 2023 and Industry Dive in 2022.
Remeasurement of Contingent Consideration
| Nine Months EndedSeptember 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | |||||||
| Remeasurement of contingent consideration | $ | 2,363 | $ | (100,910 | ) | $ | (103,273 | ) | (102.3 | %) |
Remeasurement of contingent consideration for the nine months ended September 30, 2024 was a loss of $2.4 million, a change of $103.3 million compared to a gain of $100.9 million recorded for the nine months ended September 30, 2023. In the nine months ended September 30, 2023, the amount reflected a reduction in Industry Dive’s revenue growth, which resulted in a reduction in the fair value of the 2023 contingent consideration arrangement, hence generating a gain upon remeasurement. In the nine months ended September 30, 2024, the remeasurement loss primarily relates to the unwind of the discount on the contingent consideration, resulting in an increase in the fair value of the contingent consideration arrangement.
Interest Expense
| Nine Months Ended<br>September 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | ||||||
| Interest expense | $ | — | $ | 4 | $ | (4 | ) | (100.0 | %) | |
| Interest expense on related party loans | 18,554 | 18,179 | 375 | 2.1 | % | |||||
| Total interest expense | $ | 18,554 | $ | 18,183 | $ | 371 | 2.0 | % |
Interest expense for the nine months ended September 30, 2024 was $18.6 million, an increase of $0.4 million, or 2.0%, compared to the nine months ended September 30, 2023. The interest expense in both periods primarily relate to a related party loan used to fund the acquisition of Industry Dive in 2022.
Interest Income
| Nine Months EndedSeptember 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | |||||
| Interest income | $ | 4,422 | $ | 2,019 | $ | 2,403 | 119.0 | % |
Interest income for the nine months ended September 30, 2024 was $4.4 million, an increase of $2.4 million, or 119.0%, compared to the nine months ended September 30, 2023. The increase in interest income is primarily due to interest received on higher cash balances.
Other Income (Expense), Net
| Nine Months EndedSeptember 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | ||||||||
| Other income (expense), net | $ | (1,360 | ) | $ | (520 | ) | $ | (840 | ) | 161.5 | % |
Other income (expense), net, for the nine months ended September 30, 2024 was a net expense of $1.4 million, a decrease of $0.8 million compared to a net expense of $0.5 million in the nine months ended September 30, 2023. The increase was due to changes in foreign exchange rates, specifically U.S. dollars (“USD”) versus Great British Pounds (“GBP”).
Income Tax Benefit
| Nine Months EndedSeptember 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | Increase/(Decrease) | PercentChange | ||||||
| Income tax benefit | $ | 6,542 | $ | 7,079 | $ | (537 | ) | (7.6 | %) |
Income tax benefit for the nine months ended September 30, 2024 was $6.5 million, a decrease of $0.5 million compared to the income tax benefit of $7.1 million in the nine months ended September 30, 2023. The effective tax rate was 8.4% and 10.4% for the nine months ended September 30, 2024 and 2023, respectively. In the nine months ended September 30, 2024, the effective tax rate was mainly driven by pre-tax losses and non-deductible acquisition and integration costs of $7.9 million. In the nine months ended September 30, 2023, the effective tax rate was mainly driven by pre-tax losses and a non-deductible goodwill impairment that was partially offset by non-taxable remeasurement of contingent consideration, for a net impact of $4.4 million. While the pre-tax losses were greater in 2024, the increase in the non-deductible expenses led to a decreased tax benefit compared to 2023.
Liquidity and Capital Resources
The Informa Tech Digital Businesses’ operations have historically participated in various cash management and funding arrangements managed by Informa. As part of Informa, the Informa Tech Digital Businesses have been dependent on Informa for working capital and financing requirements as Informa uses a centralized approach for cash management and financing of its operations. In particular, Informa provided the funding for the acquisitions of Canalys, Industry Dive and NetLine made in 2023, 2022 and 2021 respectively.
The Informa Tech Digital Businesses’ primary recurring use of cash is expected to be payment of operating costs, which consist primarily of employee-related expenses, such as compensation and benefits, as well as general operating expenses for product development, marketing, facilities and overhead costs.
Informa has provided funding for the Informa Tech Digital Businesses’ operating and investing activities, including pooled cash managed by Informa treasury to fund operating expenses and capital expenditures. Cash flows in the periods under review related to financing activities primarily reflect changes in Informa’s investment in the Informa Tech Digital Businesses. These activities formed a component of net parent investment, and this arrangement does not reflect the way the Informa Tech Digital Businesses would expect to operate as a standalone business. None of Informa’s cash, cash equivalents or debt at the corporate level have been assigned to the Informa Tech Digital Businesses in the combined financial statements. Prior to completion of the Transaction, all remaining related party balances as of September 30, 2024 were settled between the Informa Tech Digital Businesses and Informa.
Upon closing of the Transaction, the Informa Tech Digital Businesses no longer participate in Informa’s cash management and financing operations and as such Informa’s financial support is no longer in place. On December 2, 2024, New TechTarget, as borrower, and Former TechTarget, as guarantor, entered into a $250 million unsecured five-year revolving credit facility (the “Credit Facility”) with Informa Group Holdings Limited, an affiliate of Informa, as administrative agent (the “Administrative Agent”), and the lenders from time to time party thereto. Cash on hand and cash flows generated by operations and cash available from the Credit Facility are expected to be sufficient for at least the next 12 months to meet the Informa Tech Digital Businesses’ operating requirements as part of New TechTarget.
Cash Flow
The following table summarizes cash flow activities:
| For the Nine Months<br><br><br>Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | 2024 | 2023 | ||||
| Net cash provided by (used in) operating activities | (35,004 | ) | 3,932 | |||
| Net cash used in investing activities | (4,933 | ) | (53,471 | ) | ||
| Net cash provided by financing activities | 50,368 | 54,470 | ||||
| Effect of exchange rate changes on cash and cash equivalents | 388 | (396 | ) | |||
| Increase in cash and cash equivalents | 10,819 | 4,535 |
The primary source of cash is a combination of operating activities and related party loans which are utilized to invest in acquisitions.
Net cash provided by operating activities
Operating cash outflow for the nine months ended September 30, 2024 was $35.0 million, a $38.9 million decrease compared to the same period in 2023. This is driven by the absence of goodwill impairment and remeasurement of contingent consideration gain in the first nine months of 2024 compared to same period in 2023, transaction costs in the amount of $32.5 million incurred in the nine months ended September 2024, and a reduction in cash from related party payables driven by timing of settlement on intercompany interest. These decreases were partly offset by increases due to timing of contract billing and receipt of cash.
Net cash used in investing activities
Cash outflows from investing activities were $4.9 million, a $48.5 million decrease compared to the same period in 2023. The decrease in outflows is primarily driven by the acquisition of Canalys in September 2023.
Net cash provided by financing activities
Cash flows provided by financing activities were an inflow of $50.4 million for the nine months ended September 30, 2024 compared to an inflow of $54.5 million for the nine months ended September 30, 2023. Significant loans were granted as part of cash pool arrangements with parent in both the nine months ended September 30, 2024 and 2023, however, the contribution for the nine months ended September 30, 2024 was higher due to the transaction costs of $32.5 million incurred in the period related to the Transaction with Former TechTarget, which were paid for by the Parent on behalf of Informa Tech Digital Businesses and were recorded as net transfers from Parent. The contingent consideration from the Canalys acquisition of $4.0 million was settled in June 2024.
Off Balance Sheet Arrangements
As of September 30, 2024 and December 31, 2023, the Informa Tech Digital Businesses did not have any significant off-balance sheet arrangements.
Quantitative and Qualitative Disclosures About Market Risk
In the ordinary course of business, the Informa Tech Digital Businesses are exposed to market risk related to changes in foreign currency exchange rates due to their global presence. The foreign currency translation exposure exists primarily with the Pound Sterling. The Informa Tech Digital Businesses measure net exposure for cash balance positions and for cash inflows and outflows in order to evaluate the need to mitigate foreign exchange risk. Although they have not done so historically, the Informa Tech Digital Businesses may enter into foreign currency forward or option contracts to minimize the impact related to unfavorable exchange rate movements. Based on a hypothetical 10% change in foreign currency exchange rates for the nine months ended September 30, 2024, the Informa Tech Digital Businesses estimate that net revenue could increase or decrease by approximately $4 million.
The Informa Tech Digital Businesses’ exposure to interest rate risks is relatively immaterial as it primarily relates to the interest income generated by excess cash which is mostly held in interest-bearing bank deposits. Interest rates on related-party loan agreements are fixed and therefore there is no exposure. The Informa Tech Digital Businesses combined balance sheets and statements of income do not include an allocation of third-party debt or interest expense from Informa because it is not the legal obligor of the debt and the borrowings were not directly attributable to its business. Following the Closing, the Informa Tech Digital Businesses may incur indebtedness in connection with working capital requirements or otherwise, at which time exposure to interest rate risks is expected to increase.
Although the Informa Tech Digital Businesses cannot accurately anticipate the future effect of inflation on financial condition or results of operations, inflation historically has not had a material impact on its operations. If Informa Tech Digital Businesses costs were to become subject to significant inflationary pressures, it may not be able to fully offset such higher costs through price increases for services. The Informa Tech Digital Businesses’ inability to do so could harm its business, financial condition or results of operations.
Internal Controls Over Financial Reporting
In connection with the preparation and audit of the Informa Tech Digital Businesses’ combined financial statements as of December 31, 2023 and 2022 and for the three years ended December 31, 2023, and in connection with the preparation of the unaudited condensed combined interim financial statements during 2024, the Informa Tech Digital Businesses’ management identified certain control deficiencies in the design and implementation of its internal control over financial reporting that constituted material weaknesses. These material weaknesses continue to exist as of September 30, 2024. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected on a timely basis. The Informa Tech Digital Businesses have historically operated as part of Informa Tech operating segment of Informa and its subsidiaries and not as a standalone entity with separate legal status of existence. Accordingly, accounting policies and procedures were designed for Informa financial reporting and not for the Informa Tech Digital Businesses as a standalone entity.
The material weaknesses were driven by: (i) lack of formal documented policies and procedures and inadequate design and performance of controls over financial reporting, including documented evidence and level of precision in the execution of controls across significant business processes; (ii) ineffective IT general control environment, including lack of segregation of duties, supporting the financial reporting systems that do not utilize the Informa Tech Digital Businesses’ main enterprise resource planning systems of SAP and Oracle; and (iii) lack of sufficient resources with the appropriate level of technical U.S. GAAP accounting knowledge, experience and training to ensure proper accounting for complex, non-routine transactions required for accurate and timely financial reporting.
Management is developing a plan to remediate the material weaknesses identified, including: (a) designing and implementing a financial reporting control framework, including management review controls, together with IT general and application controls for all systems which materially impact financial reporting; and (b) providing relevant U.S. GAAP technical accounting, internal controls over financial reporting and SEC financial reporting requirements training for personnel.
Neither management nor an independent registered public accounting firm has performed an evaluation of the Informa Tech Digital Businesses’ internal control over financial reporting in accordance with the provision of the Sarbanes-Oxley Act because no such evaluation has been required. However, as of the Closing date, the Informa Tech Digital Businesses are part of New TechTarget. Management will therefore be required to certify the effectiveness of New TechTarget’s internal controls over financial reporting pursuant to Section 404(a) of the Sarbanes-Oxley Act and is expected to become subject to auditor attestation requirements pursuant to Section 404(b) of the Sarbanes-Oxley Act, beginning with the filing of New TechTarget’s Annual Report on Form 10-K for the year ended December 31, 2025.
Management cannot assure that they will be successful in remediating the material weaknesses identified in the internal controls over financial reporting as of December 31, 2025. The failure to correct the material weaknesses or the failure to discover and address any other material weaknesses or deficiencies could result in inaccuracies in the financial statements and impair the ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis.
EX-99.10
Exhibit 99.10
INDEX TO CONDENSED COMBINED INTERIM FINANCIAL STATEMENTS
Informa Tech Digital Businesses of Informa PLC Unaudited Interim Condensed Combined Financial Statements:
| Condensed Combined Balance Sheets | F-2 |
|---|---|
| Condensed Combined Statements of Income (Loss) | F-3 |
| Condensed Combined Statements of Comprehensive Income<br>(Loss) | F-4 |
| Condensed Combined Statements of Changes in Equity | F-5 |
| Condensed Combined Statements of Cash Flows | F-6 |
| Notes to the Condensed Combined Interim Financial<br>Statements | F-7 |
FS-1
INFORMA TECH DIGITAL BUSINESSES OF INFORMA PLC
CONDENSED COMBINED BALANCE SHEETS
(Expressed in thousands of U.S. Dollars)
(Unaudited)
| December 31,2023 | ||||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | 21, 608 | $ | 10,789 | |
| Accounts receivable, net of allowance for doubtful accounts of 902 and 1,083,<br>respectively | 36,181 | 38,788 | ||
| Related party receivables | 4,375 | 4,140 | ||
| Related party loans receivables | 48,215 | 104,249 | ||
| Prepaid expenses and other current assets | 9,920 | 6,320 | ||
| Total current assets | 120,299 | 164,286 | ||
| Non-current assets: | ||||
| Property and equipment, net | 2,170 | 3,229 | ||
| Goodwill | 470,122 | 467,476 | ||
| Intangible assets, net | 274,733 | 293,859 | ||
| Operating lease<br>right-of-use assets | 2,430 | 5,173 | ||
| Deferred tax assets | 782 | 337 | ||
| Total non-current assets | 750,237 | 770,074 | ||
| Total assets | 870,536 | $ | 934,360 | |
| Liabilities and Parent’s Equity | ||||
| Current liabilities: | ||||
| Accounts payable | 3,991 | $ | 5,050 | |
| Related party payables | 33,410 | 32,390 | ||
| Contract liabilities | 40,332 | 24,489 | ||
| Operating lease liabilities | 1,868 | 2,664 | ||
| Accrued expenses and other current liabilities | 5,666 | 6,013 | ||
| Accrued compensation expenses | 12,751 | 12,759 | ||
| Income taxes payable | 4,139 | 3,485 | ||
| Related party short-term debt | 550,890 | 502,872 | ||
| Contingent consideration | — | 4,937 | ||
| Total current liabilities | 653,047 | 594,659 | ||
| Non-current liabilities: | ||||
| Operating lease liabilities | 2,277 | 3,010 | ||
| Other liabilities | 11,760 | 12,080 | ||
| Deferred tax liabilities | 7,143 | 15,292 | ||
| Related party long-term debt | — | 309,237 | ||
| Contingent consideration | 39,800 | 37,500 | ||
| Total non-current liabilities | 60,980 | 377,119 | ||
| Total liabilities | 714,027 | $ | 971,778 | |
| Commitments and contingencies (see Note 9) | ||||
| Parent’s equity: | ||||
| Net Parent investment (deficit) | 145,917 | (59,663 | ) | |
| Accumulated other comprehensive income | 10,592 | 22,245 | ||
| Total equity (deficit) | 156,509 | (37,418 | ) | |
| Total liabilities and equity | 870,536 | $ | 934,360 |
All values are in US Dollars.
