TechTarget, Inc.

Good afternoon. Thank you for attending today's Informa TechTarget Third Quarter 2025 Financial Results Conference Call. My name is Tamia and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to your host, Farley Renick, General Counsel. You may proceed.

Thank you and good afternoon, everyone. The speakers joining us here today are Gary Nugent, our CEO, and Dan Norick, our CFO. Before turning the call over to Gary, we would like to remind everyone on the call of our earnings release process. As previously announced, in order to provide you with an update on our business in advance of the call, we posted a press release to the investor relations section of our website and furnished it on an 8K. You can also find these materials at the SEC free of charge at the SEC's website, www.sec.gov. A corresponding webcast as well as a replay of this conference call will be made available on the investor relations section of our website. Following Gary's remarks, the management team will be available to answer questions. Any statements made today by Informatech targets that are not factual, including during the Q&A, may be considered forward-looking statements. These forward-looking statements, which are subject to risks and uncertainties, are based on assumptions and are not guarantees of our future performance. Actual results may differ materially from our forecast and from these forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the risk factor section of our SEC filing. These statements speak only as of the date of this call, and informant or target undertakes no obligation to revise or update any forward-looking statements in order to reflect events that may arise after the conference call, except as required by law. Finally, we may also refer to certain financial measures not prepared in accordance with GAAP. A reconciliation of certain of these non-GAAP financial measures to the most comparable GAAP measure to the extent available without unreasonable effort accompanies our press release. With that, I'll turn the call over to Gary.

