Good day, and welcome to the TechTarget Second Quarter 2021 Earnings Release Conference Call. All participants will be in a listen-only mode. Should you need assistance please signal a conference specialist by pressing star and zero. After today's presentation there will be an opportunity to ask question. To ask a question you may press star and one on the touch tone phone. To withdraw your question please press star and two. Please note, this event is being recorded. I would now like to turn the conference over to Charlie Rennick, General Counsel. Please go ahead. Thank you, Betsy, and good afternoon. Joining me here today are Greg Strakosch, our Executive Chairman, Mike Cotoia, our Chief Executive Officer, and Dan Noreck, our Chief Financial Officer. Before turning the call over to Greg, I 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 the business in advance of the call, we've posted our shareholder letter on the investor relations section of our website and furnished it on an 8-K. Following Greg's introductory remarks, the management team will be available to answer your questions. Any statements made today by TechTarget that are not factual may be considered forward-looking statements. These forward-looking statements are based on assumptions and are not guarantees of our future performance. Actual results may differ materially from our forecast. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the Risk Factors sections of our filings with the SEC. The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events that may arise after this conference call, except as required by law. We may also refer to financial measures not prepared in accordance with GAAP. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures accompanies our shareholder letter. With that, I'll turn the call over to Greg. Great. Thank you, Charlie. We continue to enjoy positive momentum from multiple tailwinds, which is translating into broad-based strength across all products, customer segments, and geographies. Revenue grew over 80% in the quarter year-over-year. We are growing faster than we originally forecasted, and today we are raising our annual forecast for the second time this year. The revised upward range is included in our shareholder letter that we released today. Also today, we are announcing the acquisition of Xtelligent Healthcare Media, which is a natural extension into an important adjacent vertical technology market. I will now open the call to questions. We will now begin the question and answer session. At this time, we will pause momentarily to assemble our roster. The first question comes from Aaron Kessler with Raymond James. Please go ahead. Okay. Thanks, guys, congrats on the nice upside. A couple of questions. First, any insights you can give us, or I didn't see in the shareholder letter, maybe it's in the 10-Q, North America versus international performance. Then, maybe on the Xtelligent acquisition, if you can talk a little bit maybe the monetization plans. I think you said you'll kind of plug that into your platform but a little bit more details how you may be integrating that, given it's kind of different vertical within healthcare. Thank you. Great. Thanks, Aaron. This is Mike. Thanks for the question. Across the globe, both in North America and international, we saw outpaced performance than we had originally guided to. The real tailwinds that we talk about in the shareholder letter in the momentum in the industry, one, the transition from face-to-face events. On the international side, face-to-face events was pretty dominant in the market pre-COVID. A lot of field marketing dollars were being allocated to face-to-face events, and that has been shifted quickly, and that's going to continue to move to digital always on and first-party purchase intent data-driven. There's also a lot of privacy regulations and compliance across the globe but in particular on the international side. Having an opt-in permission-based audience through our own registration, through our own content vehicles, our customers really see the value in that, and that value continues to increase. Google's announcement of eliminating on third-party cookies has really brought a spotlight on this, again, to enhance the privacy concerns and the opt-in and people wanting to deal and engage with first-party content. I'd say on the North American side as well, we're seeing, again, as we stated during the shareholder letter, there's a big focus for our customers to modernize their sales and marketing departments, and they want to do that with first-party purchase intent data. Having that first-party purchase intent data driven with our own active, relevant, and segmented audience members has really driven the cake. I would say that we've seen really good growth across all of our products. Our demand generation as well as our Priority Engine numbers, as we noted in the shareholder letter. Priority Engine grew 20% year-over-year. Across the customer segmentation, our Global 10, as well as all others, and again, across all the geos. Then for your second question, on the Xtelligent side, this acquisition, as we noted, checked all the boxes. Original content, opt-in permission-based members, and a large amount of