The accompanying notesform an integral part of these condensed combined financial statements.
FS-2
INFORMA TECH DIGITAL BUSINESSES OF INFORMA PLC
CONDENSED COMBINED STATEMENTS OF INCOME (LOSS)
(Expressed in thousands of U.S. Dollars, except per share amounts)
(Unaudited)
| For the nine monthsended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2024 | 2023 | |||||||||
| Revenues | 62,742 | $ | 59,404 | $ | 185,020 | $ | 176,318 | ||||
| Cost of revenues | (23,814 | ) | (22,474 | ) | (74,484 | ) | (70,026 | ) | |||
| Gross profit | 38,928 | 36,930 | 110,536 | 106,292 | |||||||
| Operating expenses: | |||||||||||
| Selling and marketing | 14,217 | 13,274 | 42,096 | 40,896 | |||||||
| General and administrative | 18,205 | 18,683 | 53,909 | 50,327 | |||||||
| Product development | 2,571 | 2,305 | 8,499 | 8,399 | |||||||
| Depreciation | 386 | 156 | 1,173 | 454 | |||||||
| Amortization, excluding amortization included in cost of revenues of 158 and 21 for three months<br>ended and 403 and 21 for nine months ended | 8,131 | 7,687 | 24,414 | 22,806 | |||||||
| Impairment of goodwill | — | — | — | 130,132 | |||||||
| Impairment of long-lived assets | — | — | 2,019 | 159 | |||||||
| Acquisition and integration costs | 8,438 | 3,195 | 38,086 | 5,285 | |||||||
| Remeasurement of contingent consideration | (300 | ) | (2,400 | ) | 2,363 | (100,910 | ) | ||||
| Total operating expenses | 51,648 | 42,900 | 172,559 | 157,548 | |||||||
| Operating loss | (12,720 | ) | (5,970 | ) | (62,023 | ) | (51,256 | ) | |||
| Interest expense | — | (4 | ) | — | (4 | ) | |||||
| Interest expense on related party loans | (5,761 | ) | (6,109 | ) | (18,554 | ) | (18,179 | ) | |||
| Interest income | 873 | 745 | 4,422 | 2,019 | |||||||
| Other income (expense), net | (1,731 | ) | 471 | (1,360 | ) | (520 | ) | ||||
| Loss before provision for income taxes | (19,339 | ) | (10,867 | ) | (77,515 | ) | (67,940 | ) | |||
| Income tax benefit | 3,682 | 860 | 6,542 | 7,079 | |||||||
| Net loss | (15,657 | ) | (10,007 | ) | (70,973 | ) | (60,861 | ) | |||
| Loss per share | |||||||||||
| Basic and diluted loss per share | (0.38 | ) | $ | (0.24 | ) | $ | (1.70 | ) | $ | (1.46 | ) |
All values are in US Dollars.
The accompanying notesform an integral part of these condensed combined financial statements.
FS-3
INFORMA TECH DIGITAL BUSINESSES OF INFORMA PLC
CONDENSED COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Expressed in thousands of U.S. Dollars)
(Unaudited)
| For the three monthsended September 30, | For the nine monthsended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Net loss | (15,657 | ) | (10,007 | ) | (70,973 | ) | (60,861 | ) | ||||
| Other comprehensive gain (loss): | ||||||||||||
| Foreign currency translation gain (loss) | (13,535 | ) | 10,368 | (11,653 | ) | (8,362 | ) | |||||
| Total other comprehensive gain (loss) | $ | (29,192 | ) | $ | 361 | $ | (82,626 | ) | $ | (69,223 | ) |
The accompanying notesform an integral part of these condensed combined financial statements.
FS-4
INFORMA TECH DIGITAL BUSINESSES OF INFORMA PLC
CONDENSED COMBINED STATEMENTS OF CHANGES IN EQUITY
(Expressed in thousands of U.S. Dollars)
(Unaudited)
| Net Parentinvestment(deficit) | Accumulatedothercomprehensiveincome(loss) | Totalequity(deficit) | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Balance as of December 31, 2022 | $ | (45,708 | ) | $ | 42,742 | $ | (2,966 | ) | |
| Net profit for the period | 76,482 | — | 76,482 | ||||||
| Other comprehensive loss | — | (10,093 | ) | (10,093 | ) | ||||
| Net transfers from Parent | 6,696 | — | 6,696 | ||||||
| Balance as of March 31, 2023 | $ | 37,470 | $ | 32,649 | $ | 70,119 | |||
| Net loss for the period | (127,336 | ) | — | (127,336 | ) | ||||
| Other comprehensive loss | — | (8,637 | ) | (8,637 | ) | ||||
| Net transfers to Parent | (4,704 | ) | — | (4,704 | ) | ||||
| Balance as of June 30, 2023 | $ | (94,570 | ) | $ | 24,012 | $ | (70,558 | ) | |
| Net loss for the period | (10,007 | ) | — | (10,007 | ) | ||||
| Other comprehensive income | — | 10,368 | 10,368 | ||||||
| Net transfers from Parent | 61,916 | — | 61,916 | ||||||
| Balance as of September 30, 2023 | $ | (42,661 | ) | $ | 34,380 | $ | (8,281 | ) | |
| Net Parentinvestment(deficit) | Accumulatedothercomprehensiveincome(loss) | Totalequity(deficit) | |||||||
| Balance as of December 31, 2023 | $ | (59,663 | ) | $ | 22,245 | $ | (37,418 | ) | |
| Net loss for the period | (20,481 | ) | — | (20,481 | ) | ||||
| Other comprehensive income | — | 2,551 | 2,551 | ||||||
| Net transfers to Parent | (2,528 | ) | — | (2,528 | ) | ||||
| Balance as of March 31, 2024 | $ | (82,672 | ) | 24,796 | $ | (57,876 | ) | ||
| Net loss for the period | (34,835 | ) | — | (34,835 | ) | ||||
| Other comprehensive loss | — | (669 | ) | (669 | ) | ||||
| Net transfers from Parent | 22,255 | — | 22,255 | ||||||
| Balance as of June 30, 2024 | $ | (95,252 | ) | $ | 24,127 | $ | (71,125 | ) | |
| Net loss for the period | (15,657 | ) | — | (15,657 | ) | ||||
| Other comprehensive loss | — | (13,535 | ) | (13,535 | ) | ||||
| Related party long-term debt extinguished | 250,000 | — | 250,000 | ||||||
| Net transfers from Parent | 6,826 | — | 6,826 | ||||||
| Balance as of September 30, 2024 | $ | 145,917 | $ | 10,592 | $ | 156,509 |
The accompanying notesform an integral part of these condensed combined financial statements.
FS-5
INFORMA TECH DIGITAL BUSINESSES OF INFORMA PLC
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Expressed in thousands of U.S. Dollars)
(Unaudited)
| For the nine<br>months ended<br>September 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Operating activities: | ||||||
| Net loss | $ | (70,973 | ) | $ | (60,861 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
| Depreciation | 1,173 | 454 | ||||
| Amortization | 24,817 | 22,827 | ||||
| Change in provision for bad debts | 1,107 | (890 | ) | |||
| Operating lease expense | 1,598 | 1,963 | ||||
| Stock-based compensation expense | 879 | 861 | ||||
| Provision for income taxes | (6,542 | ) | (7,079 | ) | ||
| Impairment of long-lived assets | 2,019 | 159 | ||||
| Impairment of goodwill | — | 130,132 | ||||
| Loss on disposal of long-lived assets | 258 | (19 | ) | |||
| Remeasurement of contingent consideration | 2,363 | (100,910 | ) | |||
| Changes in assets and liabilities: | ||||||
| Accounts receivable | 1,994 | 3,305 | ||||
| Prepaid expenses and other current assets | (3,564 | ) | 542 | |||
| Related party receivables | (235 | ) | (1,337 | ) | ||
| Accounts payable | (1,108 | ) | (2,947 | ) | ||
| Accrued expenses and other current liabilities | (730 | ) | (2,585 | ) | ||
| Operating lease liabilities | (2,248 | ) | (1,938 | ) | ||
| Contract liabilities | 15,294 | 4,750 | ||||
| Contingent consideration | (1,020 | ) | — | |||
| Other liabilities | (329 | ) | (568 | ) | ||
| Related party payables | 243 | 18,073 | ||||
| Net cash (used in) provided by operating activities | (35,004 | ) | 3,932 | |||
| Investing activities: | ||||||
| Purchases of property and equipment | (302 | ) | (1,133 | ) | ||
| Purchases of intangible assets | (4,631 | ) | (4,508 | ) | ||
| Purchases of businesses, net of acquired cash | — | (47,830 | ) | |||
| Net cash used in investing activities | (4,933 | ) | (53,471 | ) | ||
| Financing activities: | ||||||
| Cash pooling arrangements with Parent | 27,402 | (512 | ) | |||
| Contingent consideration settlement | (3,980 | ) | — | |||
| Repayment of loans issued by Parent | (213 | ) | — | |||
| Net transfers from (to) Parent | 27,159 | 54,982 | ||||
| Net cash provided by financing activities | 50,368 | 54,470 | ||||
| Effect of exchange rate changes on cash and cash equivalents | 388 | (396 | ) | |||
| Net increase in cash and cash equivalents | 10,819 | 4,535 | ||||
| Cash and cash equivalents at the beginning of the period | 10,789 | 7,142 | ||||
| Cash and cash equivalents at the end of the period | 21,608 | 11,677 | ||||
| Supplemental disclosure of cash flow information: | ||||||
| Cash paid for taxes by Parent | 1,397 | 2,981 | ||||
| Cash paid for interest | 18,928 | 27 | ||||
| Non-cash investing and financingactivities: | ||||||
| Related party long-term debt extinguished | 250,000 | — | ||||
| Loans settled through existing cash pooling arrangements | 59,689 | 41 | ||||
| Intangible asset purchases included in accrued expenses and other current liabilities | 48 | 300 |
The accompanying notesform an integral part of these condensed combined financial statements.
FS-6
INFORMA TECH DIGITAL BUSINESSES OF INFORMA PLC
NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars — unless stated otherwise) (Unaudited)
Note 1 — Business overview and basis of presentation
Nature of business
Informa Tech Digital Businesses of Informa PLC (the “Business”) help technology companies accelerate growth through first-party business-to-business (“B2B”) data, market insight and market access. It provides digital solutions that deliver targeted audiences, highly qualified leads, demand generation and buyer intent, helping customers to identify, reach, influence and transact with key technology decision makers. The Business operates through a range of leading B2B brands in specialist technology research (e.g., Omdia, Canalys), specialist digital media (e.g., Industry Dive, Information Week, Light Reading, Heavy Reading, AI Business), and demand generation / buyer intent (NetLine).
The Business has historically operated as part of Informa Tech operating segment of Informa PLC and its subsidiaries (together “Informa” or “Parent”). In these condensed combined financial statements, unless otherwise specified or the context otherwise indicates, all references to Informa refer to the business and operations of the Parent and its consolidated subsidiaries.
Basis of presentation and principles of combination
The accompanying condensed combined financial statements present the historical financial position, results of operations, cash flows and changes in equity of the Business in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information. Accordingly, certain information and footnote disclosures normally included in the combined financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed combined financial statements are unaudited and, in the opinion of Management, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair statement of the condensed combined cash flows, operating results, and balance sheets for the periods presented. The results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim periods or for the full year. The information included in these condensed combined interim financial statements should be read in conjunction with the “Informa Tech Digital Businesses of Informa PLC Audited Annual Combined Financial Statements” as of December 31, 2023, and 2022, and for the three years in the period ended December 31, 2023, included in the Registration Statement on Form S-4/A (No. 333-280529) dated October 23, 2024.
The Business has historically operated as part of the Parent and not as a standalone entity and prior to the close of the Transaction described below had no separate consolidated legal status of existence. As such, these condensed combined financial statements have been derived from the Parent’s historical accounting records and are presented on a carved-out basis.
The condensed combined financial statements reflect the assets, liabilities, revenues, expenses and cash flows of the entities included within the Business. The financial statements also include allocations of certain general, administrative and sales and marketing expenses from Informa’s corporate office and from other Informa businesses to us and allocations of related assets, liabilities, and Parent investment, as applicable. The allocations have been determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had we been an entity that operated independently of Informa. Refer to additional discussion of related party allocations in Note 8. Related Party Transactions.
FS-7
Informa uses a centralized approach to cash management and financing of its operations. As part of Informa, the Business is dependent upon Informa for all of its working capital and financing requirements in the periods presented. Financial transactions with the Parent relating to the Business are accounted for through Net Parent investment. Accordingly, none of the Informa’s cash, cash equivalents or debt at the corporate level has been assigned to the Business in the accompanying condensed combined financial statements.
Net Parent investment, which includes retained earnings, represents Informa’s historical investment in the Business, the accumulated net earnings (losses) after taxes and the net effect of settled transactions with and allocations from the Parent. All significant transactions between the Business and Informa have been included in the accompanying condensed combined financial statements for the three and nine months ended September 30, 2024 and September 30, 2023. Transactions with Informa are reflected in the accompanying condensed combined statements of changes in equity as “Net transfers to Parent” and included in the accompanying condensed combined balance sheets within “Net Parent investment.” All transactions reflected in Net Parent investment by the Business in the accompanying combined balance sheets have been considered as financing activities for purposes of the combined statements of cash flows.
The Business is dependent on the Parent for the majority of its working capital and financing requirements during the periods presented in these condensed combined financial statements. The Parent uses a centralized approach to managing cash and financing its operations. Transactions between the Parent and the Business under this approach are treated as related party short-term debt. All cash and cash equivalent balances held by the Business that are not a part of the centralized cash management approach are legally held by the Business and included in the condensed combined financial statements.
The Business has intercompany financing arrangements with the Parent (“related party debt”). These related party financing arrangements between the Business and the Parent have been included in the accompanying condensed combined financial statements for all periods presented. These arrangements were settled prior to the closing date of the Transaction as described below. All other intercompany accounts and transactions between the operations comprising Informa have been eliminated in the accompanying condensed combined financial statements for the three and nine months ended September 30, 2024 and September 30, 2023.
These condensed combined financial statements may not be indicative of the Business’s financial performance and do not necessarily reflect what its results of operations, financial position and cash flows would have been had the Business operated as an independent entity during the periods presented. The amount of actual costs that may have been incurred if the Business were a standalone company would depend on a number of factors, including its chosen organizational structure, which functions were performed by its employees or outsourced and strategic decisions made in areas such as information technology and infrastructure.
The Transaction
On January 10, 2024, Informa entered into an Agreement and Plan of Merger (the “Transaction Agreement”) with TechTarget Holdings, Inc. (formerly known as TechTarget, Inc.) (“Former TechTarget”) and certain Informa and Former TechTarget subsidiaries. Pursuant to the Transaction Agreement, Informa and Former TechTarget, among other things, agreed to combine Former TechTarget with Informa Intrepid Holdings Inc. (“Informa Intrepid”), a wholly owned subsidiary of Informa, to create a new US-listed company, TechTarget, Inc. (“New TechTarget”), a leading platform in B2B data and market access. Former TechTarget is a global data and analytics leader and software provider for buyers of purchase intent-driven marketing and sales data for enterprise technology vendors.