Thank you, Charlie, and thank you all for joining our call today. As always, we greatly appreciate you investing your time. I am pleased to report that Q3 of 2025 demonstrated the momentum that we had anticipated following our Q2 results. and that we made good progress in unlocking the benefits of the scale and breadth and diversity of our combined business. We have said many times we viewed 2025 as the foundation year for our combined company, as Informatech targets, executing upon our plan to align and integrate at pace and seize the benefits that the combination affords us. And I am convinced will be a key point of differentiation in the market as we move forward. Our early strategic initiatives are gaining traction and beginning to bear fruit, and we're seeing improving performance from our business. The B2B technology market is a dynamic one, with artificial intelligence and cybersecurity and generally digital transformation key drivers. Really, a $5 trillion end market today, our own Omnia analysts forecast this end market to double by 2034. And really our ability to inform, educate and shape the market and connect technology vendors with engaged purchase ready IT decision makers has never been more valuable. Our clients are in the main performing well. However, they are currently engaged in a strategic AI investment cycle with the majority of resources being redirected towards R&D in this arena. And while this may be temporarily impacting go-to-market and marketing budgets, these investments will ultimately need to demonstrate an ROI, which will drive increased demand for our products and services in the mid-town. Regardless, it is a large, addressable market out there. We size it at around $20 billion for our business, of which we have only penetrated 2.5% market share. Thus, there is plenty of runway for growth to leverage the breadth and scale of our client proposition to compete and win, increase our share of wallet with our customers, and take market share. Our strategic focus remains on four key areas. The first is a revamped go-to-market strategy, focusing our resources and efforts on the largest clients and the hottest markets. largely artificial intelligence, cybersecurity, and the channel market. Second is our product innovation. We are aligning and integrating the portfolio of products and services, leveraging the breadth and scale to offer and deliver solutions that align to the needs of our clients across their product lifecycle. And by extension, positioning ourselves as a strategic partner and improving our average order value. The third point, is improving our operational efficiency and effectiveness, unlocking the cost savings and the synergies that the combination affords us. And then fourth is a focus towards diversifying our audience development and engagement strategies, including establishing our discoverability through AI answer engines and LLS. In terms of our financial performance, from a revenue and an adjusted EBITDA perspective, we are delivering in line with what we had previously indicated. and today we are reaffirming our full year 2025 guidance. We continue to expect broadly flat revenues on a combined company basis compared to the prior year and an increase in adjusted EBITDA from last year to over $85 million this year. What is particularly encouraging is the sequential momentum that we've built throughout the year, moving from a negative 5.8% in year-on-year growth in Q1 to negative 1.6% in Q2 and now achieving positive year-on-year growth in Q3. Q4 is seasonally our strongest quarter of the year, and this trajectory demonstrates the underlying strength of our combined platform and the effectiveness of our strategic initiatives. Third quarter revenues were $122 million as compared to the prior year of $121 million on a combined company basis, a growth of around 1% year-on-year. However, it also represents sequential growth of 2% on Q2, which was a modest seasonal sequential decline last year. So revenue momentum is building, and I think in particular there's a bit of catch up here as we work through the aligning and integrating combination in the first two quarters of the year. The business generally exhibits attractive profit drop through on revenue expansion, together with the cost savings that we were delivering, resulted in our adjusted EBITDA growth in Q3 being ahead of our revenue growth, both on a year-on-year basis and on a sequential basis, delivering healthy margin expansion. In Q3, the adjusted EBITDA grew by 9% year-on-year. The company posted a net loss of $77 million, largely as a result of an $18 million non-cash impairment given the reduction in our market capitalization during the quarter. Our Q3 wind wall, as we would describe it, which is a device we use internally to keep track of and celebrate our successes, is covered in interesting anecdotes and posters. We have consolidated our intelligence and advisory brands under the unified OmniHavana. bringing together the expertise of Canalys, Wards, and EHT into a single powerful market intelligence platform. And this consolidation is already showing results in terms of client clarity and cross-selling opportunities. We launched in September the Informa Tech Target Portal, which is the first product leveraging our combined audience data set. We're now able to provide our clients with a unified access to intelligence, intent, and demand via an improved common interface. It represents a significant increase in the intent data signals, over 40% increase and greater audience reach, and improved performance in ROI reporting, and the ability to seamlessly integrate with the majority, if not all, of our customers' preferred marketing and sales platforms. And on that note, we were delighted to receive in October the Demand-Based Technology Partner of the Year Award. Our editorial teams have won 47 awards for their original authoritative and impartial B2B journalism year to date. It is such an asset in a world where trust and trusted sources of information command a premium. And in addition, the editorial team have recently launched a new publication, our Channel Guide, targeting the North American technology channel partners who collaborate with major tech companies on marketing, sales, and distribution. It's an important point to note that in this industry, over 70% of all value goes to market via the channel, and therefore this is a critical market for us to compete and win in. Our all-star editorial team for this combines talents from TechTarget, Channel Futures, Light Reading, and CIO Dive. Our go-to-market focus on the largest players and the hottest markets is beginning to bear fruit, with bookings up year-on-year, longer-term contracts, and increased average deal sizes as we present more comprehensive integrated solutions to our clients. And we continue to successfully reposition NetLine to target the volume end of the demand market, which is delivering significant growth in revenues and bookings year-on-year. But to us, most pleasing of all, I'm proud of the way our team has embraced the combined company culture that we are building, and we're seeing excellent collaboration efforts across the business. We continue to view AI as a significant opportunity for our business, as a technology market to serve in its own right, as a tool to improve productivity and quality, and as a catalyst for enhancing existing and inspiring new products and services. the focus of our efforts today lies in four key areas to provide conversational ai interfaces into our proprietary market and our permissioned audience data enhancing the efficacy and the speed of building and executing on their go-to-market programs for our clients the second area is on providing conversational ai interfaces into audience experience across the network enhancing our audience's ability to discover and engage with the original authoritative and unbiased information that better informs and shapes their buying journey. And then finally, really it's about enhancing the productivity of our market experts as they create original data and insights that inform and educate and shape the market and the productivity of our marketing and sales teams as they seek to scale our presence in what is that $20 billion addressable market. And whilst AI is evolving the way audiences discover and consume information, Informa Tech Target is well positioned for this shift, given our wealth of market expertise, our trusted original content, and the diversity of audience development techniques that we have. We are being proactive and agile in adjusting to the fundamental change in how technology buyers discover and consume information. With the rise of answer engines and AI-driven search, there's an accompanying skepticism towards generic content. According to our own search, over four out of five technology buyers do not fully trust AI today. And our focus is on high-value expert-driven editorial content and specialized audience communities. It's proving prescient as audiences seek to verify with trusted sources. And to that, we're seeing a two to three times higher membership conversion rate from answer engines and LLM citations compared to traditional organic search. We believe this is validating our strategy of prioritizing quality and expertise and our diversified capabilities in attracting membership, such as growth in direct traffic and newsletter engagement, which has meant that our active audience membership grew modestly over the period. Looking forward, we will remain focused on capitalizing on the breadth and scale the combination affords us to become an indispensable partner to the technology industry. informing educating and shaping the market connecting buyers with sellers accelerating their growth via an expert-led data-driven and ai-enabled b2b marketing leader we aim to further build our momentum in q4 and into 2026 as we leverage the benefits of combination and we believe that we are well positioned to capitalize on the opportunities ahead and deliver consistent profitable growth and increase value for our stakeholders And I want to thank our entire team for their dedication and continued execution of our strategy. I have spent the largely, the large part of the last eight weeks or so with our customers in Massachusetts, in California, in New York, in Washington, both DC and state, in Texas, in France, in the UK, in Dubai, in Tel Aviv. And without exception, our customers have gone out of their way to highlight the quality of our people and the relationships that they have built. and their expertise and commitment are the foundation of our success. And with that, we're now happy to answer your questions, and I'll ask the operator to open up the line for Q&A.