first-party purchase intent data. We see the opportunity right now to monetize that purchase intent data into our Priority Engine subscriptions. I would expect that we'll be rolling out new segments in this market where healthcare intersects with IT, software, and hardware. We have a really good untapped opportunity right now to grow that first-party purchase intent data that Xtelligent brings to bear with the acquisition. Got it. Great. Thank you. The next question comes from Joshua Reilly with Needham. Please go ahead. Hey, guys. Thanks for taking my questions. Congrats on the strong quarter. I think if you look at the strong increase in the guidance for the second half of the year here, how much of that is balanced between the Xtelligent acquisition, the core TechTarget business kind of outperforming or maybe even greater strength than you anticipated in BrightTALK? Thanks, Joshua. In terms of the Xtelligent side, really doesn't factor into this guidance that we're doing. At the beginning of the year, we provided some guidance because we're operating and reporting under one number. BrightTALK and TechTarget sell to the same customers, same accounts. We have very similar offerings. They complement each other. We're reporting on one number. We originally gave modeling guidance of 20% growth for BrightTALK, and you have the numbers from last year, in low to mid-teens growth in TechTarget organically. We're just seeing us accelerate across those original guidance or forecast measures. Again, just to reiterate, we're seeing that across all the product sides, as you've read in the shareholder letter, Priority Engine, which was single-digit growth last year at this time, is now 20% growth and demand generation. That's where we're seeing the growth based on what we originally forecast, and we're seeing the accelerance on those areas. Okay, great. Just to follow up on the Google delaying the third-party cookies removal from Chrome. My sense is that's not going to cause any direct loss of business in the near term. Did you have any pipeline building from customers that were looking to switch their intent data providers that are maybe going to reevaluate the timeline of when they were going to make the change? Thanks. Yeah. Great question. First of all, we see this as a very strong competitive advantage. Google delaying it a year, we see that okay, because customers really need to plan what their overall marketing strategy is going to be around intent data using third-party cookies versus first-party cookies. I would say it's shown a bright spotlight on this topic. We're having a lot of conversations with customers on this, and they will continue to migrate from the use of third-party cookies to first-party purchase intent data, contextually relevant and aligned marketing programs, and that bodes well for us over the next year and a half, until it fully transitions. Hello? Thank you. You're welcome. The next question comes from Bryan Bergin with Cowen. Please go ahead. Hi, thanks. This is Zack Ajzenman on for Bryan. Couple questions. First on Priority Engine. Certainly seems like the trajectory is stronger than what was contemplated last quarter, when there was guidance on 15% growth in the second half. Can you maybe give some more color on expectations for the second half? Then, on that note, maybe talk a little bit about Priority Engine Express, an update on sales adoption there and any data points you can share as it relates to progress on Express. Great. Yeah, Zack, if you look at our Priority Engine, so I'm going to bring us back to last Q2 as we entered into the COVID arena, and you saw a lot of pullback in terms of customers committing to long-term contracts. What customers started quickly doing was shifting their face-to-face event budget to demand generation, content syndication. They wanted really tight contextual alignment with relevant, active, opt-in first-party members. As we grew the demand generation list of clients and revenue throughout Q3, Q4 of 2020, and then throughout the first half of 2021, our playbook was to engage with those customers, make sure they're seeing value in the ROI from their demand generation efforts and investments with TechTarget, and slowly migrate them into longer-term subscriptions, annual subscriptions being powered by Priority Engine. When we spoke back in May, we expect this to be 15%+ growth. We exceeded those. Our customers are doing the migrations from shorter term demand generation to more integrated long-term subscriptions. In terms of the second half, I expect it to be very similar in terms of numbers and pretty consistent with what we're seeing Q2, high teens to 20%. I would also say that not all of our customers are back in terms of migrating from short-term demand generation programs to longer-term subscriptions. We're very bullish on the second half on that, and we continue to execute and do well against the playbook. In terms of Priority Engine Express, as you mentioned, very early in the cycle, in the launch on Priority Engine Express, we've seen some really good momentum. On a percentage-wise, it's very high. In the overall dollar amount, it's still building its base in terms of customer revenue and insertion order count. We're really bullish