Prior to the closing of the Transaction, Informa undertook certain restructuring transactions to separate the Informa Tech Digital Businesses and as of the Closing Date all Informa Tech Digital Businesses were held directly or indirectly by Informa Intrepid.
FS-8
The Transaction closed on December 2, 2024 (the “Closing Date”). At the closing, in exchange for an aggregate of 41,651,366 shares of New TechTarget’s common stock, par value $0.001 per share (“New TechTarget common stock”), Informa contributed Informa Intrepid and $350.0 million (collectively, the “Contribution”) in cash to New TechTarget. Informa Intrepid merged with and into Former TechTarget, with Former TechTarget as the surviving corporation (the “Merger”). As a result of the Merger, each issued and outstanding share of Former TechTarget common stock as of immediately prior the effective time of the Merger, were converted into the right to receive (i) one share of New TechTarget common stock and (ii) pro rata share amount of the $350.0 million cash contribution. Informa owns approximately 57% of New TechTarget common stock as of the Closing Date.
Refer to Note 11 – SubsequentEvents for further information.
Restatement of previously issued financial statements
The Business restated the condensed combined financial statements for the three months ended March 31, 2024 and 2023, as presented within the Form 8-K filed with the SEC on December 6, 2024, which were originally presented in the Toro CombineCo, Inc. Registration Statement on Form S-4, filed with the SEC on June 27, 2024. Net loss for the three months ended March 31, 2024 increased by $4.4 million due to the errors. Restated net loss for the three months ended March 31, 2024 was $20.5 million.
In addition, the Business restated the condensed combined financial statements for the six months ended June 30, 2024, as presented within the Form 8-K filed with the SEC on December 6, 2024, which were originally presented in the Toro CombineCo, Inc. Registration Statement on Form S-4/A, filed with the SEC on September 4, 2024. These previously filed interim unaudited condensed combined financial statements should no longer be relied upon. Net loss for the six months ended June 30, 2024 decreased by $0.7 million due to the errors. Restated net loss for the six months ended June 30, 2024 was $55.3 million.
Note 2 — Summary of significant accounting policies
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Business bases these estimates on historical experience, the current economic environment, and on various other assumptions that are believed to be reasonable under the circumstances. However, uncertainties associated with these estimates exist and actual results may differ from these estimates.
Estimates and underlying assumptions reflected in these condensed combined financial statements are reviewed on an ongoing basis, with changes in estimates recognized in the year in which the estimates are revised and in any future periods affected. Significant estimates include assumptions associated with impairment considerations for goodwill and long-lived assets, estimating the fair value of contingent consideration and determining corporate expense allocations.
Segment reporting
In applying the criteria set forth in ASC 280 - Segment Reporting, and in conjunction with a change in the Business’s operating structure and the manner in which the Business’s Chief Operating Decision Maker (“CODM”) assesses information for decision-making purposes, during the first quarter of 2024, the Business realigned its operating segments and presented with retrospective effect herein. As a result of this, the Business has determined it operates as a single operating and reportable segment. The Business’s CODM is its Chief Executive Officer, who reviews key financial information presented on a combined basis for the purposes of making operating decisions, allocating resources, and evaluating financial performance.
FS-9
Earnings (loss) per share
Basic income (loss) per share is determined by dividing net income (loss) by the weighted average common shares outstanding during the period. Diluted income (loss) per share is determined by dividing net income (loss) by diluted weighted average shares outstanding during the period. The Business had no common capital structure for the combined business prior to closing. However, as discussed in Note1 – Business overview and basis of presentation, at the closing of the Transaction, 41,651,366 shares of New TechTarget common stock were issued to Informa in exchange for the Contribution. As such, the total number of shares issued to Informa is being utilized for the calculation of both basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2024 and 2023, as no New TechTarget common stock equivalents were outstanding prior to the Closing Date.
Recent Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. The ASU is intended to improve financial reporting by requiring disaggregated disclosure of certain costs and expenses. The ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The ASU may be applied on either a prospective or retrospective basis. The Business is currently evaluating the impact of adopting this ASU on its financial statements and disclosures.
There have been no other recent accounting standard updates that are material or potentially material to the Business.
Note 3 — Revenue
Revenue
The Business generates revenues by providing market insight and market access to the technology market, including enterprise technology, artificial intelligence, channel, cyber security, media & entertainment and service providers. Revenue is recognized when performance obligations are satisfied by transferring promised goods or services to clients, as determined by applying a five-step process consisting of: 1) identifying the contract, or contracts, with a client, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations in the contract, and 5) recognizing revenue when, or as, performance obligations are satisfied.
FS-10
Disaggregated revenue
Revenue by type:
| For the three months<br><br><br>ended September 30, | For the nine months<br><br><br>ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||
| Marketing, advertising services and sponsorship | $ | 35,369 | $ | 35,147 | $ | 105,325 | $ | 106,385 |
| Intelligence subscription services | 18,773 | 16,056 | 56,575 | 48,343 | ||||
| Advisory services | 8,215 | 7,902 | 22,498 | 21,030 | ||||
| Exhibitor and attendee | 385 | 299 | 622 | 560 | ||||
| Total revenue | 62,742 | 59,404 | 185,020 | 176,318 | ||||
| Revenues from external customers | 62,671 | 59,363 | 184,795 | 176,214 | ||||
| Revenues from related parties | 71 | 41 | 225 | 104 |
Contract liabilities
The Business’s total contract liabilities as of December 31, 2023 was $24.5 million, of which $6.3 million and $18.6 million was recognized as revenue during the three and nine months ended September 30, 2024, respectively.
Accounts receivable and allowance for doubtful accounts
Accounts receivable are recognized at the amount the Business expects to collect, net of allowance for doubtful accounts. The allowance for doubtful accounts is the Business’s best estimate of the amount of probable credit losses in its existing accounts receivable. The allowance for doubtful accounts is reviewed on a regular basis, and all past due balances are reviewed individually for collectability. Account balances are written-off against the allowance once all means of collection have been exhausted and the potential for recovery is considered remote. Provisions for doubtful accounts are recorded in general and administrative expense. As of September 30, 2024, and December 31, 2023, the allowance for doubtful accounts was $0.9 million and $1.1 million, respectively, and is recorded in accounts receivable, net, in the accompanying condensed combined balance sheets.
Note 4 — Fair value
Fair value of assets and liabilities
Cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities payable within one year are carried at cost, which approximates fair value due to their short-term nature. The only financial instruments measured at fair value are the contingent considerations relating to the Industry Dive and Canalys acquisitions.
The following table presents the Business’s financial instruments that are measured at fair value as of September 30, 2024 and December 31, 2023:
| September 30, 2024 | December 31, 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||
| Contingent consideration, current | — | — | — | — | — | 4,937 | ||||||
| Contingent consideration, non-current | — | — | 39,800 | — | — | 37,500 | ||||||
| Total liabilities | — | — | $ | 39,800 | — | — | $ | 42,437 |
Contingent considerations amounts are based on revenue growth for Industry Dive and revenue and cost performance for Canalys (level 3 fair value measurements) and have been estimated on an acquisition-by-acquisition basis using available forecasts (a significant unobservable input). The higher the forecast, the higher the fair value of any contingent consideration (subject to any maximum payout clauses).
FS-11
The fair value of contingent consideration at Industry Dive and Canalys acquisition was calculated using a probability-weighted scenario approach. The estimated range of undiscounted payment in respect of the 2023-2025 arrangement due on the acquisition of Industry Dive as of September 30, 2024 is $46.3 million to $50.6 million. In determining the fair value, the contingent consideration on Industry Dive acquisition was discounted at a rate of 12.6% as of September 30, 2024. Contingent consideration related to the acquisition of Canalys was settled in the second quarter of 2024 for $5.0 million by Parent.
Below is a summary of the changes in the contingent consideration balances for the nine months ended September 30, 2024 and 2023:
| For the nine months<br>ended September 30, | ||||||
|---|---|---|---|---|---|---|
| Year-to-date activity | 2024 | 2023 | ||||
| Balance at beginning of the period | $ | 42,437 | $ | 151,110 | ||
| Additions | — | 3,980 | ||||
| Remeasurement | 2,363 | (100,910 | ) | |||
| Settlements | (5,000 | ) | — | |||
| Balance at end of the period | 39,800 | 54,180 |
In the nine months ended September 30, 2023, the Business reduced the Industry Dive revenue forecasts to reflect market conditions, which resulted in a lower fair value of the contingent consideration related to the arrangements driving the remeasurement gain. In the nine months ended September 30, 2024, the remeasurement loss primarily relates to the unwinding of the discount on the contingent consideration, which results in a higher fair value of the contingent consideration arrangements as the potential payment date approaches.
Note 5 — Goodwill and long-lived assets
The Business evaluates its long-lived assets, including property, equipment, and intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Goodwill is tested for impairment at least annually, during the fourth quarter, or when events and circumstances indicate an impairment may have occurred.
For the nine months ended September 30, 2024 and 2023, the Business reviewed its reporting units for indicators of impairment and conducted a quantitative test where such indicators existed. The Business believes that, as of these dates, none of the Business’s goodwill or intangible assets were impaired.
In the first quarter of 2023, the Business reduced the full-year short-term 2023 revenue forecast for the Industry Dive reporting unit when remeasuring the fair value of the contingent consideration. The Business considered this to be an indicator of impairment and conducted a quantitative analysis which concluded that the fair value exceeded the carrying value because the long-term projections of the reporting unit remained unchanged based on expectations at the time of the test.
In the second quarter of 2023, on the back of challenging macro-economic conditions, long-term revenue projections were revised for the Industry Dive business, lowering expectations for its core email and website sponsorship/advertising products to reflect more constrained budgets among key customers. Following this change in assumptions, a quantitative impairment analysis was performed for the Industry Dive reporting unit, which indicated its carrying value now exceeded its fair value. Therefore, a goodwill impairment charge of $130.1 million was recognized.
FS-12
The Business recognized $2.0 million and $0.2 million of impairment to operating lease right-of-use assets in the nine months ended September 30, 2024 and 2023, respectively, due to the Business vacating certain leased properties. There was no impairment to operating lease right-of-use assets in the three months ended September 30, 2024 and 2023. There was no impairment to other long-lived assets in the periods presented.
Note 6 — Income taxes
The Business measures its interim period tax using an estimated annual effective tax rate and adjustments for discrete events that occur during the interim period. The Business recorded income tax benefit of $3.7 million and $6.5 million for the three and nine months ended September 30, 2024, respectively, and $0.9 million and $7.1 million for the three and nine months ended September 30, 2023, respectively. The tax benefit for the three months ended September 30, 2024 increased by $2.8 million, as compared to the same period in 2023. In the three months ended September 30, 2024, the effective tax rate was larger primarily due to an increased full year forecast pre-tax loss in the U.S. as compared to the position at June 30, 2024. In the three months ended September 30, 2024, the pre-tax loss was proportionally larger than the previous quarters, as compared to the three months ended September 30, 2023, which also contributed to a larger benefit being recorded.
The tax benefit for the nine months ended September 30, 2024 decreased by $0.6 million, as compared to the same period in 2023. In the nine months ended September 30, 2023, the effective tax rate was mainly driven by pre-tax losses and a non-deductible goodwill impairment that was partially offset by non-taxable remeasurement of contingent consideration, for a net impact of $4.4 million. While the pre-tax losses were greater in 2024, the increase in the non-deductible expenses led to a decreased tax benefit compared to 2023.
Note 7 — Post-retirement and other employee benefits
The Business has no post-retirement pension plans; however certain of its employees are eligible to participate in the Parent’s defined contribution pension plan. The Parent operates a defined contribution pension plan in the United States, United Kingdom and in certain other countries. The assets of the plan are held by independent custodians and are kept entirely separate from the assets of the Parent. The pension charge represents contributions due from the employer, and the amount incurred represents the charge for the employees of the Business who are part of the pensions plan. Pension charge has been allocated to the Business based on employee headcount. The total Business charge amounted to $1.4 million and $3.9 million for the three and nine months ended September 30, 2024, respectively, and $1.3 million and $3.5 million for the three and nine months ended September 30, 2023, respectively.
Note 8 — Related party transactions
Allocations of expenses prior to the separation
The Business has historically operated as part of the Parent and not as a standalone company. Certain shared costs have been allocated to the Business by the Parent and are reflected as expenses in these condensed combined financial statements.
Management considers the allocation methodologies used to be reasonable and appropriate reflections of the related expenses attributable to the Business for purposes of the condensed combined financial statements; however, the expenses reflected in the accompanying condensed combined financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Business had operated as a separate standalone entity and the expenses that will be incurred in the future by the Business.
The amount of actual costs that may have been incurred if the Business were a standalone company is not practicable to estimate as it would depend on a number of factors, including its chosen organizational structure, which functions were performed by its employees or outsourced; and strategic decisions made in areas such as information technology and infrastructure.
Corporate expense allocations
Certain corporate overhead and other shared expenses incurred by the Parent and its subsidiaries have been allocated to the Business and are reflected in the accompanying condensed combined statements of income and comprehensive income. These amounts include, but are not limited to, items such as general management and executive oversight, costs incurred at the Parent level to support the Business’s information technology infrastructure, facilities, compliance, human resources, operations, and legal functions and financial management and transaction processing, including public company consolidated reporting, consolidated tax filings and tax planning, risk management and consolidated treasury services, certain employee benefits and incentives, and stock-based compensation administration. These costs are allocated using a methodology that management believes is reasonable for the item being allocated. Allocation methodologies include the Business’s relative share of revenues, headcount, usage, or functional spend as a percentage of the total.
FS-13
The amounts of related party expenses allocated to the Business from the Parent and its subsidiaries for the three and nine months ended September 30, 2024 are $8.9 million and $25.8 million, respectively, and for the three and nine months ended September 30, 2023 are $8.4 million and $23.8 million, respectively, and are recognized in general and administrative expenses in the condensed combined statements of income and comprehensive income (loss).
Further, in the three and nine months ended September 30, 2024, the Parent incurred $5.5 million and $32.5 million, respectively, of costs related to the transaction described in Note 1 – Business overview and basis of presentation. These costs were paid by the Parent and allocated to the Business. The costs are included in acquisition and integration expenses in the accompanying condensed combined statements of income and comprehensive income (loss) and relate primarily to legal, professional accounting and advisory services.
Revenue and other transactions entered into in the ordinary course of business
The Business entered into revenue arrangements in the ordinary course of business with the Parent and its affiliates, which resulted in recording revenue of $0.1 million and $0.2 million for the three and nine months ended September 30, 2024, respectively, and $0.1 million for the nine months ended September 30, 2023. Revenue between the Business and the Parent were not material during the three months ended September 30, 2023. The cost of revenues related to the sales between the Business and the Parent were not material during the three and nine months ended September 30, 2024 and 2023.
