Good afternoon and welcome to the TechTarget Q1 2015 Earnings Release Conference Call and Webcast. 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 this event is being recorded. I would now like to turn the conference over to Ms. Jane Freedman, General Counsel. Please go ahead.

Thank you, Gary. 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 financial results for the quarter and some changes in our forecast for 2015, and then management will respond to questions. Following Greg's introductory remarks, the management team will be available to answer your questions: On the call today, we have Kevin Beam, our President; Mike Cotoia, our COO; and Janice Kelliher, our CFO. I need to remind you that during this call, any statements made by TechTarget that are not actual may be considered forward-looking statements. These forward-looking statements are based on assumptions and are not guarantees of our 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 this 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. Now, I will turn the call over to Greg.

Great, thanks Jane. Our largest customer set off to a slow start to the year because a significant portion of the revenues are international, they have been impacted by foreign currency issues. As a result, we lowered our forecast for international growth this year and that changes reflected in our revised 2015 guidance. Despite these headwinds, we continue to enjoy strong momentum with IT Deal Alert as evidenced by the number of new customers we added in the quarter and the 49% year-over-year revenue growth. We’re also pleased with the reception we’ve received in the market to Deal Data and Priority Engine, the two new products we’ve launched in the first quarter. In addition, today we announced TechTarget research the latest new offerings to our suite of IT Deal Alert products. Our goal is to bring transparency to market share and pricing in the enterprise IT market. We believe this will be disruptive and create a significant revenue opportunity for TechTarget. Our board has authorized an additional $10 million to be used to repurchase shares under our buyback plan reflecting confidence in our business, the large opportunity in front of us, the attractive evaluation of our stock and our continued commitment to enhancing shareholder value. I’ll now open the call for questions.

We’ll now begin the question-and-answer session. [Operator Instruction] Our first question comes from Brian Fitzgerald with Jefferies. Please go ahead.

Thanks. Greg, congratulations on launching the two new IT Deal Alert products. I want to ask a couple of questions around those. 30 customers using the two new products. How are they split and is that an even split between the Deal Data and Priority Engine any nuance to the timing. And two when those launched in the quarter would be our first one I guess.

Yeah, so we announced the product in January. So we started bringing out the customers in January start. We delivered it a month or so after that. At this point, there’s more priority engine customers than Deal Data, but that was kind of the plan, so there’s no surprise with that.

And then on the Priority Engine, two-thirds signing for annual subscription was there but short trial period and they kind of saw the efficacy of the product. And said yeah, upsell me to an annual subscription. And then is deal data priced on annual subscription also?

So, Priority Engine, those people have signed up from an annual subscription signed up, annual subscription out of the gate. So the way it works is its $90,000 per segment for an annual subscription or you can buy each segment quarterly at $30,000. So those customers decided to take advantage of the pricing incentive to do annual. Deal Data, the pricing is custom and those deals can be priced with any duration, quarterly, two quarters, annually. But, right now, the customers that are using Deal Data are shorter term – mostly quarter to two quarter subscriptions as they’re testing it.

Okay. And then, if I can one more on the TechTarget research, the post Deal Data, is it overall market transparency that you think it’s going to drive the data submission? And I guess my question there is – when an IT buyer pushback for strategic reasons, I don’t want my competitors to know where I’m investing and buying, can anatomization alleviate this? And then one more follow-on on the post Deal Data.

Yes, on the post Deal Data for the IT buyers, there is tremendous values. So if they participate and give us their data, we’ll get them data back. And what we’re giving them is primarily three things. We’re giving them realtime market share data, which is very valuable because there is – it’s hard for buyers to separate the height from the reality in the IT market. So this will show them which incumbents are being displaces, which companies are gaining market shares, so that’s very valuable.

The second thing is we’re going to give them some information on what types of discounts that peers have been getting. So there is a very little pricing transparency in the IT market, so that will help them negotiate better deals. And then also very valuable, if you’re about to make a large purchase, 6 figures, 7 figures, 8 figures, you want to talk to other IT organizations who have made that same purchase and the way people get references today is primarily from the vendors and obviously [indiscernible] so they don’t have as much value as references independent of the vendors. And since we know where such a large number of deals are, we can give references in scale independent as vendors. So that’s the motivation why customers are sharing this data with us, why we’re getting responses on 13,000 surveys from us because they know if they feed information to us, we will give information back to them.