about that but it's really confirming that we have a really good opportunity in that SMB market that are really focused on sales use cases. A lot of those small companies do not have elaborate, sophisticated marketing teams or marketing systems but they all have inside sales force and inside sales reps, outside reps. They really want to identify which accounts and which contacts within those accounts that they should be mobilizing and prioritizing their sales efforts against. That's helpful. Thanks. Just to follow up, looking at the P&Ls operating leverage this quarter was pretty impressive. Actually, SG&A and product dev was essentially flat quarter-over-quarter, looks like, on an absolute basis. How should we think about investments here going forward and just leverage? I know you gave some guardrails on guidance in 3Q and 4Q. You can kind of back into things. It looks like 3Q will stay flat and 4Q expenses might pick up a bit. Can you just talk about, a little more broadly, about leveraging the model and how should we think about this going forward? Yes. This is Greg. OpEx will go up gradually in the second half versus the first half. We do about half of our employee base gets reviewed on compensation increases in July and about half are in January. That will increase in response. In terms of long-term operating leverage, it's a great model. There's very little incremental cost to sales. It's a model where most incremental revenue on a gross basis drops to the bottom line. We target around at least a 50% incremental EBITDA margin. That allows us to reinvest half the incremental revenue. It's a model where we're able to reinvest at a healthy rate and expand margins at the same time. This type of operating leverage that you see in this quarter and you'll see in this year is pretty consistent what you've seen with us for the past several years and what you can expect to see going forward. As we've said in the past, as we continue to scale revenue, 40% adjusted EBITDA margins we're going to see in the near term. We think, long term, as we scale the revenue, that 50% adjusted EBITDA margins are achievable. Great. Thank you. The next question comes from Patrick Colville with Deutsche Bank. Please go ahead. Great. Thanks so much. This is [Bob Anaj] for Patrick. Congrats on the strong performance in the quarter. Mike, in your shareholder letter, you mentioned some early cross-selling efforts going well with BrightTALK. Can you maybe elaborate on this a bit? Where are you seeing some success today? Maybe what's left on the product side to really drive additional revenue synergies? Right. Bob, yeah, in terms of the cross-selling efforts, as I mentioned, the acquisition of BrightTALK just made complete sense for all the reasons that we talked about earlier. The content, the audience, and the first-party purchase intent data. Even more importantly, the complementary product offerings, they really focus on webinars, videos, talks. They create a platform where customers can, an all-inclusive platform, generate their own content, promote it, as well as create a demand generation system engine within that platform. We're all one organization, but our reps are walking the BrightTALK reps into accounts where they're spending with TechTarget but might not be spending with BrightTALK at a material level. The BrightTALK reps continue to do a great job of walking TechTarget reps into those accounts that are spending on the BrightTALK product, but maybe not as heavily on the TechTarget solutions. There is a huge high I get it factor from customers. They want to make sure they have the right mix of media content, vehicles out there to engage with the active buyers throughout the entire research process. This combination is working well. It's working well in North America. We're doing it throughout EMEA. We're rolling this out in APJ as well. We've seen it with really good success. I'm sorry, what was the second question you had on the product side? No, is there anything left on the product side to really drive additional synergies in terms of any new product features that you need to come out with? Yeah, very good. There are a lot of synergies on the product side that we're looking at in the short term as well as the long-term strategic product roadmap. Again, BrightTALK has just launched their BrightTALK Central platform, which I would refer to as an all-inclusive content creation and demand gen vehicle for the marketers. We obviously have our Priority Engine platform that works across marketing and sales. Recently, we announced in Priority Engine that we are ingesting account level intelligence from the BrightTALK members from the BrightTALK community into Priority Engine. We did this really to focus on a sales use case. What that has been able to accomplish in the short term, it has allowed our customer sales force to now have double on average, 2x the amount of accounts that are active within their respective territories that they can engage with. Now you have more reps within our accounts calling on more accounts within their territory that are active with first-party purchase intent signals, which creates a larger engagement and consumption model of the TechTarget data and the BrightTALK data coming