Debt financing
The Business entered into related party loan arrangements with the Parent to finance its operations and acquisitions. Debt arrangements between the Business and the Parent have been included in the accompanying condensed combined financial statements for all periods presented. All outstanding debt arrangements were settled prior to the Closing Date of the Transaction through cash and non-cash settlements.
Loans from the Parent to the Business with maturity within one year have been recorded as related-party short-term debt in the accompanying condensed combined balance sheets, with interest rate of 4.25% per annum. Loans from Parent to the Business with maturities ranging between November 30, 2026 and August 31, 2027 have been recorded as related party long-term debt in the accompanying condensed combined balance sheets, with fixed interest rates ranging between 7% and 8% per annum. During the three months ended September 30, 2024, $250 million of the related party long-term debt was extinguished and reflected as an increase in net parent investment, with the remaining $59 million settled through cash pooling arrangements.
Some of the Parent entities are responsible for receiving and making certain payments on behalf of the Business for recharges and expenses such as payroll and supplier invoices. These arrangements are financing in nature as the receipts and payments have been made by the Parent for the Business. The Business and the Parent is obligated to repay these balances on demand and therefore these balances are classified as related party loan receivables and short-term debt on the condensed combined balance sheets. These balances are not interest bearing, do not have specific repayment terms and are repaid on a non-routine basis.
FS-14
Related-party loans receivable and debt related to debt financing are recorded in the accompanying condensed combined balance sheets as follows:
| September 30,<br>2024 | December 31,<br>2023 | |||
|---|---|---|---|---|
| Related party long-term debt | $ | — | $ | 309, 237 |
| Related party short-term debt | $ | 1,155 | $ | 43,801 |
| Related party loan receivable | $ | 1,657 | $ | — |
Cash pooling arrangement
The Parent uses a centralized approach to cash management and financing of its operations. The majority of the Business’s cash is transferred to the Parent on a regular basis, and the Parent funds the Business’s operating and investing activities as needed. Transfers of cash to and from the Parent’s cash management system are reflected as related party loan receivables and short-term debt on the condensed combined balance sheets.
Related party loans receivable and short-term debt related to cash pooling arrangements are recorded in the accompanying condensed combined balance sheets as follows:
| September 30,<br>2024 | December 31,<br>2023 | |||
|---|---|---|---|---|
| Related party loans receivable | $ | 46,558 | $ | 104,249 |
| Related party short-term debt | $ | 549,735 | $ | 459,071 |
Interest income and interest expense
Interest income and interest expense on debt financing and cash pooling arrangements are recorded within interest income and interest expense on related party debt, respectively within the accompanying condensed combined statements of income and comprehensive income (loss) as follows:
| For the three months<br>ended September 30, | For the nine months<br>ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||
| Interest expense on related party loans payable | 5,761 | 6,109 | 18,554 | 18,179 | ||||
| Interest income on related party loans receivable | 873 | 745 | 4,422 | 2,019 |
The accrued interest related to short-term and long-term debt to Parent was $0.1 million and $1.6 million as of September 30, 2024 and December 31, 2023, respectively, and are recorded in Related party payables within the accompanying combined balance sheets. There was no accrued interest related to cash pooling arrangements since interest is accrued directly to the cash pooling accounts.
Related party receivables and payables
The Business has receivables and payables with the Parent arising from transactions entered into in the ordinary course of business with the Parent, such as related party sales, shared and corporate cost recharges, including payroll and employee related costs, acquisition and integration costs and central operating costs. Related party receivables and payables are recorded in the accompanying condensed combined balance sheets as follows:
| September 30,<br>2024 | December 31,<br>2023 | |||
|---|---|---|---|---|
| Related party receivables | $ | 4,375 | $ | 4,140 |
| Related party payables | $ | 33,410 | $ | 32,390 |
FS-15
Settlement patterns of related party payables vary from transaction to transaction and are repaid on a non-routine basis. Changes in related party receivables and payables are presented in operating activities in the condensed combined statement of cash flows. These balances were settled prior to the Closing Date through cash and non-cash transactions.
Note 9 — Commitments and contingencies
Contingent liabilities
The Business has liabilities with respect to contingent consideration payments under the Industry Dive business acquisition contract. As part of the Transaction, the contingent consideration liability will be settled by the Parent. See Note 4. Fair value for further information.
Legal matters
From time to time, the Business may be subject to legal actions and claims in the ordinary course of business. Management does not believe that the outcome of such proceedings will have a materially adverse effect on the Business’s financial position, results of operations or cash flows. Legal fees and other costs related to litigation and other legal proceedings are expensed as incurred and are included in general and administrative expenses in the accompanying condensed combined statements of income and comprehensive income (loss).
Note 10 – Acquisitions
On September 1, 2023, the Business acquired 100% of the issued share capital of Canalys Pte Ltd and its subsidiaries (collectively “Canalys”). The acquisition expands Omdia research capabilities into Channel (distributors, value added resellers, systems integrators and managed service providers) and Mobility (consumer and business devices), while creating a global platform for networking in Channel by bringing together both Canalys and the Business’ Channel events franchises.
Total consideration was $61.6 million, of which $52.6 million was settled in cash, $5.0 million in Informa common stock, and $4.0 million in contingent consideration. The contingent consideration is based on revenue and cost performance during the period from April 1, 2023 to March 31, 2024. The fair value of contingent consideration at acquisition was calculated using a probability-weighted scenario approach. Ongoing employment is not required to earn the contingent consideration, and as a result, the amount has been included in the total consideration transferred. Subsequent remeasurement of the contingent consideration was recorded in the combined statements of income and comprehensive income (loss). Contingent consideration related to the acquisition of Canalys was settled in the second quarter of 2024 for $5.0 million by Parent.
The following summarizes the fair value of the cash and contingent consideration transferred as part of the acquisition of Canalys as of the acquisition date:
| Cash consideration | $ | 52,606 |
|---|---|---|
| Capital consideration | 5,000 | |
| Contingent consideration | 3,980 | |
| Total consideration | $ | 61,586 |
The following table summarizes the fair value of the assets acquired and liabilities assumed for the Canalys acquisition:
| Intangible assets | $ | 13,935 | |
|---|---|---|---|
| Accounts receivable | 2,878 | ||
| Prepaid expenses and other current assets | 2,363 | ||
| Cash and cash equivalents | 4,776 | ||
| Contract liabilities | (7,035 | ) | |
| Deferred tax liabilities | (3,484 | ) | |
| Other assets and liabilities, net | (1,621 | ) | |
| Total identifiable net assets acquired | 11,812 | ||
| Goodwill | 49,774 | ||
| Total consideration | $ | 61,586 |
FS-16
Intangible assets of $13.9 million consist of $10.1 million of customer relationships, fair valued using the excess earnings method, and $3.8 million of intellectual property fair valued using the relief from royalty method. A deferred tax liability has been recognized as a result of the recognition of these acquired intangible assets.
Goodwill arising from the acquisition was $49.8 million and represents the total consideration of $61.6 million less the fair value of the net assets acquired of $11.8 million.
The value of goodwill arising from the acquisition has been identified as relating to the following factors:
| • | Enhancing the Business’s position in the Channel subsegment through an increased product offering and<br>expanded geographic footprint; |
|---|---|
| • | Enhancing the Business’s position in consumer and business devices through improved ability to win across<br>the supply chain; and |
| --- | --- |
| • | Synergy opportunities through cost savings. |
| --- | --- |
None of the goodwill recognized is deductible for tax purposes.
Acquisition costs of $1.1 million were recognized within acquisition and integration costs in the combined statements of income and comprehensive income (loss) in the three and nine months ended September 30, 2023.
The business generated revenue of $1.0 million and net income of $0.1 million for the period from the date of acquisition to September 30, 2023.
Canalys pro forma financial information
The following unaudited pro forma financial information for the periods below gives effect to the Canalys acquisition as if it had occurred as of January 1, 2023. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition been consummated as of that time.
| Three months endedSeptember 30, 2023 | Nine months ended<br>September 30, 2023 | |||||
|---|---|---|---|---|---|---|
| Revenue | $ | 61,339 | $ | 183,740 | ||
| Net income (loss) | $ | (9,174 | ) | $ | (60,641 | ) |
Note 11 — Subsequent events
The Business has evaluated subsequent events through December [6], 2024, the date the condensed combined financial statements were available to be issued.
As discussed in Note 1 – Business overview and basis of presentation, on December 2, 2024, New TechTarget, Former TechTarget and Informa completed the previously announced Transaction. The Transaction will be accounted for as a business combination in accordance with U.S. GAAP, with the Business treated as the accounting acquirer and Former TechTarget treated as the acquired company. Given the short period of time between the closing of the Transaction and the publication of these financial statements it has not been practicable to prepare a preliminary purchase price allocation as of the closing date reflecting the fair value of assets acquired and liabilities assumed.
Prior to completion of the Transaction, all remaining related party balances as of September 30, 2024 were settled between the Business and Informa through cash and non-cash transactions. Upon closing of the Transaction, the Business no longer participates in Informa’s cash management and financing operations and as such Informa’s financial support is no longer in place.
On December 2, 2024, New TechTarget, as borrower, and Former TechTarget, as guarantor, entered into a $250 million unsecured five-year revolving credit facility (the “Credit Facility”) with Informa Group Holdings Limited, an affiliate of Informa, as administrative agent (the “Administrative Agent”), and the lenders from time to time party thereto.
FS-17
The Credit Facility expires on December 2, 2029 (the “Maturity Date”) and is guaranteed by New TechTarget’s existing and future material wholly-owned domestic subsidiaries, subject to customary exceptions. The Credit Facility also contains an expansion option permitting New TechTarget to request incremental commitments of up to the greater of (A) $125 million and (B) 100.0% of Consolidated EBITDA (as defined in the Credit Agreement) of the trailing four fiscal quarters plus an unlimited amount, so long as the Consolidated Senior Secured Net Leverage Ratio (as defined in the Credit Agreement) does not exceed 2.50:1.00, from lenders that elect to make such incremental commitments available, upon the satisfaction of certain conditions.
Borrowings under the Credit Facility bear interest at New TechTarget’s option as follows: (1) SOFR Loans (as defined in the Credit Agreement) bear interest at a variable rate equal to the Term SOFR (as defined in the Credit Agreement) plus a margin of between 2.50% and 3.00% per annum, depending on New TechTarget’s Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) plus a 0.10% credit spread adjustment; and (2) ABR Loans (as defined in the Credit Agreement) bear interest at a variable rate equal to the highest of (a) the Federal funds rate (as published by the Federal Reserve Bank of New York from time to time) plus 1/2 of 1.0%, (b) the “prime rate” appearing in the “Money Rates” section of The Wall Street Journal and (c) the Daily SOFR Rate (as defined in the Credit Agreement) plus 1.00%, plus in each case a margin of between 1.50% and 2.00% per annum, depending on New TechTarget’s Consolidated Total Net Leverage Ratio. In no event will SOFR Loans or ABR Loans bear interest at a rate lower than 0.0%. New TechTarget is required to pay to the Administrative Agent on the Closing Date a funding fee equal to 0.75% of the aggregate principal amount of the commitments under the Credit Facility.
In addition, New TechTarget is required to pay a commitment fee of between 0.30% and 0.50% per annum (depending on New TechTarget’s Consolidated Total Net Leverage Ratio) based on the average daily unused amount of commitments under the Credit Facility.
The Credit Facility requires New TechTarget to maintain (i) a Consolidated Total Net Leverage Ratio of 3.00 to 1.00 or less; provided, that the maximum Consolidated Total Net Leverage Ratio will, at New TechTarget’s election, be increased to 3.50 to 1.00 for the four consecutive fiscal quarters following the consummation of any Permitted Acquisition (as defined in the Credit Agreement) by New TechTarget in which the aggregate cash consideration exceeds $150 million and (ii) a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of at least 3.00 to 1.00. The Consolidated Total Net Leverage Ratio and Consolidated Interest Coverage Ratio will be tested beginning with the first full fiscal quarter ending after the completion of the Transactions.
Borrowings under the Credit Facility are prepayable at New TechTarget’s option in whole or in part without premium or penalty. Amounts borrowed under Credit Facility may be repaid and reborrowed from time to time prior to the Maturity Date. There is no scheduled amortization under the Credit Facility.
New TechTarget’s obligations under the Credit Facility are unsecured. The Credit Agreement contains customary representations, warranties, conditions precedent, events of default, indemnities and affirmative and negative covenants, including covenants that, among other things, restrict the ability of New TechTarget and certain of its subsidiaries to: incur liens; incur indebtedness; make investments; sell or otherwise dispose of New TechTarget’s or certain of its subsidiaries’ assets; enter into certain mergers or consolidations; enter into sale and lease back transactions; and use proceeds of borrowings under the Credit Facility for other than permitted purposes. These covenants are subject to a number of important exceptions and qualifications. Certain changes of control with respect to New TechTarget would constitute an event of default under the Credit Facility; provided, that the Transactions shall not constitute a change of control. Upon the occurrence and during the continuance of an event of default, the lenders may terminate any unfunded commitments and declare the outstanding advances and all other obligations under the Credit Facility immediately due and payable.
New TechTarget used part of the proceeds of the borrowings under the Credit Facility on the Closing Date to consummate the Transaction. Following the Closing Date, New TechTarget intends to use the Credit Facility for its ongoing general corporate and working capital purposes.
On the Closing date, New TechTarget and Informa entered into various agreements to provide a framework for New TechTarget’s relationship with Informa after the Transaction, including transition services agreements, a data sharing agreement, a tax matters agreement, a brand license agreement, a commercial cooperation agreement, and a stockholder’s and registration rights agreement. These agreements will govern the separation between the Informa Tech Digital Business and Informa of the assets, employees, liabilities and obligations and will govern certain relationships between New TechTarget and Informa after the Transaction.
FS-18
In accordance with the provisions of the agreements, Informa will retain responsibility for the contingent consideration liabilities related to the acquisition of Industry Dive.
FS-19
EX-99.11
Exhibit 99.11
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On January 10, 2024, Informa entered into the Transaction Agreement to combine the Informa Tech Digital Businesses with Former TechTarget under TechTarget, Inc., (formerly known as Toro CombineCo, Inc.) a new publicly traded company (hereinafter referred to as “CombineCo”). In accordance with the Transaction Agreement, Informa PLC (“Informa”) contributed the Informa Tech Digital Businesses and $350 million in cash to CombineCo in exchange for CombineCo common stock.
The Transaction closed on December 2, 2024 (the “Closing”). Upon Closing, Informa held approximately 57% ownership in CombineCo (on a fully diluted basis, but without taking into account shares which may be issued upon the conversion (if any) of Former TechTarget’s convertible notes or shares reserved for future grants pursuant to certain NewCo equity incentive plans) and Former TechTarget’s current shareholders (including certain equity award holders) received $350 million in the form of a cash distribution and the remaining ownership interest in CombineCo, which is a publicly traded company in the U.S. The cash contribution by Informa and payment to Former TechTarget shareholders were subject to specific adjustments set forth in the Transaction Agreement for changes in net working capital, Target Adjusted EBITDA as defined in the Transaction Agreement, and certain non-current liabilities of the Informa Tech Digital Businesses. For the purposes of this Unaudited Pro Forma Condensed Combined Financial Information, management determined that the amount of such adjustments is zero. In connection with the Closing, CombineCo changed its registered name with the Secretary of State of Delaware to TechTarget, Inc. (hereinafter referred to as “NewCo”).
