Jane Freedman - VP & General Counsel Greg Strakosch - Executive Chairman Mike Cotoia - CEO Janice Kelliher - CFO Kevin Beam - President.

Brian Fitzgerald - Jefferies Kyle Evans - Stephens Eric Martinuzzi - Lake Street Capital Markets Mike Malouf - Craig-Hallum Kerry Rice - Needham.

Good afternoon everyone and welcome to the TechTarget Q1 2016 Earnings Release Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded.

At this time I’d like to turn the conference call over to Ms. Jane Freedman, Vice President and General Counsel. Please go ahead..

Thank you Jamie. Before turning the call over to Greg, I want 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 have posted Greg’s Letter to Shareholders on the Investor Relations section of our website and furnished it on an 8-K.

On the call today, Greg will briefly summarize our results for the first quarter. Following his introductory remarks the management team will be available to answer your questions. In addition to Greg, we have Mike Cotoia, our Chief Executive Officer; Kevin Beam, our President; and Janice Kelliher, our Chief Financial Officer.

During this call, any statements made by TechTarget that are not factual, may be considered forward-looking. These forward-looking statements are based on assumptions and are not guarantees of future performance.

Our actual results may differ materially from expectations please refer to our risk factors and other factors in our annual and quarterly reports filed with the SEC. In addition, the forward-looking statements speak only as of the date of this call, and the company undertakes no obligation to update these statements.

Also during the call we may refer to financial measures not prepared in accordance with GAAP. A reconciliation of these measures to the most comparable GAAP measures accompanies our Shareholder Letter. With that, I will turn the call over to Greg..

Great, Thank you. IT Deal Alert continues to gain traction in the market. Q1 2016 IT Deal Alert revenue were up 34% compared to Q1 2015. We have seen the most growth with Priority Engine and Deal Data, with revenue attributable to those products up more than 3 times compared to the same quarter a year ago and up over 50% sequentially from Q4, 2015.

We are expecting this growth rate to accelerate in the second half of 2016 as we benefit from Priority Engine subscriptions sold in the first half of the year. This demand for our purchase intent data has giving us the opportunity to reshape our business in two very important ways.

First, our data is being integrated into our customers’ sales force and marketing automation systems and workflow. Second, we are very focused on migrating as much of our business as possible from short-term campaign-based marketing deals to long-term subscription contracts. While it’s still early days for us, we are making progress in this area.

In Q1, 2016 we recognized over $1.5 million of revenue from long-term contracts. As our company is embarking on an exciting new chapter in our history, I am thrilled to announce that Mike Cotoia has been elected as the CEO of TechTarget and a member of the Board of Directors.

After serving as the CEO for almost 17 years, I am taking on the role of Executive Chairman. In this role, I will remain a full-time employee of the company and will assist Mike with long-term strategy, investor relations, among other things. Many of you know Mike.

He has been with TechTarget since 2002 and has served as our Chief Operating Officer for the past 4 years, where he has been responsible for the day-to-day operations of TechTarget. Mike is a great leader and we are all in good hands with him at the helm.

We are also announcing today our intention to launch a tender offer for the purchase of up to 8 million shares, or almost 25% of our issued and outstanding shares, at a purchase price of $7.75 per share, representing the five-day volume-weighted average share price of our stock from May 2nd through May 6th.

We will fund the tender offer through a new 5-year term loan for $50 million and cash on hand. We are also maintaining our 2016 annual guidance. I will now open up the call for questions..

[Operator Instructions] Our first question today comes from Brian Fitzgerald from Jefferies. Please go ahead with your questions..

Just a couple of things, it’s still early innings in the research product but maybe you could talk about what trends you are seeing on with the product? And then just more globally in terms of the Tech outlook, I know you are always a good harbinger for what the outlook looks like, but can you just give us any sense or an update there?.

Sure, on the research business, we are getting very good feedback from the research that were, that we’ve released, where we continue to add new research categories.

We are selling the research, we have customers taking us on it and the pipeline is building very nicely and the key thing was research, the more time you have into it, where you can have comparables from quarter-to-quarter and year-over-years makes it more valuable so, it’s ramping nicely as we in the categories we had out longer, were we have more historical data.

So we very pleased with that and that, on-plan where we expect that. On the terms of the overall tech outlook, I say not much has changed there, it’s still pretty challenging for the largest tech companies, they are still dealing with the economy not being in the reinvestment cycle.

And in addition the strong dollar definitely makes it’s tougher internationally for the large tech companies who, most of them get more than 50% of their revenues outside the US. And then specifically, you still have some of the very largest company, we are still in the middle of a merger right? I’m taking about Dell [ph], EMC and VMware.