Okay. And then the timing around the – I guess there is kind of two pieces. One is giving your data back to the IT community, so they have this greater transparency. And you also mentioned to kind of selling the data to research and to investors. Is there a two pieces of the timing there?

Yeah, so we’re sharing some information back with buyers already, but what we’re looking to do is get it – we’re doing it in scale. We’re full speed ahead on collecting this information, right now. We’re building systems to make easy to disseminate that information and we expect in the second half of the year to be able to have that in shape where we can go to market with revenue offerings to IT vendors and investors.

Great, thanks. And I’ll jump back in the queue, if I need to know.

Great. Thanks, Brain.

The next question comes from Kerry Rice with Needham. Please go ahead.

Thanks a lot. I apologize if I missed a previous comment on here, several calls one on today. Will you – how do I think about the FX impact in the sense of, is this primarily just the core online versus IT Deal Alert, I mean meaning international or did IT Deal Alert also see a little of that impact. And is it fair I guess to look at the guidance and I think you said that the original forecast for international rep is around 20%, now it’s in. So it’s truly a 10 point kind of swing in the full year guidance it looks like and it was only about 1.4%. Is that correct on the quarter? That’s the first question. Then the second is, are you giving any – are you just losing any split between IT Deal Alert on the QSO versus Priority Engine? And then the final question on IT Deal Alert is, can you maybe talk a little bit more specific about maybe customers and their buying behavior whether its – they’re buying, you’re seeing a lot more segments being added or you’re seeing a lot more products being ordered meaning may be they order QSO and Priority Engine now or you’re seeing multiple products ordered at the same time? Thanks.

Sure. So on the foreign currency issues, basically what’s happening is our largest customers that have a big portion of the revenues internationally are seeing less revenues. So you could see that in all the big IT companies first quarter results that once that have announced so far, it’s kind of the major theme. So typically what happens when our customers under revenue pressure, they cut budgets, they delay programs, and we saw it in Q1. And Q1 is always the slowest quarter of the year anyway, so it’s really exasperated in the quarter. So when we look at what we did internationally in Q1 and kind of play out what we’re seeing from our customers that’s why we revised the guidance to 10% growth internationally. In terms of the split on IT Deal Alert, yeah the 90% plus of the revenue were still bought by sales opportunities because we just started selling Deal Data and Priority Engine in the quarter. And since several of those deals are annual subscription, we recognized that revenue pro rata over the life of the contract. So a lot of that revenue will be recognized in later quarters. But that ratio will grow a larger – each quarter a larger percentage will be Deal Data and Priority Engine as the new products, but we still think we will be growing bought by sales opportunities. And then in terms of tech methods, there is a lot going on in the growth. We’re still adding new customers. We’re up selling customers. We’re cross selling qualified sales – retaining customers by cross-selling them, Priority Engine and Deal Data. So that the mix of different things that are happening all good, that’s driving in this quarter 49% growth and obviously we’re guiding to that 50% growth for the year.

Greg, you – in previous quarters you have highlighted revenue renewal being around 200%. Can you update us on that?

Yes, renewal statistics are a bit – are consistent with what we’ve seen in the past. So, yes, there is no changes there.

Okay, thank you.

Your next question comes from Kyle Evans with Stephens Inc. please go ahead.

Thanks for taking my question. Maybe we could start off with the pricing scheme around the new TechTarget research. How much thought have you gone into there and give us some kind of a forecast?

So we’re in the stage, Kyle, where we’re talking to a lot of customers, potential customers and prospects about what the offering will be, what the – what type of pricing makes sense. So we’re still figuring that out. But which – what I will say is the data that we possess is very unique and very valuable. So like all of our other products, I think we will follow with the premium pricing strategy.

Sure, on the top 12 customers that were particularly weak in the core online business. Is that fairly evenly distributed across those 12, do you have a couple that are particularly large 8%, 9%. What does that group look like?

Yeah, so in terms of the percentage of revenue, there is a bunch of customers that are fairly even. We don’t have any 10% customers. And most of those customers are definitely impacted significantly by the currencies and we definitely saw it affected in the level of business that we saw probably in the first quarter.

Could you kind of a price range on the Deal Data sales that you got thus far? Just brackets?

Yeah, I mean, it’s similarly price to Priority Engine. Right so, it’s Priority Engine is $90,000 per segment annually and $30,000 per segment quarterly. So that is a data is basically the same as really how the customer would like to get it delivered. Do they want to integrate with salesforce.com or they not want to ingrate with the salesforce.com, but the data set is similar. So a lot of those deals are priced custom or it could be multiple segments or multiple geographies, so it’s a little bit different, but as a guideline, we’d – we use the Priority Engine pricing as kind of the guidelines to the customization.