The Merger will be accounted for as a business combination in accordance with U.S. GAAP (pursuant to Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”)), with the Informa Tech Digital Businesses treated as the “acquirer” and Former TechTarget treated as the “acquired” company for financial reporting purposes. Informa controls NewCo as it beneficially owns approximately 57% of the outstanding shares of NewCo common stock (on a fully diluted basis, but without taking into account shares which may be issued upon the conversion (if any) of Former TechTarget’s convertible notes or shares reserved for future grants pursuant to certain NewCo equity incentive plans) and is entitled to designate five of the nine members of the NewCo Board. As a result, the Informa Tech Digital Businesses was determined to be the acquirer, as it is the business contributed by and still controlled by Informa. The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting. Under the acquisition method of accounting, the purchase price is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed of Former TechTarget based on their respective estimated fair values with any excess purchase price allocated to goodwill. Significant estimates and assumptions were used in determining the preliminary purchase price and the preliminary purchase price allocation reflected in the unaudited pro forma condensed combined financial statements. The process of valuing the net assets of Former TechTarget immediately prior to the business combination for purposes of presentation within this unaudited pro forma condensed combined financial information is preliminary. As the unaudited pro forma condensed combined financial statements have been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.
The unaudited pro forma condensed combined financial statements give effect to the business combination and other events contemplated by the Transaction Agreement as described in this combined this Form 8-K/A as below:
| • | The unaudited pro forma condensed combined balance sheet as of September 30, 2024 combines the historical<br>balance sheets of Former TechTarget and the Informa Tech Digital Businesses on a pro forma basis assuming the business combination and related transactions had been consummated on September 30, 2024. |
|---|---|
| • | The unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2024<br>and for the year ended December 31, 2023 combines the historical statements of income of Former TechTarget and the Informa Tech Digital Businesses on a pro forma basis assuming the business combination and related transactions had been<br>consummated on January 1, 2023 (i.e., the beginning of the earliest period presented). |
| --- | --- |
1
The unaudited pro forma condensed combined financial statements have been prepared using the interim financial statements of the Informa Tech Digital Businesses as of and for the nine months ended September 30, 2024, and the audited financial statements of the Informa Tech Digital Businesses as of December 31, 2023 and December 31, 2022 and for each of the years in the three-year period ended December 31, 2023 included elsewhere within this Form 8-K/A and from Former TechTarget’s unaudited consolidated financial statements as of and for the nine months ended September 30, 2024, and the consolidated audited financial statements as of December 31, 2023 and December 31, 2022 and for each of the years in the three-year period ended December 31, 2023 also included elsewhere within this Form 8-K/A.
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses” (“Article 11 of Regulation S-X”). Article 11 of Regulation S-X provides requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and the option to present reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). NewCo has elected not to present Management’s Adjustments in the unaudited pro forma condensed combined financial statements. Based on management’s assessment, no autonomous entity adjustments were required for the purposes of preparing the unaudited pro forma condensed combined financial information. The results set forth in the unaudited pro forma condensed combined financial information include adjustments that give effect to events that are directly attributable to the Transactions.
The unaudited pro forma condensed combined financial statements should be read in conjunction with the Informa Tech Digital Businesses’ and Former TechTarget’s historical financial statements described above, and the accompanying notes to the unaudited pro forma condensed combined financial statements, which describe the assumptions and estimates underlying the adjustments set forth therein. The pro forma adjustments, which management believes are reasonable under the circumstances, are preliminary and are based upon available information and certain assumptions described in the accompanying notes to the unaudited pro forma condensed combined financial information. Accordingly, the actual financial condition or performance of NewCo following completion of the Transactions in subsequent periods may differ materially from that which is reflected in the unaudited pro forma condensed combined financial statements. The pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Transactions in subsequent periods may differ materially from that which is reflected in the unaudited pro forma condensed combined financial statements. Additionally, the final determination of the purchase price allocation will depend on a number of factors that cannot be predicted with certainty at this time. Actual results and valuations may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information presented is for informational purposes only and is not necessarily indicative of the financial position or results of earnings that would have been realized if the Transactions had been completed on the dates set forth above, nor is it indicative of future results or financial position. The unaudited pro forma condensed combined financial statements do not include the realization of any cost savings from operating efficiencies, synergies or other activities, or the recognition of any cost increases or dis-synergies that might result from the Transactions.
2
TechTarget, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2024
(In thousands)
| Historical | Pro Forma | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Informa TechDigitalBusinesses | TechTarget Inc. -Historical (asreclassified –Note 8) | TransactionAccountingAdjustments | Note | Pro FormaCombined | ||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 21,608 | 278,519 | (8,198 | ) | 5 | (j) | 291,929 | |||||
| — | 5 | (f) | ||||||||||
| Short-term investments | — | 77,310 | — | 5 | (f) | 77,310 | ||||||
| Accounts receivable, net of allowance for doubtful accounts | 36,181 | 40,438 | — | 76,619 | ||||||||
| Related party receivables | 4,375 | — | (4,375 | ) | 5 | (g) | — | |||||
| Related party loan<br><br><br>Receivables | 48,215 | — | (48,215 | ) | 5 | (g) | — | |||||
| Prepaid Taxes | — | 3,928 | — | 3,928 | ||||||||
| Prepaid expenses and other current assets | 9,920 | 5,660 | — | 15,580 | ||||||||
| Total current assets | **** | 120,299 | **** | 405,855 | **** | (60,788 | ) | **** | 465,366 | |||
| Non-current assets | ||||||||||||
| Property and equipment, net | 2,170 | 2,047 | — | 4,217 | ||||||||
| Goodwill | 470,122 | 196,004 | 298,340 | 5 | (a) | 964,466 | ||||||
| Intangible assets, net | 274,733 | 109,559 | 540,441 | 5 | (b) | 924,733 | ||||||
| Operating lease<br>right-of-use assets | 2,430 | 14,605 | (1,799 | ) | 5 | (c) | 15,236 | |||||
| Deferred tax assets | 782 | 4,248 | 6,212 | 5 | (d) | 11,242 | ||||||
| Other assets | — | 652 | 9,800 | 5 | (k) | 10,452 | ||||||
| Total non- current assets | **** | 750,237 | **** | 327,115 | **** | 852,994 | **** | **** | 1,930,346 | |||
| Total assets | **** | 870,536 | **** | 732,970 | **** | 792,206 | **** | **** | 2,395,712 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | 3,991 | 6,616 | — | 10,607 | ||||||||
| Related party payables | 33,410 | — | (33,410 | ) | 5 | (g) | — | |||||
| Operating lease liabilities | 1,868 | 3,556 | (293 | ) | 5 | (c) | 5,131 | |||||
| Accrued expenses and other current liabilities | 5,666 | 8,133 | — | 13,799 | ||||||||
| Accrued compensation expenses | 12,751 | 1,817 | — | 14,568 | ||||||||
| Income taxes payable | 4,139 | 1,201 | — | 5,340 | ||||||||
| Contract liabilities | 40,332 | 17,354 | — | 57,686 | ||||||||
| Related party short-term debt | 550,890 | — | (550,890 | ) | 5 | (g) | — | |||||
| Convertible senior notes | — | — | 412,154 | 5 | (f) | 412,154 | ||||||
| Total current liabilities | **** | 653,047 | **** | 38,677 | **** | (172,439 | ) | **** | 519,285 |
3
| Historical | Pro Forma | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Informa TechDigitalBusinesses | TechTarget Inc. -Historical (asreclassified –Note 8) | TransactionAccountingAdjustments | Note | Pro FormaCombined | ||||||||||
| Non-Current Liabilities | ||||||||||||||
| Operating lease liabilities | 2,277 | 13,933 | (1,060 | ) | 5 | (c) | 15,150 | |||||||
| Convertible senior notes | — | 412,154 | (412,154 | ) | 5 | (f) | — | |||||||
| Term loan | — | — | — | 5 | (f) | — | ||||||||
| Other liabilities | 11,760 | — | — | 11,760 | ||||||||||
| Deferred tax liabilities | 7,143 | 18,730 | 143,503 | 5 | (d) | 169,376 | ||||||||
| Related party long-term debt | — | — | — | 5 | (g) | — | ||||||||
| Contingent consideration | 39,800 | — | (39,800 | ) | 5 | (i) | — | |||||||
| Total non-current liabilities | **** | 60,980 | **** | 444,817 | **** | **** | (309,511 | ) | **** | 196,286 | **** | |||
| Total liabilities | **** | 714,027 | **** | 483,494 | **** | **** | (481,950 | ) | **** | 715,571 | **** | |||
| Stockholders’ Equity: | ||||||||||||||
| Net parent investment | 145,917 | — | (145,917 | ) | 5 | (e) | — | |||||||
| Common Stock | — | 59 | (59 | ) | 5 | (e) | 71 | |||||||
| 71 | 5 | (e) | ||||||||||||
| Treasury stock | — | (329,118 | ) | 329,118 | 5 | (e) | — | |||||||
| Additional paid-in capital | — | 504,471 | (504,471 | ) | 5 | (e) | 2,151,863 | |||||||
| 625,358 | 5 | (e) | ||||||||||||
| 950,012 | 5 | (e) | ||||||||||||
| 531,710 | 5 | (g) | ||||||||||||
| 2,944 | 5 | (h) | ||||||||||||
| 39,800 | 5 | (i) | ||||||||||||
| (7,761 | ) | 5 | (j) | |||||||||||
| 9,800 | 5 | (k) | ||||||||||||
| Accumulated other comprehensive income (loss) | 10,592 | (276 | ) | 276 | 5 | (e) | 10,592 | |||||||
| Retained earnings | — | 74,340 | (74,340 | ) | 5 | (e) | (482,385 | ) | ||||||
| (479,441 | ) | 5 | (e) | |||||||||||
| (2,944 | ) | 5 | (h) | |||||||||||
| Total stockholders’ equity | **** | 156,509 | **** | 249,476 | **** | **** | 1,274,156 | **** | **** | 1,680,141 | **** | |||
| Total liabilities and stockholders’ equity | **** | 870,536 | **** | 732,970 | **** | **** | 792,206 | **** | **** | 2,395,712 | **** |
4
TechTarget, Inc.
Unaudited Pro Forma Condensed Combined Statement of Income
For the nine months ended September 30, 2024
(In thousands except number of shares and per share data)
| Historical | Pro Forma | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Informa TechDigital Businesses | TechTarget Inc. –Historical (asreclassified –Note 8) | TransactionAccountingAdjustments | Note | Pro FormaCombined | |||||||||||
| Revenues | 185,020 | 169,022 | 354,042 | ||||||||||||
| Cost of revenues: | |||||||||||||||
| Cost of revenues | (74,484 | ) | (61,870 | ) | 3,822 | 6 | (a) | (132,532 | ) | ||||||
| Amortization of acquired technology | — | (2,128 | ) | (13,578 | ) | 6 | (b) | (15,706 | ) | ||||||
| Gross Profit | **** | 110,536 | **** | **** | 105,024 | **** | **** | (9,756 | ) | **** | 205,804 | **** | |||
| Operating expenses: | |||||||||||||||
| Selling and marketing | (42,096 | ) | (68,419 | ) | (53 | ) | 6 | (c) | (110,568 | ) | |||||
| Product development | (8,499 | ) | (8,345 | ) | — | (16,844 | ) | ||||||||
| General and administrative | (53,909 | ) | (20,927 | ) | (237 | ) | 6 | (d) | (75,073 | ) | |||||
| Depreciation | (1,173 | ) | (830 | ) | — | (2,003 | ) | ||||||||
| Amortization | (24,414 | ) | (10,609 | ) | (17,346 | ) | 6 | (b) | (52,369 | ) | |||||
| Impairment of long-lived assets | (2,019 | ) | — | — | (2,019 | ) | |||||||||
| Acquisition and integration costs | (38,086 | ) | (11,240 | ) | — | (49,326 | ) | ||||||||
| Remeasurement of contingent consideration | (2,363 | ) | — | 2,363 | 6 | (e) | — | ||||||||
| Total operating expenses | **** | (172,559 | ) | **** | (120,370 | ) | **** | (15,273 | ) | **** | (308,202 | ) | |||
| Operating loss | **** | (62,023 | ) | **** | (15,346 | ) | **** | (25,029 | ) | **** | (102,398 | ) | |||
| Interest income | 4,422 | 11,523 | — | 15,945 | |||||||||||
| Interest expense | — | (1,656 | ) | — | (1,656 | ) | |||||||||
| Interest expense on related party loans | (18,554 | ) | — | 18,554 | 6 | (f) | — | ||||||||
| Other income (expense), net | (1,360 | ) | 91 | — | (1,269 | ) | |||||||||
| Loss before provision for income taxes | **** | (77,515 | ) | **** | (5,388 | ) | **** | (6,475 | ) | **** | (89,378 | ) | |||
| Income tax benefit (provision) | 6,542 | (5,104 | ) | 2,209 | 6 | (g) | 3,647 | ||||||||
| Net loss | **** | (70,973 | ) | **** | (10,492 | ) | **** | (4,266 | ) | **** | (85,731 | ) | |||
| Loss per share | 6 | (h) | |||||||||||||
| Basic | (1.70 | ) | (0.37 | ) | (1.20 | ) | |||||||||
| Diluted | (1.70 | ) | (0.37 | ) | (1.20 | ) |
5
TechTarget, Inc.