So, I said I would kind of give the general outlook of what we’re seeing, but it terms of -- via our business with our largest 12 customers was down slightly in Q1.

I thinks it’s important to note that our midsized companies and the VT backed startups, our revenues with those companies, revenues increased by over 10%, because they are not dealing with, obviously they’re not dealing with any of these mergers and they don’t have as much exposure outside the US.

So we think that as a really good signs in terms of how our products are being accepted in the market..

Our next question comes from Kyle Evans from Stephens. Please go ahead with your question. .

Sounds like Priority Engine and Deal data are started to gather some momentum. Can you talk a little bit there about pricing, length of contract, churn and may be how those are for Priority Engine and Deal Data might differ from the core dealer product, and then I’ve got a follow up. Thanks.

The qualified sales opportunity product is where we do the first level of follow up and we sell each of those opportunity reports for $300 or $500 a piece, they’re typically bought in quarterly campaigns.

Priority Engine and Deal Data is the raw data, that’s the product were customers are integrating into their work flow, into their sales force automation systems their marketing automation systems. We have over 300 tech segments for priority engine and we sell it two ways, we sell it on an annual subscription for $90,000 per segment.

As I said there is 300 segments or you can buy it quarterly for $30,000 and what we’re seeing is more and more of our customers are choosing the longer term and that’s why you see our -- revenue from annual subscription is growing very rapidly for us..

On the core digital publishing business is the engine that makes everything else work, what’s the -- any change in the competitive land escape there in the quarter?.

Not wouldn’t say specifically in the quarter but long time what we’ve seen is this prolonged challenging environment has caught many of our traditional competitors, specifically once with print legacy to really retreat and reduce their investment in content, in audience acquisition, in new product.

So that’s been very positive for us, that’s this quarter and that’s going back through last years as well.

So I’ll say if anything, what we’re seeing is an improving competitive position on our part, and our unique content model, really is an incredibly strong barrier on the purchase intent data, because no one else really has a content model that would give meaningful inside to which technology product companies are looking to buy..

Great, maybe one last one, is there any granularity you could add to the 2Q guidance, I know it’s sound like exchange rates in the international stuff, but your gathering steam in Priority Engine and Deal Data, but any more you could give on the -- on how we got to these mid-points? Okay great thanks. .

The one point I would make is, is we’re really making a very consorted effort to sell, IT Deal Alert on annual basis, that limits our flexibility somewhere in terms of what you can put into one quarter.

So we’re definitely taking a long term view there and we would, we’re willing to give up some short-term revenues to get the longer term agreement in place for all the obviously reasons. The increased stickiness, increase visibility, our ability with pricing power on renewal.

So that’s one of the things in terms of kind of the push-pull on the short term basis long term you might get something up little bit in the short term but long term is obviously much better for the business and eventually we believe that we can get a meaningful portion of our revenue to be on a long term contract basis and we think that our-- eventually that our multiple will reflect that..

Our next question comes from Eric Martinuzzi from Lake Street Capital Markets. Please go ahead with your question..

I just want to revisit the full-year, the old guidance for the full year was 120 million to 125 million top line and then the EBITDA was down 29 million to 32 million. Did you comment on that? I missed your --..

I commented that we’re maintaining that guidance..

Pretty big step up in the back half and you are saying that that’s this Priority Engine and Deal Data are really what's going to be driving that?.

Yes, so that and the new research product. So since -- anything we benefit in the second half by any mid-long term agreement, anything that we’re selling in Q1 or Q2 we get some of that revenue in Q1 and Q2, but we also get revenue in Q3 and Q4. So it's just the way that subscription revenue builds..

And you talked it in your shareholder letter about 1.5 million [ph] of long term contract.

That was 6% of your revenue in Q1 you also talked about more morphing the business over time, is there a particular goal in mind or is it just say 6% becomes something bigger, we’re not sure what it is, but we don’t want to the way we are now?.

I think that, we will -- we don’t know the exact number, but we believe that it can become a meaningful portion of our online revenues.

Because the other thing that we’re seeing is as we get people to our customers who want to -- and our customers -- this is good for our customers and they want to sign up for long term agreement because they want to integrate this purchase intent data into their systems and their work flow.

We’re starting to see some of our customers that are now more open to putting some of the core products on a long term agreement as well because it's basically one of our product is, we can show you where the purchase intent data is, which companies are looking to purchase, but we can also integrate a brand campaign and demand generation campaign with that and that you should always be on.