Last one, and then I’ll get back in queue. You talked a little bit about the renewal rates on the QSOs, how was the pricing integrity there and the up sell there?

Pricing integrity is very strong, so we don’t discount them, we don’t discount IT Deal Alert. Sales force doesn’t really have the flexibility to discount. So pricing is – pricing discipline is very good. And then up sell is obviously we’re always looking to sell more segments of Qualified Sales Opportunities and a lot of the existence – a lot of the people those 30 customers that bought Priority Engine and Deal Data, most of those customers are Qualified Sales Opportunity customers as well.

Okay. Thank you.

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

Yeah. I am curious about the linearity in the quarter. I know we came out of Q4 on February 11 and gave you outlook for the quarter and year. I’m just wondering, Q4, we get the 31% nice international revenue growth comp and here you we’re at 7%. When did you see this impacting your business?

Yeah, so the thing about Q1, Q1 are always our latest starting quarter because our people – our customers have a big push at the end of the year and then they have Christmas holiday and then most of our customers have sales kick off meetings, which takes a lot of their marketing teams out of pocket for most of January. So it’s probably our back and at quarter of the year anyway. And then, when we got into the middle of February and beginning of the March where we would expect to see a lot of deals coming in. We saw a lot of delays from the big customers as they were trying to figure out their budgets and what they’re going to do in light of their – the declining revenue they were seeing from the currency issues.

Okay. So kind of – middle of March, you knew that things are going to be off track?

Yes, I mean – it was your, the way it works as – customers start date the programs for us is a huge factor. So, if customers are pushing out – given us orders and pushing out start date that that effects the revenue in Q1.

Okay. And then the IT Deal Alert kind of the QSO, if we had – if there was kind of a same store sales number, I am trying to get a feel for seasonality in QSO. Did you see kind of a same-store sales seasonality between Q4 and Q1.

Well, our seasonality, so that the normal seasonality of the business as Q1 is the smallest quarter of the year, Q4 is the largest quarter of the year. I think, IT Deal Alert is a new enough product and growing so fast that seasonality hasn’t had too much an effect on it. Although, we’re definitely seeing an effect on international IT Deal Alert by what’s going on with customers budgets internationally that’s definitely going to affect international IT Deal Alert revenues this year.

Okay, I guess maybe I didn’t asked the question carefully enough, but it was good to see that up sequentially. And I was wondering if that just because of the incremental new customers you added or was that increased spend by the existing guys?

It’s a combination Q - Eric MartinuzziOkay.

We brought a lot of new customers, so obviously that helped as well.

All right. And then the TechTarget research product when I look out to how IT Deal Alert ramp a year ago, was that kind of a sub-period when you launched it in 2013 at $4 million, it went to $17 million in 2014. Is there a way to size it how we can think about the incrementality of TechTarget Research best product offering?

That’s hard to do because we haven’t – it’s – we’re working on introducing the product. So it’s hard to say. The other thing is we’re going to be selling this to two new customers sets that are new to us, so we haven’t installed – I see we saw a lot to the IT organizations, the IT vendors, but we haven’t installed to their research arms, and then we haven’t sold it to investors before. So I think it would be pretty mature for us to take a stab at that. But what I will say is that – I think over the medium-term and long-term based on the feedback we’re getting from talking to both those audiences that we feel that – we can drive pretty significant revenues to both of those – sets of customers.

Thank you.

You’re welcome.

The next question is from Mike Malouf with Craig Hallum Capital Group. Please go ahead.

Hey, everyone. Just quick question on the international side, most of my questions have been answered, but I can understand why the North American Core online business certainly slowed down given the currency headwinds. But can you – can sort of compare [indiscernible] international side because I guess you could say that some of the international guys could be helped by the foreign exchange. So just a little bit clarity on how it affects those guys? Thanks.

Yeah, we’re basically their part of these large organizations and marketing budgets are set based on the overall health of the business each quarter. So, what we basically saw was those types of pullbacks. So there is also – I think it will be interesting to see what the IT spend numbers were for the quarter internationally, but I think a lot of customers on the IT side were also moving slower, which affected how the vendors operated as well.

Okay, and then with regards to TechTarget Research side are. you – did I hear it right that you’re going to launch the investor and IT buyer parts of that at the same time in the second half?