Unaudited Pro Forma Condensed Combined Statement of Income
For the year ended December 31, 2023
(In thousands except number of shares and per share data)
| Historical | Pro Forma | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Informa TechDigital Businesses | TechTarget Inc. –Historical (asreclassified –Note 8) | TransactionAccountingAdjustment | Note | Pro FormaCombined | |||||||||||
| Revenues | 252,049 | 229,963 | — | 482,012 | |||||||||||
| Cost of revenues: | |||||||||||||||
| Cost of revenues | (99,170 | ) | (72,776 | ) | 3,837 | 7 | (a) | (168,109 | ) | ||||||
| Amortization of acquired technology | — | (2,761 | ) | (18,180 | ) | 7 | (b) | (20,941 | ) | ||||||
| Gross Profit | **** | 152,879 | **** | **** | 154,426 | **** | **** | (14,343 | ) | **** | 292,962 | **** | |||
| Operating expenses: | |||||||||||||||
| Selling and marketing | (55,470 | ) | (97,161 | ) | (47 | ) | 7 | (c) | (152,678 | ) | |||||
| Product development | (11,143 | ) | (10,911 | ) | — | (22,054 | ) | ||||||||
| General and administrative | (66,087 | ) | (29,967 | ) | (215 | ) | 7 | (d) | (96,269 | ) | |||||
| Depreciation | (895 | ) | (1,172 | ) | (2,067 | ) | |||||||||
| Amortization | (30,723 | ) | (13,354 | ) | (23,919 | ) | 7 | (b) | (67,996 | ) | |||||
| Impairment of goodwill | (130,132 | ) | — | — | (130,132 | ) | |||||||||
| Impairment of long-lived assets | (577 | ) | — | — | (577 | ) | |||||||||
| Acquisition and integration costs | (5,830 | ) | (4,130 | ) | (2,944 | ) | 7 | (e) | (12,904 | ) | |||||
| Remeasurement of contingent consideration | 112,653 | — | (112,653 | ) | 7 | (f) | — | ||||||||
| Total operating expenses | **** | (188,204 | ) | **** | (156,695 | ) | **** | (139,778 | ) | **** | (484,677 | ) | |||
| Operating loss | **** | (35,325 | ) | **** | (2,269 | ) | **** | (154,121 | ) | **** | (191,715 | ) | |||
| Interest income | 2,402 | 14,056 | — | 16,458 | |||||||||||
| Interest expense | (1 | ) | (2,581 | ) | — | (2,582 | ) | ||||||||
| Interest expense on related party loans | (24,259 | ) | — | 24,259 | 7 | (g) | — | ||||||||
| Gain from early extinguishment of debt | — | 5,033 | — | 5,033 | |||||||||||
| Other income (expense), net | (874 | ) | 180 | — | (694 | ) | |||||||||
| Income (Loss) before provision for income taxes | **** | (58,057 | ) | **** | 14,419 | **** | **** | (129,862 | ) | **** | (173,500 | ) | |||
| Income tax benefit (provision) | 5,777 | (9,958 | ) | 3,566 | 7 | (h) | (615 | ) | |||||||
| Net income (loss) | **** | (52,280 | ) | **** | 4,461 | **** | **** | (126,296 | ) | **** | (174,115 | ) | |||
| Earnings/ (loss) per share | 7 | (i) | |||||||||||||
| Basic | (1.26 | ) | 0.16 | (2.44 | ) | ||||||||||
| Diluted | (1.26 | ) | 0.16 | (2.44 | ) |
6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
| 1. | Description of the Merger |
|---|
On January 10, 2024, Informa entered into an agreement to combine the Informa Tech Digital Businesses with Former TechTarget under a new publicly traded company, NewCo. The Transaction has been completed on December 2, 2024 in accordance with the Transaction Agreement, with Informa having contributed the Informa Tech Digital Businesses, along with $350 million in cash.
As a result of the Merger, each issued and outstanding share of Former TechTarget common stock as of immediately prior to the effective time of the Merger was converted into the right to receive (i) one share of NewCo common stock and (ii) a pro rata share of an amount in cash equal to $350 million which per share cash consideration amount is approximately $11.70 per share of Former TechTarget common stock as of the date of this Form 8-K/A (the “Merger Consideration”). For the purposes of this Unaudited Pro Forma Condensed Combined Financial Information, management determined that the amount of such adjustments is zero.
Additionally, pursuant to the terms of the Transaction Agreement and the governing plans and agreements (including existing employment agreements), equity awards issued by Former TechTarget that are outstanding as of immediately prior to the Effective Time was treated as follows:
| • | Immediately prior to the Effective Time, 100% of the outstanding<br>Pre-Signing Former TechTarget RSUs held by eight specified Former TechTarget executives, including each of Former TechTarget’s current executive officers, and 50% of all other outstanding unvested Pre-Signing Former TechTarget RSUs vested. At the Effective Time, each vested Pre-Signing Former TechTarget RSUs and any other Former TechTarget RSUs that were then vested and<br>outstanding were canceled, ceased to exist and were converted into the right of the holder thereof to receive the applicable portion of Merger Consideration in respect of the shares of Former TechTarget common stock underlying the vested Former<br>TechTarget RSUs. |
|---|---|
| • | Each Former TechTarget RSU that was outstanding and unvested as of the Effective Time (after taking into account<br>any vesting described in the prior paragraph) was assumed by NewCo and converted into an award of restricted stock units with respect to shares of NewCo common stock in the manner set forth in the Transaction Agreement. Each converted restricted<br>stock unit is subject to the same terms and conditions (including vesting, accelerated vesting and settlement schedule) as applied to the corresponding unvested Former TechTarget RSU immediately prior to the Effective Time. |
| --- | --- |
| • | Each Former TechTarget Option, whether vested or unvested, that was outstanding and unexercised as of immediately<br>prior to the Effective Time vested in full as of the Effective Time. Immediately prior to the Effective Time, each In-The-Money Option automatically ceased to exist and<br>was converted into the right of the holder of the In-The-Money Option to receive the applicable portion of the Merger Consideration in respect of the shares of Former<br>TechTarget common stock underlying the In-The-Money Option, reduced by the aggregate exercise price of the In-The-Money Option. Immediately prior to the Effective Time, each Underwater Option was canceled and terminated for no consideration. |
| --- | --- |
| • | Prior to the Closing, the Former TechTarget ESPP continued to operate consistent with its terms as in existence<br>as of January 10, 2024. Since the Closing occurred prior to the end of a Plan Period (as defined in the Former TechTarget ESPP), all accumulated participant contributions under the Former TechTarget ESPP were used to purchase shares of Former<br>TechTarget common stock from Former TechTarget as close as reasonably practicable to (but in any event prior to) the Closing Date in accordance with the terms of the Former TechTarget ESPP as if it were the last day of the Plan Period. The Former<br>TechTarget ESPP terminated in its entirety on the Closing Date, and no further rights to purchase Former TechTarget common stock will be granted or exercised under the Former TechTarget ESPP thereafter. |
| --- | --- |
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| • | Immediately following the Closing, Informa US Holdings Limited owns approximately 57% of the outstanding shares<br>of NewCo common stock (on a fully diluted basis, but without taking into account shares which may be issued upon the conversion (if any) of the Former TechTarget convertible notes or shares reserved for future grants pursuant to certain NewCo equity<br>incentive plans) and Former TechTarget stockholders own the remaining outstanding shares of NewCo common stock. |
|---|
**Debt refinancing:**Former TechTarget, as of September 30, 2024, had $3,040 thousand in aggregate principal amount of 0.125% convertible senior notes due 2025 (the “2025 Notes”) and $414,000 thousand in aggregate principal amount of 0.0% convertible senior notes due 2026 (the “2026 Notes” and together with the 2025 Notes, the “Notes”) outstanding. Pursuant to provisions within the indentures for the Notes, holders of the Notes for a specified period of time following the consummation of the merger may liquidate their Notes by (i) delivering them to NewCo for conversion, which NewCo may settle in cash, shares of NewCo or a combination thereof in NewCo’s discretion, or (ii) tendering them to NewCo for repurchase at fair value. Based upon the current conversion price, management expects that holders of the Notes will tender all of their notes for repurchase at fair value. To the extent any holders of the Notes elect to tender their notes for repurchase or deliver their Notes for conversion, NewCo would elect to settle such Notes using a combination of cash on hand at NewCo, proceeds from a new credit facility (as discussed below) and by liquidating short-term investments.
On December 2, 2024, NewCo entered into a financing agreement with Informa Group Holdings Limited for a revolving credit facility of $250,000 thousand for a period of five years incurring a debt-origination fee of $1,875 thousand (the “new credit facility”). NewCo expects to draw-down $150,000 thousand from the new credit facility to partly repay the Notes after the specified period of time following the merger that the holders of the Notes have available to liquidate their Notes.
NewCo’s new credit facility will bear interest at an interest rate of SOFR+2.75% and consequently the NewCo is expected to incur an annual interest cost of $11,756 thousand.
8
| 2. | Basis of Presentation |
|---|
The unaudited pro forma condensed combined financial information and related notes are prepared in accordance with SEC Article 11 of Regulation S-X and present the historical financial information of the Informa Tech Digital Businesses and Former TechTarget adjusted to give effect to the business combination and the other events contemplated by the Transaction Agreement.
The Merger will be accounted for under the acquisition method of accounting for business combinations pursuant to the provisions of ASC 805. Informa will control NewCo as it will beneficially own approximately 57% of the outstanding shares of NewCo common stock (on a fully diluted basis, but without taking into account shares which may be issued upon the conversion (if any) of Former TechTarget’s convertible notes or shares reserved for future grants pursuant to certain NewCo equity incentive plans), and was entitled to designate five of the nine NewCo Board members. As a result, the Informa Tech Digital Businesses was determined as the acquirer, as it is the business contributed by and still controlled by Informa. Under the acquisition method of accounting, the estimated purchase price will be allocated to Former TechTarget’s assets acquired and liabilities assumed based upon their estimated fair values, using the fair value concepts defined in ASC Topic 820, Fair Value Measurement, at the date of completion of the Merger. Any excess of merger consideration over the preliminary estimate of the fair value of identified assets acquired and liabilities assumed will be recognized as goodwill. Significant judgment is required in determining the preliminary fair values of identified intangible assets, property, plant and equipment, certain other assets, debt and other assumed liabilities. These preliminary valuations of assets acquired, and liabilities assumed are determined using market, income and cost approaches from the perspective of a market participant, which requires estimates and assumptions including, but not limited to, estimating future cash flows in addition to developing the appropriate market discount rates and obtaining available market pricing for comparable assets. Additionally, the final purchase price allocation will depend on a number of factors that cannot be predicted with certainty at this time. The final valuation may materially change the allocation of the purchase price, which could materially affect the fair values assigned to the assets and liabilities and could result in a material change to the unaudited pro forma condensed combined financial information.
The historical audited consolidated financial statements of Former TechTarget were prepared in accordance with U.S. GAAP and presented in U.S. dollars. The historical audited combined financial statements of the Informa Tech Digital Businesses were prepared in accordance with U.S. GAAP and presented in U.S. dollars.
The following unaudited pro forma condensed combined financial information presents the combination of the financial information of the Informa Tech Digital Businesses and Former TechTarget adjusted to give effect to the business combination and other events contemplated by the Transaction Agreement as described in this Form 8-K/A. The unaudited pro forma condensed combined balance sheet as of September 30, 2024 combines the historical balance sheets of Former TechTarget and the Informa Tech Digital Businesses on a pro forma basis assuming the business combination and related transactions had been consummated on September 30, 2024. The unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2024 and the year ended December 31, 2023 combines the historical statements of income of Former TechTarget and the Informa Tech Digital Businesses on a pro forma basis assuming the business combination and related transactions as if they had occurred on January 1, 2023, beginning of the earliest period presented.
The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of NewCo and they are based on the information available at the time of their preparation. Actual results may differ materially from the assumptions within the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial statements are intended to provide information about the impact of the Former TechTarget acquisition as if it had been consummated earlier. The pro forma adjustments are based on available information and certain assumptions that management believes are factually supportable and are expected to have an impact on NewCo’s results of operations. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma condensed combined financial statements have been made.
9
Accounting policies and Reclassification
Management will perform a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when confirmed, could have a material impact on the consolidated financial statements of NewCo. Based on its initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information other than certain reclassification adjustments to conform Former TechTarget’s historical financial statements presentation to the Informa Tech Digital Businesses’ financial statement presentation (as presented in Note 8 below). As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.
| 3. | Estimated purchase price |
|---|
Pursuant to the Transaction Agreement, at the closing of the Transaction, Informa owns approximately 57% of the outstanding NewCo common stock (on a fully diluted basis, but without taking into account shares which may be issued upon the conversion (if any) of the Notes or shares reserved for future grants pursuant to certain NewCo equity incentive plans) and Former TechTarget stockholders own the remaining outstanding NewCo common stock. The preliminary estimated purchase price, which represents the consideration transferred to Former TechTarget’s security holders in this reverse acquisition, is calculated based on the aggregate amount of the cash and the NewCo common stock that transferred to Former TechTarget stockholders own upon the closing of the Transaction. The accompanying unaudited pro forma condensed combined financial information reflects the purchase price of $950,083 thousand, which consists of the following (in thousands except for number of shares and per share amounts):
| (USD in thousands) | Amount | |
|---|---|---|
| Cash paid (i) | 350,000 | |
| Estimated aggregate fair value of NewCo common stock issued for outstanding Former TechTarget<br>common stock (ii) | 592,172 | |
| Replacement equity awards for Former TechTarget’s equity awards (iii) | 7,911 | |
| Estimated purchase price | **** | 950,083 |
Notes:
| i. | Represents the total cash consideration paid to Former TechTarget stockholders, who hold 29,802,846 shares of<br>NewCo, in the aggregate, of $11.70 per share of Former TechTarget common stock. |
|---|---|
| ii. | Represents the preliminary estimated aggregate fair value of 29,802,846 shares of NewCo common stock that were<br>issued to Former TechTarget shareholders (including certain equity award holders) as purchase consideration as of the closing of the Transactions pursuant to the Transaction Agreement |
| --- | --- |
NewCo common stock did not have a readily observable market price at close. Accordingly, management derived the preliminary estimated per share fair value of the NewCo common stock based on (a) the aggregate fair value of the Former TechTarget shares acquired of approximately $940 million measured using Former TechTarget’s quoted share price of $31.54 on NASDAQ at the close of trading on December 2, 2024 (the acquisition date) multiplied by the 29,802,846 shares of Former TechTarget that were acquired, less (b) the $350 million of cash consideration payable to holders of Former TechTarget common stock on close of the transaction, all divided by (c) the 29,802,846 shares of NewCo issued for outstanding Former TechTarget common stock. Management determined that the value of the acquisition cash consideration was already reflected in the quoted share price of Former TechTarget shares at close.
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| iii. | Represents estimated consideration for replacement of Former TechTarget’s outstanding equity awards. As<br>discussed in Note 1 above, 949,300 unvested Former TechTarget RSUs will be replaced by 1,494,390 NewCo RSUs with similar terms and conditions. The fair value of NewCo’s RSUs equity awards attributable to the<br>pre-combination service period aggregating $7,911 thousand represents merger consideration. The remainder of the fair value of $39,218 thousand will be recognized as compensation expense subsequent<br>to the merger until the year 2027. |
|---|
11
| 4. | Preliminary Purchase Price Allocation |
|---|
The allocation of the purchase price with respect to the Merger is based upon management’s estimates of and assumptions related to the fair values of assets to be acquired and liabilities to be assumed as of September 30, 2024, using currently available information. Due to the fact that the unaudited pro forma condensed combined financial statements have been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on NewCo’s financial position and results of operations may differ materially from the pro forma amounts included herein.
