10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-33472

TECHTARGET, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3483216
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
275 Grove Street Newton, Massachusetts	02466
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 431-9200

(Former name, former address and formal fiscal year, if changed since last report): Not applicable

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value	TTGT	Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 31, 2020, the registrant had 27,536,786 shares of common stock, $0.001 par value per share, outstanding.

TABLE OF CONTENTS

Item		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	3
	Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2020 and 2019	4
	Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019	5
	Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 6.	Exhibits	42
	Signatures	43

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

TechTarget, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

	June 30, 2020			December 31, 2019
Assets	(Unaudited)			(Unaudited)
Current assets:
Cash	$	50,390		$	52,487
Short-term investments		5,023			5,012
Accounts receivable, net of allowance for doubtful accounts of $2,028 and $1,899 respectively		25,568			27,102
Prepaid taxes		—			1,017
Prepaid expenses and other current assets		1,830			1,813
Total current assets		82,811			87,431
Property and equipment, net		12,951			12,371
Goodwill		97,023			93,639
Intangible assets, net		3,471			710
Operating lease assets with right-of-use		25,485			26,385
Deferred tax assets		616			136
Other assets		903			936
Total assets	$	223,260		$	221,608
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,847		$	2,036
Current operating lease liability		2,769			2,571
Current portion of term loan		1,554			1,241
Accrued expenses and other current liabilities		3,737			2,476
Accrued compensation expenses		1,164			3,679
Income taxes payable		3,217			65
Contract liabilities		5,051			4,335
Total current liabilities		19,339			16,403
Long-term portion of term loan		21,540			22,473
Non-current operating lease liability		26,845			28,170
Deferred tax liabilities		850			1,611
Other liabilities		1,140			—
Total liabilities		69,714			68,657
Leases and contingencies (see Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 55,035,081 and 54,903,824 shares issued, respectively; 27,536,786 and 28,142,519 shares outstanding, respectively		55			55
Treasury stock, at cost; 27,498,295 and 26,761,305 shares, respectively		(199,796	)		(184,972	)
Additional paid-in capital		326,194			317,675
Accumulated other comprehensive loss		(399	)		(319	)
Retained earnings		27,492			20,512
Total stockholders’ equity		153,546			152,951
Total liabilities and stockholders’ equity	$	223,260		$	221,608

See accompanying Notes to Consolidated Financial Statements.

3

TechTarget, Inc.

Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	34,796		$	34,286		$	66,212		$	64,258
Cost of revenues(1)		8,785			7,952			16,936			14,964
Gross profit		26,011			26,334			49,276			49,294
Operating expenses:
Selling and marketing(1)		12,570			13,976			25,519			26,422
Product development(1)		1,846			2,001			3,878			3,988
General and administrative(1)		3,267			3,123			6,622			6,145
Depreciation and amortization, excluding depreciation of $221, $56, $392, and $69, respectively, included in cost of revenues		1,453			1,146			2,798			2,276
Total operating expenses		19,136			20,246			38,817			38,831
Operating income		6,875			6,088			10,459			10,463
Interest and other expense, net		(10	)		(253	)		(479	)		(390	)
Income before provision for income taxes		6,865			5,835			9,980			10,073
Provision for income taxes		2,092			1,684			3,000			2,632
Net income	$	4,773		$	4,151		$	6,980		$	7,441
Other comprehensive income (loss), net of tax:
Unrealized loss on investments (net of tax provision of $(24), $0, $13, and $0, respectively)	$	84		$	—		$	(48	)	$	—
Foreign currency translation gain (loss)		21			(58	)		(32	)		(17	)
Other comprehensive income (loss)		105			(58	)		(80	)		(17	)
Comprehensive income	$	4,878		$	4,093		$	6,900		$	7,424
Net income per common share:
Basic	$	0.17		$	0.15		$	0.25		$	0.27
Diluted	$	0.17		$	0.15		$	0.25		$	0.26
Weighted average common shares outstanding:
Basic		27,533			27,640			27,768			27,723
Diluted		28,163			28,232			28,304			28,226

(1) Amounts include stock-based compensation expense as follows:

Cost of revenues	$	71	$	41	$	140	$	80
Selling and marketing		2,118		2,964		4,307		4,655
Product development		125		93		321		186
General and administrative		979		664		1,953		1,303

See accompanying Notes to Consolidated Financial Statements.

