Good day, and welcome to the TechTarget Fourth Quarter 2012 Earnings Call and Webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Bob Kellegrew, General Counsel, followed by Mr. Greg Strakosch, CEO, who will address the earnings call. Mr. Kellegrew, the floor is yours, sir.

Thank you, Mike. Before turning the call over to Greg, I want to briefly remind everyone on the call of our earnings release process. As you saw, we issued our press release at 4 p.m. today, and as previously announced, in order to provide you the usual update on the business -- I'm sorry, let me repeat that. As previously announced, and in order to provide you the usual update on the business ahead of the call and hopefully save you all some time and effort, we have posted on the Investor Information section of our website and furnished with our 8-K filing a letter to the stockholders from Greg. This letter is intended to provide supplemental information about the quarter and fiscal year ended December 31. On the call today, Greg will briefly summarize our financial results for the most recently completed quarter and the full year, and then management will devote the rest of the call to answering your questions. Additionally, I'd like to remind everyone that during the course of this conference call and the Q&A session, TechTarget will make certain statements that may be considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, particularly, guidance as to the future financial results. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those contemplated by such forward-looking statements. These risks include: market acceptance of our products and services; relationships with customers, strategic partners and our employees; difficulties in integrating acquired businesses; and changes in economic or regulatory conditions and other trends affecting the Internet, Internet advertising and information technology industries. For a description of these and other risks, we encourage you to read the section entitled Risk Factors in our annual report filed on Form 10-K, as well as other filings we have made. In addition, the forward-looking statements speak only as of the date of this call, and the company undertakes no obligation to update these forward-looking statements. Following Greg's introductory remarks, in addition to Greg, the following members of our management team will be available to answer your questions: Mike Cotoia, our Chief Operating Officer; and Janice Kelliher, our Chief Financial Officer. And I now turn the call over to Greg. Greg?

Thank you, Bob. Despite the challenging economy, we're optimistic about our business because we are gaining market share, and we will be rewarded when IT spending recovers and marketing budgets begin to grow again. We are executing very well outside the U.S. as our geo-targeted revenues grew by more than 50% in 2012. And we believe that we can continue to grow that business at a very healthy rate for several years. We believe that international revenues will eventually represent approximately 40% of overall revenues. We are also very bullish on the new recurring revenue sales intelligence product that we recently launched called IT Deal Alert and new ones that we plan to bring in the market in the coming quarters and years. I will now open up the call to any questions that any shareholders have.

[Operator Instructions]

There's a queue. Sorry. We have a question. Sorry.

We do, sir, and it comes from Zach Pollinger of Cobia Capital.

Greg, I have a question on the events guidance. You're guiding Q1 to a much larger than normal sequential decline. Can you give us some color as to that drop? Are there just fewer events in total going on in Q1 that's generating less revenue on average? Or what exactly is going on there?

Yes. So that is basically just based on the event schedule. So our event business is very seasonal. Q2 and Q3 are the heavy -- and Q4 are the heaviest event quarters. So we don't run as many events in the winter. So it's really just less events scheduled.

Even sort of on a year-over-year basis, I'm looking back to Q1, over the last couple of years, it's pretty precipitous drops. So what do you think of the cause of that decline specifically?

Yes. So it's basically just a -- it's a calendar shift from Q1 into later quarters, predominantly into Q2 and Q3. So we are -- because of the current economic situation and limited visibility we're in, we're not giving annual guidance, but I can say that we expect events roughly to be flat on a revenue basis. So we're not expecting to see some sort of big drop-off in event revenue for 2013.

Okay, that's helpful. And then I guess on the EBITDA guidance, what level of OpEx spend is being baked into that forecast?

Can you repeat the question, please?

I'm curious as to what level of OpEx spend is being baked into the EBITDA guidance. Is there an uptick in sales and marketing or product development costs given IT Deal Alert? Or is there something else going on there that's lowering that margin?

Yes. I mean, really, what's -- we're really -- what factors into the margin is the revenue because most of our costs, over 70% of our costs are labor based. And those are consistent every quarter. So when revenue goes up, you see the margin much higher. And when revenue is lower, it's lower. So if you look historically, the EBITDA margin is always the lowest in Q1 because seasonally, that's always the lowest revenue quarter of the year. So you'll see -- so OpEx will be in the same ballpark as Q4 as it was in Q1. It will be a little bit higher because you have annual salary increases. But it's basically a fixed rate expense model, and the EBITDA margin goes up and down based on the revenue. Because again, in our model, there's very little cost of goods. It's almost all revenue above the fixed rate expense. It drops to the bottom line at a very high rate.

Okay. And then last question for me. I'm just curious if you can give some additional color as of the read from the early launch of IT Deal Alert, how that's going as far as from the reception that you've gotten from customers and at what point during the year you think that, that should be generating a meaningful portion of revenue.

Yes. So we just launched the product to our sales team 2 weeks ago at our annual kickoff meeting, and we have -- right now, we're in the midst of taking it out to our customers. We probably had about 3 dozen, I'd say, sales calls about it, and it's been very positively received. So we're very optimistic about it. It's a product that is sold to sales teams in addition to marketing teams. So it's a different budget that we're tapping into. And there's not any other product like this in the marketplace, and it really fits a big need, a big paying point that sales teams have. So we're very optimistic about the initial reception. It's a little premature at this point to talk about numbers because we've only had it out in the field for 2 weeks. But our goals for the year is to obviously generate revenue on it. We want to have a lot of back and forth with our customers and really optimize the formula. We have a lot of products in the pipeline to follow. This is one of a series of products. We want to get a lot of feedback from our customers so we can really figure out the recipe for those future products. And then we definitely -- one financial goal that we do have is we want to have a meaningful run rate in Q4 so that it contributes significant growth for us next year. But I think as we get a little further into the year, we'll be able to put some numbers around IT Deal Alert, what that -- how meaningful that would be in 2013.

And next, we have a question from Paul Szczygiel of Columbia Management.

What was your geo-targeted revenue in Q4? The growth?

It was roughly 26% of revenue -- of online revenue.

Okay. And just a follow up on the EBITDA question. Are you saying that you're not cutting costs really because this event thing will balance out over the year? I mean, if you actually had a sustained drop to that $20 million level, I assume there are costs you could cut.

Yes. So most of our cost is headcount. So we have several levers there, right? So we have how fast we hire people, how quickly we replace people, what we do for comp increases. So -- and I think we have a pretty good track record of aligning our expenses to revenue levels to maintain EBITDA margins, and on an annual basis in that, in that 20% range or better, and with that, with our model, with the modest CapEx, also comes very healthy cash flow. So that's definitely very top of mind for the management team as we look at the business.

It appears that we have no further questions at this time. I will go ahead and hand the conference back over to management for any closing remarks.

We're all set. Thank you very much, and thank you for joining the call.

And we thank you, sir, for your time and to the rest of management. We thank you all for attending today's presentation. At this time, you may disconnect your lines. Thank you, and have a great day.