The following table sets forth a preliminary allocation of the consideration to the identifiable tangible and intangible assets acquired and liabilities assumed with the excess recorded to goodwill as if the Transactions occurred on September 30, 2024:
| (in 000’s) | Estimate Fair Value | |
|---|---|---|
| Cash and cash equivalents | 278,519 | |
| Short term investments | 77,310 | |
| Accounts receivables, net of allowances | 40,438 | |
| Prepaid taxes | 3,928 | |
| Prepaid expenses and other current assets | 5,660 | |
| Property and Equipment, net | 2,047 | |
| Intangible Assets, net | 650,000 | |
| Operating lease assets with<br>right-of-use | 12,806 | |
| Deferred tax assets | 10,460 | |
| Other assets | 652 | |
| Total assets acquired | **** | 1,081,820 |
| Accounts payable | 6,616 | |
| Current operating lease liabilities | 3,263 | |
| Accrued expenses and other current liabilities | 8,570 | |
| Accrued compensation expenses | 1,817 | |
| Income taxes payable | 1,201 | |
| Contract liabilities | 17,354 | |
| Non-current operating lease liabilities | 12,873 | |
| Convertible senior notes | 412,154 | |
| Deferred tax liabilities | 162,233 | |
| Total liabilities assumed | **** | 626,081 |
| Total assets acquired in excess of liabilities assumed | **** | 455,739 |
| Goodwill | **** | 494,344 |
| Total estimated merger consideration | $ | 950,083 |
The preliminary purchase price allocation is based on a preliminary assessment of the fair values of the assets acquired and liabilities assumed as of September 30, 2024.
12
| 5. | Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet | |||||||
|---|---|---|---|---|---|---|---|---|
| a) | Represents the elimination of $196,004 thousand of existing goodwill of Former TechTarget and the<br>preliminary recognition of $494,344 thousand of goodwill arising out of the Transactions which is not expected to be deductible for tax purposes. | |||||||
| --- | --- | |||||||
| b) | Represents the elimination of $109,559 thousand of existing intangible assets of Former TechTarget and<br>preliminary recognition of $650,000 thousand of identifiable intangible assets attributable to the Transactions. | |||||||
| --- | --- | |||||||
| (in 000 ‘s) | Fair Value | EstimatedUsefulLives | Amortizationexpense for thenine monthsendedSeptember 30,2024 | Amortizationexpense forthe yearDecember 31,2023 | ||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Trade Names -Digital Intent | 40,000 | 14 years | 2,143 | 2,857 | ||||
| Trade Names – Intelligence and Advisory | 5,000 | 14 years | 268 | 357 | ||||
| Developed Technology – Digital Intent | 105,000 | 6.5 years | 12,115 | 16,154 | ||||
| Customer Relationships – Digital Intent | 440,000 | 13 years | 25,385 | 33,846 | ||||
| Customer Relationships – Intelligence and Advisory | 60,000 | 12 years | 3,750 | 5,000 | ||||
| Total | **** | 650,000 | **** | 43,661 | **** | 58,214 |
The above amortization expense has been presented in the unaudited pro forma condensed combined statements of income as follows:
| (in 000’s) | Amortizationexpense for the ninemonths endedSeptember 30, 2024 | Amortizationexpense for theyear endedDecember 31, 2023 | ||
|---|---|---|---|---|
| Amortization of acquired technology (as part of Cost of revenues) – Refer to Note 6(b) and<br>Note 7(b) | 15,706 | 20,941 | ||
| Amortization (as part of Operating expenses) – Refer to Note 6(b) and Note 7(b) | 27,955 | 37,273 | ||
| Total | **** | 43,661 | **** | 58,214 |
| c) | Represents adjustment to remeasure acquired lease liabilities and ROU assets in accordance with ASC 842, Leases<br>as per the details below: | |||
| --- | --- | |||
| (in 000’s) | Amount | |||
| --- | --- | --- | --- | |
| Pro forma transaction accounting adjustments | ||||
| Elimination of Former TechTarget’s historical net book value of operating lease<br>assets | (14,605 | ) | ||
| Preliminary remeasurement of acquired operating lease assets | 16,136 | |||
| Fair valuation impact of acquired unfavorable lease arrangements | (3,330 | ) | ||
| Net pro forma transaction accounting adjustment to ROU assets, net | (1,799 | ) |
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| (in 000’s) | Amount | ||
|---|---|---|---|
| Pro forma transaction accounting adjustments | |||
| Elimination of Former TechTarget’s historical net book value of current operating lease<br>liabilities | (3,556 | ) | |
| Preliminary remeasurement of current operating lease liabilities | 3,263 | ||
| Net pro forma transaction accounting adjustment to current operating lease liabilities | (293 | ) | |
| (in 000’s) | Amount | ||
| --- | --- | --- | --- |
| Pro forma transaction accounting adjustments | |||
| Elimination of Former TechTarget’s historical net book value of non-current operating lease liabilities | (13,933 | ) | |
| Preliminary remeasurement of non-current operating lease<br>liabilities | 12,873 | ||
| Net pro forma transaction accounting adjustment to<br>non-current operating lease liabilities | (1,060 | ) | |
| d) | Represents the net change in deferred tax assets and liabilities associated with the fair value adjustments<br>(refer Note 4 above) related to allocation of the purchase price to assets acquired and liabilities assumed (excluding goodwill). Deferred taxes were computed using a combined U.S. federal and state statutory tax rate of 25%. This rate is subject to<br>change when NewCo performs a complete tax analysis after the Transactions are completed. | ||
| --- | --- | ||
| e) | Represents adjustments to equity including the following: | ||
| --- | --- | ||
| • | Elimination of the historical Former TechTarget stockholders’ equity of $249,476 thousand.<br> | ||
| --- | --- | ||
| • | Reclassification of net parent investment aggregating $(145,917) thousand, of which $(479,441) thousand is<br>reclassified to retained earnings, being the Informa Tech Digital Businesses’ historical accumulated deficit, and the balance of $625,358 thousand is reclassified to additional paid-in capital.<br> | ||
| --- | --- | ||
| • | Recording estimated purchase consideration of $950,083 thousand of which $71 thousand is included in<br>common stock as par value of 71,454,212 shares outstanding (29,802,846 issued to Former TechTarget shareholders and 41,651,366 issued to Informa in the business combination) of NewCo at a par value of $0.001/ per share with the balance of<br>$950,012 thousand included in additional paid-in capital. | ||
| --- | --- | ||
| • | Recording $350,000 thousand cash contribution by Informa (refer to Note 1 above) utilized for settling cash<br>consideration payable to certain existing Former TechTarget shareholders (refer to Note 3 above). | ||
| --- | --- | ||
| f) | The Notes have not settled as of the date of the close of the transaction. The Notes are expected to be settled<br>with existing cash, cash drawn on the new credit facility (net of unamortized debt issuance costs) and short-term investments as referenced in detail at Note 1 above and were reclassified as a current liability. No pro forma effect has been given to<br>the settlement of the Notes. | ||
| --- | --- | ||
| in (000’s) | Amount | ||
| --- | --- | --- | |
| Principal amount of Former TechTarget convertible notes at close (A) | 417,040 | ||
| Repaid through (B): | |||
| i) Cash on hand with Former TechTarget | 191,605 | ||
| ii) Cash drawn from new credit facility | 148,125 | ||
| iii) Short term investments | 77,310 |
14
| g) | Represents the settlement of the Informa Tech Digital Businesses’ related party receivables, related party<br>loan receivables, related party payables, and related party loans, resulting in a net amount of $531,710 thousand, which were extinguished upon consummation of the Transactions pursuant to the terms of the Transaction Agreement with the below<br>details: | ||
|---|---|---|---|
| in (000’s) | Amount | ||
| --- | --- | --- | --- |
| Pro forma transaction accounting adjustments | |||
| Related party receivables | 4,375 | ||
| Related party loan receivables | 48,215 | ||
| Related party payables | (33,410 | ) | |
| Related party short-term debt | (550,890 | ) | |
| Related party long-term debt | — | ||
| Total | **** | (531,710 | ) |
| h) | Reflects the accrual of the Informa Tech Digital Businesses’<br>non-recurring transaction costs of $2,944 thousands related to the transaction including fees expected to be paid for financial advisors, legal services, and professional accounting services. Such costs are<br>not reflected in the historical balance sheet of Informa Tech Digital Businesses as of September 30, 2024, but are reflected in the NewCo’s unaudited pro forma condensed combined balance sheet as of September 30, 2024, as an increase<br>to additional paid-in capital and a decrease to retained earnings. These costs are not expected to be incurred in any period beyond 12 months from the closing date of the transaction. Such costs were not<br>recorded as liabilities as the liability will be assumed by Informa pursuant to the terms of the Transaction Agreement. Furthermore, Former TechTarget also incurred similar non-recurring transaction costs of<br>$20,424 thousand until the Closing Date. Such costs were not reflected as pro forma adjustments in the unaudited pro forma condensed combined statements of operations as these amounts are not expected to impact the operating results of the<br>NewCo. | ||
| --- | --- | ||
| i) | Represents the elimination of the Informa Tech Digital Businesses’ contingent consideration of<br>$39,800 thousand, as it has been excluded from the Transactions and will be assumed by Informa pursuant to the terms of the Transaction Agreement. | ||
| --- | --- | ||
| j) | Represents one-time post-combination payment of $8,198 thousand to<br>tax authorities, related to estimated tax effects resulting from the accelerated vesting of Former TechTarget’s existing RSUs of which $7,761 thousand pertaining to employee’s share was recorded in additional paid-in capital and $437 thousand pertaining to employer’s share which was considered as an assumed liability. | ||
| --- | --- | ||
| k) | Represents the recognition of an indemnification asset related to the Informa Tech Digital Businesses’<br>historical sales tax related to a prior acquisition as Informa is contractually obligated to indemnify NewCo to settle this liability pursuant to the terms of the Transaction Agreement. | ||
| --- | --- |
15
| 6. | Adjustments to the Unaudited Pro Forma Condensed Combined Statements of Income for the Nine Months EndedSeptember 30, 2024 | ||
|---|---|---|---|
| a) | Represents adjustments to cost of revenues associated with the elimination of Former TechTarget’s<br>historical lease expense, amortization related to existing computer software, internal-use software, and website development costs, and the recognition of the estimated lease expense based on remeasured lease<br>liabilities and ROU assets. | ||
| --- | --- | ||
| (in 000’s) | Amount | ||
| --- | --- | --- | --- |
| Pro forma transaction accounting adjustments | |||
| Elimination of historical lease expense | 99 | ||
| Elimination of historical amortization related to existing computer software, internal-use software, and website development costs* | 3,832 | ||
| Recognition of the estimated new lease expense | (109 | ) | |
| Net pro forma transaction accounting adjustment—cost of revenues | 3,822 | ||
| * | The recognition of new amortization costs is not presented in this table and is instead included below at Note<br>6(b). | ||
| --- | --- | ||
| b) | Represents the following adjustments pertaining to amortization of intangibles: | ||
| --- | --- | ||
| • | Classified within cost of revenues: Elimination of Former TechTarget’s historical amortization of acquired<br>technology of $2,128 thousand and recognition of new amortization expense of $15,706 thousand resulting from intangible assets identified as part of the estimated purchase price allocation. | ||
| --- | --- | ||
| • | Classified within operating expenses: Elimination of Former TechTarget’s historical amortization of<br>intangible assets of $10,609 thousand and recognition of new amortization expense of $27,955 thousand resulting from intangible assets identified as part of the estimated purchase price allocation. | ||
| --- | --- | ||
| c) | Represents adjustments to selling and marketing expenses associated with the elimination of Former<br>TechTarget’s lease expense, and the recognition of the estimated lease expense based on remeasured lease liabilities and ROU assets. | ||
| --- | --- | ||
| (in 000’s) | Amount | ||
| --- | --- | --- | --- |
| Pro forma transaction accounting adjustments | |||
| Elimination of historical lease expense | 547 | ||
| Recognition of the estimated new lease expense | (600 | ) | |
| Net pro forma transaction accounting adjustment-selling and marketing expenses | (53 | ) | |
| d) | Represents adjustments to general and administrative expenses associated with the elimination of Former<br>TechTarget’s historical lease expense, and the recognition of the estimated lease expense based on remeasured lease liabilities and ROU assets. | ||
| --- | --- | ||
| (in 000’s) | Amount | ||
| --- | --- | --- | --- |
| Pro forma transaction accounting adjustments | |||
| Elimination of historical lease expense | 2,468 | ||
| Recognition of the estimated new lease expense | (2,705 | ) | |
| Net pro forma transaction accounting adjustment-general and administrative expenses | **** | (237 | ) |
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| e) | Represents the elimination of the Informa Tech Digital Businesses’ loss on remeasurement of contingent<br>consideration, as contingent consideration liabilities have been excluded from the Transactions and will be assumed by Informa pursuant to the terms of the Transaction Agreement. | |||||
|---|---|---|---|---|---|---|
| f) | Represents the elimination of the Informa Tech Digital Businesses’ interest expense on related party<br>loans, which were extinguished upon consummation of the Merger. | |||||
| --- | --- | |||||
| g) | Represents the income tax effect of the pro forma adjustments presented. The pro forma income tax adjustments<br>were estimated using a combined U.S. federal and statutory tax rate of 25.0% applied to all adjustments excluding non-taxable and non-deductible items such as certain<br>contingent consideration and unrecorded transaction costs. The effective tax rate of NewCo could be materially different depending on post-combination activities. | |||||
| --- | --- | |||||
| h) | The pro forma basic and diluted weighted average shares outstanding represent NewCo’s shares issued to<br>Informa and Former TechTarget’s shareholders on consummation of the Transaction. The pro forma basic and diluted loss per share are as follows: | |||||
| --- | --- | |||||
| (in 000’s, except for number of shares per sharedata) | For the nine months ended September 30, 2024 | |||||
| --- | --- | --- | --- | --- | --- | --- |
| Basic loss per share | Diluted loss per share | |||||
| Record issuance of NewCo shares to Informa (a) | 41,651,366 | 41,651,366 | ||||
| Record issuance of NewCo shares to Former TechTarget’s shareholders (b) | 29,802,846 | 29,802,846 ^ | ||||
| Pro forma NewCo weighted -average outstanding shares(c = a+ b) | **** | 71,454,212 | **** | **** | 71,454,212 | **** |
| Pro forma net loss (d) | (85,731 | ) | (85,731 | ) | ||
| Pro forma loss per share (e = d / (c) | **** | (1.20 | ) | **** | (1.20 | ) |
| ^ | 1,494,390 Restricted Stock Units outstanding were excluded from the calculation of diluted pro forma earnings<br>per share as they were anti-dilutive. | |||||
| --- | --- | |||||