together. We're keeping that on the account level right now. We're working on future roadmap strategies in terms of the platform, as I mentioned, from Priority Engine as well as BrightTALK Central. Teams are working closely together, and we're really excited about those short and the long term on that. Got it. That's super helpful. That segues nicely to my second question. Can you maybe just talk a little bit about the sales use case within some of your larger customers of Priority Engine? How has adoption been thus far relative to your expectations? Any data points that you can provide just to highlight some of the adoption you've seen thus far? Yeah, that's a good question. Sales use case is going well. Historically, this has been a marketing-focused use case platform where marketers would have insights into the accounts as well as the active prospects at the account level, by segment and by geography. Marketers, this is still a big focus for us, marketers that are looking to mobilize against an account-based marketing strategy, ABM, named account strategy, they want to increase their database. Sales is a different use case. We rolled out our prospect level intelligence at the beginning of this year, where sales reps, if you think about their cadence, they will come in, they'll do a call blitz, they have a territory that they call into. Now it's enabling them to rank at the individual prospect level, who is most likely to be prioritized first. If I'm a rep and I come in on Monday morning and I'm doing a call blitz, I might have an active prospect that we've identified in account A, be number one to call into, account B would be number two, versus just focusing on the individual account level. What that does is it allows sales reps to customize and personalize the individual outreach, whether it's email or phone conversation, when they reach out to that individual buying team member. That has seen really good adoption. We've seen sales usage increase by 2x, and we're driving, again, very focused around the sales application and the sales use case. In this recent press release, Bob, we talked about ingesting the account intelligence data from BrightTALK, but we also expanded on our functionality with what we call Inbound Converter. An Inbound Converter is a technology that's tied into Priority Engine that tracks the accounts that visit our customers' websites. What we've now done is we expanded that intelligence in granularity to not only tell you what accounts have visited your sites, but we're now identifying which pages on the customer's websites those accounts are engaging with. Are they on product review pages, customer success pages, demo pages? It helps prioritize the accounts. We marry that account data into Priority Engine to show which individual active members within that account's buying team are probably the ones that are engaging on those customers' websites. What we're really doing is de-anonymizing the account-based traffic going on to our customers' websites, and we're prioritizing which people they should reach out to within those accounts. Sales is seeing a lot of success on that, and we are focused on both on the sales use case and on the marketing use case, and features and functionalities on our next rollout or revision, which will come in the latter part of the year in the fourth quarter. Got it. Super helpful. Last quick one, if I could squeeze in. Long-term revenue mix downticked slightly from 1Q. Is there anything of note impacting the mix here, or was it just strong performance on some of the managed side of the business? It's two things. The overall number grew materially quarter-over-quarter. If you look at the overall revenue dollars associated with long-term revenue, they were up double digits quarter-over-quarter. It's just really that the percentage is a little lower because the revenue was so much higher. Yep. Makes sense. Congrats again, guys. Thank you. The next question comes from Greg Burns with Sidoti & Company. Please go ahead. Good afternoon. What was the Xtelligent trailing 12-month revenues and EBITDA? Greg, we don't report that for disclosure reasons. I can tell you, the main focus of this acquisition was on the content, the opt-in audience, and the untapped monetization of first-party purchase intent data. In the press release, we mentioned that the CEO of Xtelligent is a former TechTarget employee. He spent 11 years here focused on our member and audience acquisition methods and process. The focus on this acquisition was around the content, the audience, and again, the potential in terms of first-party purchase intent data and the ability to monetize that. We have a lot of good relationships with organizations around the industry, and we try to avoid any bid process. What we see as value, again, around content, audience, and first-party purchase intent data, we try to keep that really close to the vest. Just to not reach any of the materiality thresholds where we'd have to disclose it, but we also want to make sure we keep a competitive advantage so our competitors aren't seeing how we are trying to value potential organizations, and we want to make it sure it's fair to our investors. Okay. Was the healthcare IT vertical, was this something that