So, the IT buyer piece, so just to be clear, the IT – the data that we give to IT buyers if buyers give us data, we’ll give them data back at no costs, they will be part of this community of peers, sharing data with other and we’re kind of the clearing house for them. In the second half of the year, we will start selling this data both the IT vendors to the market research teams and their executives as well as to investors.

Okay, great. Thanks.

You’re welcome.

The next question is from Marco Rodriguez with Stonegate Capital Partners. Please go ahead.

Good afternoon guys. Thanks for taking my questions. I just want to get a little bit clarification here on the guidance and the FX issues. So if I am understanding you guys correctly, the impact on guidance, the reduction in guidance that is and your results this quarter. It has more to do with what your clients are doing with their budgets more so than you translating revenues back into dollars, is that correct?

Exactly, so in the quarter our revenue was adversely affected by 1.4%, but the major thing that’s going on its significantly effecting our largest customers base. I think that’s an important point. So if you look at the segmentation of our customers are 12 largest customers revenue was down 12% year-over-year. So then if you look at our next 100 customers so the customer 13 to 112, those customers has less exposure outside the U.S. Their revenue was up 20%. And then if you look at our next customers from 113 plus we tend to be smaller VC backed start-ups and primarily operate in North America. Their revenue was up 26% in the quarter. So it’s really happening is our very largest customers, the company is with billions of dollars of revenue and very large marketing budgets that’s where we saw the pull back.

Got it. And can you provide us some update or some additional color into this Q2? I mean what are you seeing and what are you hearing from these clients are there budgets still looking kind of stretched, has anything improving, any kind of color there?

Well, I mean you can see from the guidance that there is sequential growth Q2 to Q1. So I think that speaks to – that we’re expecting improvement. In general Q1 is always the toughest quarter because of the stress kind of timing things that I talked about earlier than we usually see, normal seasonality would be a sequential increase in Q2 versus Q1. So as you can tell from the guidance, we’re expecting that to occur.

Okay. Excuse me – and then coming back to the Priority Engine clients, you mentioned I guess in your prepared remarks that about two-thirds of the clients had signed up for annual subscriptions. In my understanding, obviously as you said before also is that when they sign up, they sign up right way for annual deals. So I am just kind of wondering the other third – what sort of I guess what kind of a impact of that and what sort of a feedback you get from them [indiscernible] signed up for an annual subscription there?

Yeah, I mean, some customers just can’t from – internal budgets can’t sign up. So they just – they buy quarterly. So they’d rather, they don’t have the option of doing annual. Other customers want to try it for a quarter before doing annual. So just kind of normal reasons.

Got it. And then last question on this new product at TechTarget Research, are you going to have a dedicated sales team for that?

We are because its sellings in two new constituencies, so we will be – we’re looking to hire people have experience on research to IT vendors and people with experience selling research to investors, so we will have a dedicated sales team.

And, can you quantify how many people or dollar was what’s the investments about?

We’re going to hire to meet the demand in terms of the investment though that is baked into of our – into our guidance. So basically how we look at it is with addition – with incremental revenue, what we typically do is we take half of that incremental revenue and drop at the bottom line and other half of that incremental revenue we’ve reinvest in the business. And I thought that those dollars we will be paying for this additional visit – to invest in this new research business.

Got it, thanks for that guys.

Welcome.

The next question is a follow-up from Brian Fitzgerald of Jefferies. Please go ahead.

Thanks, I’m just wondering when you saw that Greg, I appreciate how you highlighted the segments and where you saw the weakness. Was there any particular weakness around segments, one particular segment weaker than others or any weakness around who the end IT buyers, consumer guys are weak but other end users are not?

Well, in general, the strength of the market is around the same area that you expect, cloud, and security and its intelligence and those 12 largest customers obviously those are the important markets for them. But I don’t really think there is any specific weakness in an IT segment that’s causing them to pull back our market. And I just think what they do is when they are challenged on revenue, they are looking to manage their earnings and they are pretty aggressive with cost cutting and pushing out expenditures and one of the easiest places to do that is marketing because there at short-term discretionary spend. So it’s something where they can kind of manage expenses pretty quickly. So we’ve seen this behavior many times before, it’s not new. And I think it’s pretty interesting that it’s not – but we’re seeing it wasn’t broad-based, it wasn’t across our customer set, it’s really only across the customers. They have a significant amount of the revenue coming internationally.

Great, thanks.

You’re welcome.

Showing no further questions, the conference has now concluded. Thanking you for attending today’s presentation. You may now disconnect.