| 7. | Adjustments, to the Unaudited Pro Forma Condensed Combined Statements of Income for the Year EndedDecember 31, 2023 | |||||
| --- | --- | |||||
| a) | Represents adjustments to cost of revenues associated with the elimination of Former TechTarget’s<br>historical lease expenses, amortization related to existing computer software, internal -use software, and website development costs, and the recognition of the estimated lease expenses based on remeasured lease liabilities and ROU assets.<br> | |||||
| --- | --- | |||||
| (in 000’s) | Amount | |||||
| --- | --- | --- | --- | |||
| Pro forma transaction accounting adjustments | ||||||
| Elimination of historical lease expense | 131 | |||||
| Elimination of historical amortization related to existing computer software, internal-use software, and website development costs* | 3,846 | |||||
| Recognition of the estimated new lease expense | (140 | ) | ||||
| Net pro forma transaction accounting adjustment-cost of revenues | 3,837 | |||||
| * | The recognition of new amortization costs is not presented in this table and is instead included in below in<br>Note 7(b). | |||||
| --- | --- | |||||
| (b) | Represents the following adjustments pertaining to amortization of intangibles: | |||||
| --- | --- | |||||
| • | Classified within cost of revenues: Elimination of Former TechTarget’s historical amortization of acquired<br>technology of $2,761 thousand and recognition of new amortization expense of $20,941 thousand resulting from intangibles identified as part of the estimated purchase price allocation. | |||||
| --- | --- |
17
| • | Classified within operating expenses: Elimination of Former TechTarget’s historical amortization of<br>intangibles of $13,354 thousand and recognition of new amortization expense of $37,273 thousand resulting from intangibles identified as part of the estimated purchase price allocation. | ||
|---|---|---|---|
| c) | Represents adjustments to selling and marketing expenses associated with the elimination of Former<br>TechTarget’s historical lease expense, and the recognition of the estimated remeasured lease liabilities and ROU assets. | ||
| --- | --- | ||
| (in 000’s) | Amount | ||
| --- | --- | --- | --- |
| Pro forma transaction accounting adjustments | |||
| Elimination of historical lease expense | 727 | ||
| Recognition of the estimated new lease expense | (774 | ) | |
| Net pro forma transaction accounting adjustment - selling and marketing expenses | (47 | ) | |
| d) | Represents adjustments to general and administrative expenses associated with the elimination of Former<br>TechTarget’s historical lease expense, and the recognition of the estimated lease expense based on remeasured lease liabilities and ROU assets. | ||
| --- | --- | ||
| (in 000’s) | Amount | ||
| --- | --- | --- | --- |
| Pro forma transaction accounting adjustments | |||
| Elimination of historical lease expense | 3,364 | ||
| Recognition of the estimated new lease expense | (3,579 | ) | |
| Net pro forma transaction accounting adjustment - general and administrative expenses | (215 | ) | |
| e) | Reflects the accrual of the Informa Tech Digital Businesses’<br>non-recurring transaction costs of $2,944 thousands related to the transaction including fees expected to be paid for financial advisors, legal services, and professional accounting services. Such costs are<br>not reflected in the historical statements of income of Informa Tech Digital Businesses for the year ended December 31, 2023, but are reflected in the NewCo.’s unaudited pro forma condensed combined statements of income for the year ended<br>December 31, 2023. These costs are not expected to be incurred in any period beyond 12 months from the closing date of the transaction. Furthermore, Former TechTarget also incurred similar non-recurring<br>transaction costs of $20,424 thousand until the Closing Date. Such costs were not reflected as pro forma adjustments in the unaudited pro forma condensed combined statements of operations as these amounts are not expected to impact the<br>operating results of the NewCo. For the year ended December 31, 2023, the Informa Tech Digital Businesses’ historical statements included $5,830 thousand of transaction costs, while Former TechTarget’s historical financial<br>statements included $4,130 thousand of transaction costs, all of which are non-recurring. | ||
| --- | --- | ||
| f) | Represents the elimination of the Informa Tech Digital Businesses’ gain on remeasurement of contingent<br>consideration, as contingent consideration liabilities have been excluded from the Transactions and will be assumed by Informa pursuant to the terms of the Transaction Agreement. | ||
| --- | --- | ||
| g) | Represents the elimination of the Informa Tech Digital Businesses’ interest expense on related party<br>loans, which were extinguished upon consummation of the Merger. | ||
| --- | --- | ||
| h) | Represents the income tax effect of the pro forma adjustments presented. The pro forma income tax adjustments<br>were estimated using a combined U.S. federal and statutory tax rate of 25.0% applied to all adjustments excluding non-taxable and non-deductible items such as certain<br>contingent consideration and unrecorded transaction costs. The effective tax rate of NewCo could be materially different depending on post-combination activities. | ||
| --- | --- |
18
| i) | The pro forma basic and diluted weighted average shares outstanding represent NewCo’s shares issued to<br>Informa and Former TechTarget’s shareholders on consummation of the Transactions. The pro forma basic and diluted loss per share are as follows: | |||||
|---|---|---|---|---|---|---|
| (in 000’s, except for number of shares and per sharedata) | For the year ended December 31, 2023 | |||||
| --- | --- | --- | --- | --- | --- | --- |
| Basic loss per share | Diluted loss per share | |||||
| Record issuance of NewCo shares to Informa (a) | 41,651,366 | 41,651,366 | ||||
| Record issuance of NewCo shares to Former TechTarget’s shareholders (b) | 29,802,846 | 29,802,846 ^ | ||||
| Pro forma NewCo weighted-average outstanding shares(c = a+ b) | **** | 71,454,212 | **** | **** | 71,454,212 | **** |
| Pro forma net loss (d) | (174,115 | ) | (174,115 | ) | ||
| Pro forma loss per share (e = d / c) | **** | (2.44 | ) | **** | (2.44 | ) |
| ^ | 1,494,390 Restricted Stock Units outstanding were excluded from the calculation of diluted pro forma earnings<br>per share as they were anti-dilutive. | |||||
| --- | --- |
19
| 8. | Reclassifications |
|---|
The pro forma combined financial statements have been adjusted to reflect reclassifications to conform Former TechTarget Inc.’s financial statement presentation to that of the Informa Tech Digital Businesses.
Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2024:
| TechTarget Inc. -Historical | Reclassification | Note | TechTarget Inc. -As Reclassified | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | 278,519 | **** | — | **** | 278,519 | |||||
| Short term investments | 77,310 | **** | — | **** | 77,310 | |||||
| Accounts receivables, net of allowances | 40,438 | **** | — | **** | 40,438 | |||||
| Related party receivables | — | **** | — | **** | — | |||||
| Related party loan receivables | — | **** | — | **** | — | |||||
| Prepaid taxes | 3,928 | **** | — | **** | 3,928 | |||||
| Prepaid expenses and other current assets | 5,660 | **** | — | **** | 5,660 | |||||
| Total current assets | **** | 405,855 | — | **** | 405,855 | |||||
| Non-current assets | ||||||||||
| Property and Equipment, net | 26,851 | (24,804 | ) | (i | ) | 2,047 | ||||
| Goodwill | 196,004 | **** | — | **** | 196,004 | |||||
| Intangible Assets, net | 84,755 | 24,804 | (i | ) | 109,559 | |||||
| Operating lease assets with<br>right-of- use | 14,605 | **** | — | **** | 14,605 | |||||
| Deferred tax assets | 4,248 | **** | — | **** | 4,248 | |||||
| Other assets | 652 | **** | — | **** | 652 | |||||
| Total Non-Current Assets | **** | 327,115 | — | **** | 327,115 | |||||
| Total Assets | **** | 732,970 | — | **** | 732,970 | |||||
| Current Liabilities | ||||||||||
| Accounts payable | 6,616 | **** | — | **** | 6,616 | |||||
| Related party payables | — | **** | — | **** | — | |||||
| Current operating lease liabilities | 3,556 | **** | — | **** | 3,556 | |||||
| Accrued expenses and other current liabilities | 8,133 | **** | — | **** | 8,133 | |||||
| Accrued compensation expenses | 1,817 | **** | — | **** | 1,817 | |||||
| Income taxes payable | 1,201 | **** | — | **** | 1,201 | |||||
| Contract liabilities | 17,354 | **** | — | **** | 17,354 | |||||
| Related party short-term debt | — | **** | — | **** | — | |||||
| Contingent consideration | — | **** | — | **** | — | |||||
| Total Current Liabilities | **** | 38,677 | — | **** | 38,677 | |||||
| Non-Current Liabilities | ||||||||||
| Non-current operating lease liabilities | 13,933 | **** | — | **** | 13,933 | |||||
| Convertible senior notes | 412,154 | **** | — | **** | 412,154 | |||||
| Term loan | — | **** | — | **** | — | |||||
| Other liabilities | — | **** | — | **** | — | |||||
| Deferred tax liabilities | 18,730 | **** | — | **** | 18,730 |
20
| TechTarget Inc. -Historical | Reclassification | Note | TechTarget Inc. -As Reclassified | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Related party long-term debt | — | **** | — | — | |||||
| Non-current Contingent consideration | — | **** | — | **** | — | **** | |||
| Total Non-Current Liabilities | **** | 444,817 | **** | — | **** | 444,817 | **** | ||
| Total liabilities | **** | 483,494 | **** | — | **** | 483,494 | **** | ||
| Stockholders’ Equity: | |||||||||
| Net Parent investment | — | **** | — | — | |||||
| Preferred stock | — | **** | — | — | |||||
| Common stock | 59 | **** | — | 59 | |||||
| Treasury stock | (329,118 | ) | **** | — | (329,118 | ) | |||
| Additional paid-in capital | 504,471 | **** | — | 504,471 | |||||
| Accumulated other comprehensive income (loss) | (276 | ) | **** | — | (276 | ) | |||
| Retained earnings | 74,340 | **** | — | 74,340 | |||||
| Total stockholders’ equity | **** | 249,476 | **** | — | **** | 249,476 | **** | ||
| Total liabilities and stockholders’ equity | **** | 732,970 | **** | — | **** | 732,970 | **** |
Notes:
| i. | Represents the reclassification of $24,804 thousand from Property and equipment, net to Intangibleassets, net to conform to the Informa Tech Digital Businesses’ Balance Sheet presentation. |
|---|
21
Unaudited Pro Forma Condensed Combined Income Statement for the nine months ended September 30,2024:
| TechTarget Inc. -Historical | Reclassification | Note | TechTarget Inc. -As Reclassified | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 169,022 | — | 169,022 | |||||||||
| Cost of revenues: | ||||||||||||
| Cost of revenues | (61,870 | ) | — | (61,870 | ) | |||||||
| Amortization of acquired technology | (2,128 | ) | (2,128 | ) | ||||||||
| Gross Profit | 105,024 | — | 105,024 | |||||||||
| Operating expenses: | ||||||||||||
| Selling and marketing | (68,419 | ) | (68,419 | ) | ||||||||
| Product development | (8,345 | ) | (8,345 | ) | ||||||||
| General and administrative | (20,927 | ) | (20,927 | ) | ||||||||
| Depreciation | (6,930 | ) | 6,100 | (i | ) | (830 | ) | |||||
| Amortization | (4,509 | ) | (6,100 | ) | (i | ) | (10,609 | ) | ||||
| Impairment of long-lived assets | — | — | ||||||||||
| Acquisition and integration costs | (11,240 | ) | — | (11,240 | ) | |||||||
| Remeasurement of contingent consideration | — | — | ||||||||||
| Total operating expenses | (120,370 | ) | — | (120,370 | ) | |||||||
| Operating income (loss) | (15,346 | ) | — | (15,346 | ) | |||||||
| Interest and other income (expense), net | 9,958 | (9,958 | ) | (ii | ) | — | ||||||
| Interest expense | — | (1,656 | ) | (ii | ) | (1,656 | ) | |||||
| Interest income | — | 11,523 | (ii | ) | 11,523 | |||||||
| Other income (expense) | — | 91 | (ii | ) | 91 | |||||||
| Interest expense on related party loans | — | — | ||||||||||
| Gain from early extinguishment of debt | — | — | **** | — | **** | |||||||
| Income before provision for income taxes | **** | (5,388 | ) | **** | (5,388 | ) | ||||||
| Provision for income taxes | (5,104 | ) | — | (5,104 | ) | |||||||
| Net income (loss) | **** | (10,492 | ) | — | **** | (10,492 | ) |
Notes:
| i. | Represents the reclassification of $6,100 thousand from Deprecation to Amortization to conform to<br>the Informa Tech Digital Businesses’ Income Statement presentation. |
|---|---|
| ii. | Represents the disaggregation of $9,958 presented as Interest and other income (expense), net by Former<br>TechTarget as Interest expense, Interest income and Other income (expense) to conform to the Informa Tech Digital Businesses’ Income Statement presentation. |
| --- | --- |
22
Unaudited Pro Forma Condensed Combined Income Statement the year ended December 31, 2023:
| TechTargetInc. -Historical | Reclassification | Note | TechTargetInc. - AsReclassified | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 229,963 | **** | — | **** | 229,963 | |||||||
| Cost of revenues: | ||||||||||||
| Cost of revenues | (72,776 | ) | **** | — | **** | (72,776 | ) | |||||
| Amortization of acquired technology | (2,761 | ) | **** | — | **** | (2,761 | ) | |||||
| Gross Profit | **** | 154,426 | **** | **** | — | **** | **** | 154,426 | **** | |||
| Operating expenses: | ||||||||||||
| Selling and marketing | (97,161 | ) | **** | — | **** | (97,161 | ) | |||||
| Product development | (10,911 | ) | **** | — | **** | (10,911 | ) | |||||
| General and administrative | (34,097 | ) | 4,130 | (i | ) | (29,967 | ) | |||||
| Depreciation | (8,527 | ) | 7,355 | (ii | ) | (1,172 | ) | |||||
| Amortization | (5,999 | ) | (7,355 | ) | (ii | ) | (13,354 | ) | ||||
| Impairment of long-lived assets | **** | — | **** | **** | — | **** | **** | — | **** | |||
| Acquisition and Integration costs | **** | — | **** | (4,130 | ) | (i | ) | (4,130 | ) | |||
| Remeasurement of contingent consideration | **** | — | **** | **** | — | **** | **** | — | **** | |||
| Total operating expenses | **** | (156,695 | ) | — | **** | (156,695 | ) | |||||
| Operating income (loss) | **** | (2,269 | ) | — | **** | (2,269 | ) | |||||
| Interest and other income (expense), net | 11,655 | (11,655 | ) | (iii | ) | **** | — | **** | ||||
| Interest expense | — | (2,581 | ) | (iii | ) | (2,581 | ) | |||||
| Interest income | — | 14,056 | (iii | ) | 14,056 | |||||||
| Other income (expense) | — | 180 | (iii | ) | 180 | |||||||
| Interest expense on related party loans | — | **** | — | **** | **** | — | **** | |||||
| Gain from early extinguishment of debt | 5,033 | **** | — | **** | 5,033 | |||||||
| Income before provision for income taxes | **** | 14,419 | **** | — | **** | 14,419 | **** | |||||
| Provision for income taxes | (9,958 | ) | **** | — | **** | (9,958 | ) | |||||
| Net income (loss) | **** | 4,461 | **** | — | **** | 4,461 | **** |
Notes:
| i. | Represents the reclassification of $4,130 thousand from General and Administrative expenses to Acquisition<br>and Integration costs to conform to the Informa Tech Digital Businesses’ Income Statement presentation. |
|---|---|
| ii. | Represents the reclassification of $7,355 thousand from Deprecation to Amortization to conform to the<br>Informa Tech Digital Businesses’ Income Statement presentation. |
| --- | --- |
| iii. | Represents the disaggregation of $11,655 presented as Interest and other income (expense), net by Former<br>TechTarget as Interest expense, Interest income and Other income (expense) to conform to the Informa Tech Digital Businesses’ Income Statement presentation. |
| --- | --- |
23