TechTarget, Inc. Q1 FY2025 earnings call

Key Points

• Preliminary Q1 2025 results are subject to final review; aim to file Q1 shortly after July 4, with Q2 filing on or before August 14.
• Q1 revenues in line with expectations, with combined company revenues down 6% y-o-y; improving momentum expected in Q2 to mid-single-digit decline at half year.
• Reaffirmed full-year guidance: revenues broadly flat y-o-y, adjusted EBITDA $85 million plus.
• Progress on combination program: focus on establishing leadership and reporting lines, new operating model, product strategy/rationalization (e.g., consolidating Canalys, Wards, ESG under Omdia brand).
• Focus on key client accounts, investments in addressing them, market focus on cybersecurity.
• AI as a major opportunity: $190B market by 2028, leveraging AI for product competitiveness, efficiency, and audience development strategies; strengthening AI engine optimization while continuing SEO and other audience strategies.

Preliminary Q1 2025 revenues were in line with previous guidance, with combined company revenues declining 6% year-on-year. Adjusted EBITDA for Q1 was $3 million. Full-year guidance reaffirmed: revenues broadly flat year-on-year on a combined company basis, and adjusted EBITDA of $85 million plus.

• Full-year revenues expected to be broadly flat year-on-year on a combined company basis.
• Adjusted EBITDA expected to be $85 million plus.
• Q1 is likely the trough for adjusted EBITDA margin, with sequential improvement expected in the remaining quarters to achieve the full-year outlook.
• Anticipate recording further noncash goodwill impairment in Q2 reflecting current depressed market capitalization.

Q: What gives confidence in unchanged guidance and sequential revenue improvement in H2 to hit full-year implied revenue?

A: Confidence comes from operational improvements, customer conversations, and repositioning of NetLine.

Q: Changes to go-to-market or product structures post-combination?

A: Progress on product rationalization, consolidating products under Omdia, ongoing work on brand/content/demand space, focus on cross-selling across product life cycles.

Q: Response to shift to large customer accounts?

A: Yes, seeing incremental lift in pipeline from large accounts with needs across product life cycle.

Q: AI engine optimization vs SEO?

A: Rules of AI game are evolving, testing and learning, search engine authority plays a role, continuing SEO and other audience strategies.

Q: Adjusted EBITDA margin progression?

A: Q1 is lowest, sequential growth expected in remaining quarters.

Q: Green shoots in combination?

A: Repositioning of NetLine, combined offer of brand and demand capabilities seen in wins.

Q: AI opportunity manifestation?

A: AI as a market now, deployment in editorial, research, content, go-to-market with many use cases in production.