4

TechTarget, Inc.

Consolidated Statements of Stockholders’ Equity

For the three and six months ended June 30, 2020

(in thousands, except share and per share data)

(Unaudited)

	Common Stock				Treasury Stock
	Number of Shares		$0.001 Par Value		Number of Shares		Cost			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss)			Retained Earnings		Total Stockholders’ Equity
Balance, December 31, 2019		54,903,824	$	55		26,761,305	$	(184,972	)	$	317,675		$	(319	)	$	20,512	$	152,951
Issuance of common stock from restricted stock awards		123,027		—		—		—			—			—			—		—
Purchase of common stock through stock buyback		—		—		736,760		(14,824	)		—			—			—		(14,824	)
Impact of net settlements		230		—		230		—			(68	)		—			—		(68	)
Stock-based compensation expense(1)		—		—		—		—			5,294			—			—		5,294
Comprehensive income:
Unrealized loss on investments		—		—		—		—			—			(132	)		—		(132	)
Unrealized loss on foreign currency exchange		—		—		—		—			—			(53	)		—		(53	)
Net income		—		—		—		—			—			—			2,207		2,207
Balance, March 31, 2020		55,027,081	$	55		27,498,295	$	(199,796	)	$	322,901		$	(504	)	$	22,719	$	145,375
Issuance of common stock from restricted stock awards		8,000		—		—		—			—			—			—		—
Stock-based compensation expense		—		—		—		—			3,293			—			—		3,293
Comprehensive income:
Unrealized gain on investments		—		—		—		—			—			84			—		84
Unrealized gain on foreign currency exchange		—		—		—		—			—			21			—		21
Net income		—		—		—		—			—			—			4,773		4,773
Balance, June 30, 2020		55,035,081	$	55		27,498,295	$	(199,796	)	$	326,194		$	(399	)	$	27,492	$	153,546

(1) Includes $1.8 million of accrued compensation expense from 2019.

See accompanying Notes to Consolidated Financial Statements.

5

TechTarget, Inc.

Consolidated Statements of Stockholders’ Equity

For the three and six months ended June 30, 2019

(in thousands, except share and per share data)

(Unaudited)

	Common Stock				Treasury Stock
	Number of Shares		$0.001 Par Value		Number of Shares		Cost			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss)			Retained Earnings		Total Stockholders’ Equity
Balance, December 31, 2018		54,117,325	$	54		26,326,280	$	(177,905	)	$	307,014		$	(215	)	$	3,637	$	132,585
Issuance of common stock from exercise of options		10,000		—		—		—			23			—			—		23
Issuance of common stock from restricted stock awards		112,545		—		—		—			—			—			—		—
Purchase of common stock through stock buyback		—		—		220,297		(3,125	)		—			—			—		(3,125	)
Impact of net settlements		6,391		—		6,391		—			(868	)		—			—		(868	)
Stock-based compensation expense		—		—		—		—			3,179			—			—		3,179
Comprehensive income:
Unrealized gain on foreign currency exchange		—		—		—		—			—			41			—		41
Net income		—		—		—		—			—			—			3,290		3,290
Balance, March 31, 2019		54,246,261	$	54		26,552,968	$	(181,030	)	$	309,348		$	(174	)	$	6,927	$	135,125
Issuance of common stock from exercise of options		56,207		—		—		—			—			—			—		—
Issuance of common stock from restricted stock awards		—		—		97,427		(1,600	)		—			—			—		(1,600	)
Purchase of common stock through stock buyback		—		—		—		—			3,762			—			—		3,762
Stock-based compensation expense		—		—		—		—			—			—			—		—
Comprehensive income:
Unrealized gain on foreign currency exchange		—		—		—		—			—			(58	)		—		(58	)
Net income		—		—		—		—			—			—			4,151		4,151
Balance, June 30, 2019		54,302,468	$	54		26,650,395	$	(182,630	)	$	313,110		$	(232	)	$	11,078	$	141,380

See accompanying Notes to Consolidated Financial Statements.

6

TechTarget, Inc.

Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended
	June 30,
	2020			2019
	(Unaudited)
Operating activities:
Net income	$	6,980		$	7,441
Adjustments to reconcile net income to net cash provided by operating    activities:
Depreciation and amortization		3,190			2,345
Provision for bad debt		317			367
Stock-based compensation		6,721			6,224
Amortization of debt issuance costs		4			4
Deferred tax provision		(1,236	)		(80	)
Changes in operating assets and liabilities:
Accounts receivable		1,217			2,600
Prepaid expenses and other current assets		(17	)		(112	)
Other assets		15			(94	)
Accounts payable		(187	)		(843	)
Income taxes payable		4,162			1,153
Accrued expenses and other current liabilities		(346	)		(175	)
Operating lease right-of-use assets and liabilities, net		(182	)		(161	)
Accrued compensation expenses		(637	)		(763	)
Contract liabilities		700			913
Other liabilities		1,140			—
Net cash provided by operating activities		21,841			18,819
Investing activities:
Purchases of property and equipment, and other capitalized assets		(3,338	)		(3,379	)
Purchases of investments and maturities of investments		(71	)		500
Acquisitions of businesses, net		(5,015	)		—
Net cash used in investing activities		(8,424	)		(2,879	)
Financing activities:
Tax withholdings related to net share settlements		(68	)		(868	)
Purchase of treasury shares and related costs		(14,824	)		(4,725	)
Proceeds from exercise of stock options		—			23
Term loan principal payment		(625	)		(625	)
Net cash used in financing activities		(15,517	)		(6,195	)
Effect of exchange rate changes on cash		3			(13	)
Net (decrease) increase in cash		(2,097	)		9,732
Cash at beginning of period		52,487			34,673
Cash at end of period	$	50,390		$	44,405
Supplemental disclosure of cash flow information:
Cash paid for taxes, net	$	92		$	1,407

See accompanying Notes to Consolidated Financial Statements.

7

TechTarget, Inc.

Notes to Consolidated Financial Statements

(In thousands, except share and per share data, where otherwise noted, or instances where expressed in millions)

1. Organization and Operations

TechTarget, Inc. and its subsidiaries (the “Company”) is a leading provider of specialized online content for buyers of enterprise technology products and services, and a leading provider of purchase-intent marketing and sales services for business-to-business “B2B” technology companies. The Company’s service offerings enable enterprise B2B technology companies to better identify, reach, and influence corporate enterprise technology decision makers actively researching specific enterprise technology purchases. The Company improves B2B technology companies’ ability to impact these audiences for business growth using advanced targeting, analytics, and data services complemented with customized marketing programs that integrate demand generation and brand advertising techniques. The Company operates a network of over 140 websites, each of which focuses on a major enterprise technology sector such as storage, security, or networking. Enterprise technology and business professionals have become increasingly specialized, and they have come to rely on the Company’s sector-specific websites for purchasing decision support. The Company’s content platform enables enterprise technology and business professionals to navigate the complex and rapidly changing enterprise technology landscape where purchasing decisions can have significant financial and operational consequences. At critical stages of the purchase decision process, these content offerings, through different channels, meet enterprise technology and business professionals’ needs for expert, peer, and IT vendor information and provide a platform on which IT vendors can launch targeted marketing campaigns which generate measurable return on investment. Based upon the logical clustering of members’ respective job responsibilities and the marketing focus of the products being promoted by the Company’s customers, the Company categorizes its content offerings to address the key market opportunities and audience extensions across a portfolio of distinct market categories including: Security, Networking, Storage, Data Center and Virtualization Technologies, CIO/IT Strategy, Business Applications and Analytics, Application Architecture and Development, and ANCL Channel.

2. Summary of Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these Notes to Consolidated Financial Statements. The Company’s critical accounting policies are those that affect its more significant judgments used in the preparation of its consolidated financial statements. A description of the Company’s critical accounting policies and estimates is contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in this note to the consolidated financial statements.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, TechTarget Securities Corporation (“TSC”), TechTarget Limited, TechTarget (HK) Limited (“TTGT HK”), TechTarget (Australia) Pty Ltd., TechTarget (Singapore) Pte Ltd., E-Magine Médias SAS (“LeMagIT”) and TechTarget Germany GmbH. TSC is a Massachusetts corporation. TechTarget Limited is a subsidiary doing business principally in the United Kingdom. TTGT HK is a subsidiary incorporated in Hong Kong in order to facilitate the Company’s activities in the Asia-Pacific region. TechTarget (Australia) Pty Ltd. and TechTarget (Singapore) Pte Ltd. are the entities through which the Company does business in Australia and Singapore, respectively; LeMagIT and TechTarget Germany GmbH, both wholly-owned subsidiaries of TechTarget Limited, are entities through which the Company does business in France and Germany, respectively.