So there is lots of benefit from this push we’re making for the long term agreements on the Priority Engine..

Okay. And then lastly, on the tender offer, in your shareholder letter you also address the topic, you are basically setting aside the original 20 million repurchase Graham and putting this pretty substantial tender offer in place.

What was the -- at a board level, was the discussion? Why are they really kind of amping it up here to kind of 2.5x which your previous intent was?.

Yes, we think that long-term it’s very compelling for shareholders, very accretive, if we can retire 25% of the shares. So what we looked at was putting some leverage onto the balance sheet which we hadn’t done before and we looked at the current evaluation and what we think the business can do long-term.

That's kind of how we came to the decision to launch this tender offer..

What's the -- I haven't been through this process recently, what’s the timeline we should be looking at? Is this 30 days, 60 days?.

It's our 20 business days..

Our next question comes from Louie Toma from Craig-Hallum. Please go ahead with your question..

Actually this is Mike Malouf, I wanted to ask a little bit on the IT Deal Alert, that’s a pretty big back end swing and I think you had talked about 50% growth is that still sort of your target for IT Deal Alert?.

Yes, what we have guided to for 2016 IT Deal Alert annually was 40% to 50% growth..

And your -- that still sounds good to you?.

Yes..

And then with regards to the 120 to 125 guidance, was there -- I know that you previously commented on tying to be a little bit conservative with regards to the recovery in the core online specifically in the North America side.

Is there still some cushion built into that or now are we sort of after you’ve seen June and March, be a little bit behind what you thought it was a while ago, we still have any kid of cushion there because the back end looks like, I think like what Eric said a little bit of a spike in the back half..

Yes, what we try to with guidance, is we try to be accurate. So that’s how we always approach it. And we obviously built into this guidance as higher growth in the second half of the year..

And I am sorry I missed the timing on the tender, what's the timing again?.

We announced it today, we are expecting to file it tomorrow and then its 20 business days from there..

[Operator Instructions] Our next question comes from Kerry Rice from Needham..

Just most of my questions have been answered, but may as it relates to the full year guidance and the second half ramp, how do I think about a weaker dollar and may be some of these mega-mergers that are being completed, if spending comes back from those.

Are those two factors, would those be, upside or have you factored some of that into the second half ramp, is the first question.

And the second question is, you’re often talking about renewal rates, particularly dollar renewal rates on IT dealer product, how was that trending, it was about 200%, were as it today, or maybe you can talk about attach rate at multiple products now, anything around that concept? Thank you..

Yes in terms of the second half ramp, the assumption is current environment, so if the currency changed, one way the other that could affect result, in terms of the renewal rates, on the qualified sales opportunity product, when we were given those types of revenue renewal rates, that was in the early days, that part is really soft quarter-to-quarter, so very challenging to do that type -- those types of comparisons.

But if we start in terms of Priority Engine which we’re really selling on a subscription basis, it’s on small numbers, but we’re seeing very strong renewal rates there and we’ll be able to in the future have a more traditional renewal rate because that’s obviously easy to calculate, when you have x numbers of annual subscription renewing..

What about the attach rates? Are customers taking in more than one product at a time? Are they still kind of fairly specific whether it is Qualified Sales Opportunities or Priority Engine or Deal Data?.

Yes, it really depends on the size of the customer and how many markets they are in. But what we typically see is, for large comforters that play in more than one market, is they’ll test in one market and then we’re able to cross-sell them and up-sell them into other markets.

So that’s definitely what our strategy is and that’s what we have seen play out..

Maybe another way to ask it is also category, I don't Priority Engine you said is in 300 categories.

Are they usually buying more than one category or is there kind of an average or anything you can add there?.

Yes, our customers are so, we have kind of three different sized customers.

So we have you know the top 12 that play in many, many segments and most of those customers buy in multiple segments and then we have our mid-sized companies that would play in less segments and many of those customers buy in multiple segments, and then in terms of the VC backed startups they typically only compete in one segment.

So it’s unusual for them to buy more than one segment. So it’s kind of as you expect based on the size of company and how many segments they compete in. And the other thing I’ll say about in the large companies to keep in mind that those budgets are decentralized.

So if you are a very large Tech company in you’re in 25 different segments, there is not one person controlling all that. We deal with their stores team, the security team, their cloud team, their virtualization team, their development team, so it’s -- those tend to be a little bit decentralized..

And ladies and gentleman in showing no additional questions, we’ll conclude today’s conference call. We do thank you for attending. You may now disconnect your telephone line..