you had your eye on for a while? Are there any other kind of niche technology verticals that you might be able to do the same thing, kind of plug them into your platform and expand the monetization opportunities? Yeah, great question. In terms of the healthcare IT vertical, this is a vertical that we've been keeping our eye on for a couple of years. The adjacent vertical, where healthcare intersects with IT and infrastructure security, hardware, and software, just made all the sense in the world to us. We believe it's going to open the door to new customers, opportunities. As I mentioned earlier, we believe that we have an untapped revenue opportunity with Priority Engine and bringing our purchase intent data onto the Xtelligent community. In terms of other verticals, there are some other adjacent verticals that are interesting to us and that we're keeping an eye on. Even BrightTALK, when we acquired BrightTALK, they have some audience and verticals in the fintech space, asset management space. Those are definitely something that we're keeping an eye on now and moving forward. Okay, great. Thank you. Yep. The next question comes from Eric Martinuzzi with Lake Street Capital Markets. Hey, guys, this is Kevin on for Eric. Thanks for taking my questions. Just on the acquisition, and I know you just touched on it briefly in the last question, but maybe could you give us a little more color in terms of, was this one of the larger players for content and audience in terms of the healthcare IT vertical, or was it kind of the quality of the stuff they were putting out there? I know you had a relationship with the founder and stuff but what really maybe size up the market is what I'm trying to get to. All right. This play was focused not on the size but on the target and the quality of the content and the audience, and the untapped opportunity with the monetize and the purchase intent data. There are a couple big players out there. I think Becker's Healthcare and HIMSS, that is part of a nonprofit organization that has a big event every year. The reason why this fits so well is we know A, we know the folks over at Xtelligent. We know the type of content and the approach which mirrors what TechTarget would do in terms of the enterprise IT market. We really value the opt-in permission-based audience members. Again, we talk about eliminating third-party cookies, what's going to happen with third-party data. We just see an opportunity to really monetize the large amount of purchase intent insights that they can generate on their sites due to the quality and the targeted focus of the healthcare market. Got it. Thanks. Just a bigger kind of question here. I know you touched on it in the letter, the continued migration from in-person events to online. Do you see that Is there any been flurry of more in-person events? I know you mentioned international earlier in the call, do you see any of that coming back anytime soon or no? I don't see it coming back to where it was before or being anywhere near that. There's a couple of things. The analogy that we use internally is when somebody moves from analog to digital, it's really difficult to go back to analog. Also when you go from face-to-face events to online first-party intent-driven type of opportunities, it's more scale out of the office for five days, set up booths, have all these travel costs. They're seeing that while we have to make this digital transformation, COVID accelerated that. We need to capitalize on that, and we can grow, scale, and measure that more effectively. I really seeing this trend moving forward in a positive manner. Again, this bodes very well for what we've built as an organization. Thanks, guys. You're welcome. The next question comes from Justin Patterson. Throwing off cash. Just curious, what that future pipeline looks like. Secondly, Priority Engine growth's strong. You've got the new businesses coming in. How should we think about just what the normalized growth rate for TechTarget should be going forward? Thank you. Right. Justin, in terms of M&A, there is a lot of activity going on in the market, and we've seen this for the last couple of years. Opt-in registered members, first-party purchase intent data, and/or complementary solutions like BrightTALK. BrightTALK checked four of the boxes on that. We look at a lot of organizations. We are very selective on what we're going to choose, and it needs to fit that. I would say for every acquisition we've done, we've probably looked at 40, and we're going to continue to be selective on that. We're not going to make a decision just to make a decision. It's got to really fit in the short and long-term strategy and what we're really focused on as a business. In terms of normalized growth, again, beginning of the year, we figured we provided that model of 20% BrightTALK and low to mid-teens in TechTarget. It's early, but if you look at it and the trends continue the way they're continuing, we continue to execute on how we're executing. I would say this would be mid-teens plus growth, moving forward mid to high teens. Great. Thank you. This concludes our question and answer session and concludes the conference call. Thank you for attending today's presentation. You may now disconnect.