.

8

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted (Generally Accepted Accounting Principles or “GAAP”) in the United States (“U.S.”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. All adjustments, which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown, are of a normal, recurring nature and have been reflected in the consolidated financial statements. The results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim periods or for the full year. The information included in these consolidated financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report and the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenues, long-lived assets, goodwill, the allowance for doubtful accounts, stock-based compensation, self-insurance accruals, and income taxes. The Company reduces its accounts receivable for an allowance for doubtful accounts based on its best estimate of the amount of probable credit losses. Estimates of the carrying value of certain assets and liabilities are based on historical experience and on various other assumptions that the Company believes to be reasonable. Actual results could differ from those estimates.

Revenue Recognition

The Company generates its revenues from the sale of targeted marketing and advertising campaigns, which it delivers via its network of websites and data analytics solutions. Revenue is recognized when performance obligations are satisfied by transferring promised goods or services to customers, as determined by applying a five-step process consisting of: a) identifying the contract, or contracts, with a customer, b) identifying the performance obligations in the contract, c) determining the transaction price, d) allocating the transaction price to the performance obligations in the contract, and e) recognizing revenue when, or as, performance obligations are satisfied.

Accounts Receivable

We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the Consolidated Statements of Income and Comprehensive Income. We assess collectability by reviewing accounts receivable on an individual basis when we identify specific customers with known disputes, overdue amounts or collectability issues and also reserve for losses on all accounts based on historical information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status and make judgments about the creditworthiness of customers based on ongoing credit evaluations.

At June 30, 2020, the Company’s assessment considered business and market disruptions caused by COVID-19 and estimates of expected emerging credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict causing variability and volatility that may have a material impact on our allowance for credit losses in future periods. 

Other Liabilities

Other liabilities consist of the long-term portions of amounts payable related to our acquisition of substantially all of the assets of Data Science Central LLC (see Notes 4 and 14) and the amounts deferred under the Coronavirus, Aid, Relief and Economic

9

Security Act (CARES Act) which allows employers to defer the payment of the Company’s employer share of FICA payroll taxes. The amount of the employer share of FICA payroll taxes (6.2% of the first $137,700 of employee pay) due for the period beginning on March 27, 2020, and ending December 31, 2020, can be deferred. The deferred amounts will then be payable in equal installments at December 31, 2021 and December 31, 2022.

Recent Accounting Pronouncements

Recently Adopted Accounting Guidance

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Income and Comprehensive Income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees, capital and operating leases, existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company adopted ASU 2016-02 in the first quarter of 2019 using the modified retrospective approach, and elected the package of practical expedients permitted under the transition guidance. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842.

The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract was or contains a lease, and our initial direct costs for any leases that existed prior to January 1, 2019. We also elected to combine our lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the Consolidated Statements of Income and Comprehensive Income on a straight-line basis over the lease term. The Company recorded operating lease assets with right-of-use of $27.5 million and $2.9 million current operating lease liability and $29.2 million non-current operating lease liability as of January 1, 2019, of which $4.9 million and $0.3 million were reclassified from deferred rent and prepaid rent, respectively (see Note 9).

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (step 2 of the goodwill impairment test) and instead requires only a one-step quantitative impairment test, performed by comparing the fair value of goodwill with its carrying amount. ASU 2017-04 is effective on a prospective basis effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangements plus any optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” (ASU 2016-13) which amends ASC 326 “Financial Instruments—Credit Losses” which introduces a new methodology for accounting for credit losses on financial instruments. The guidance establishes a new forward -looking "expected loss model" that requires entities to estimate current expected credit losses on accounts receivable and financial instruments by using all practical and relevant information. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

10

In August 2018, the FASB issued Accounting Standard Update No. 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements” (Topic 820) (ASU 2018-13), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Accounting Guidance Not Yet Adopted

In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): “Simplifying the Accounting for Income Taxes” (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for us in the first quarter of 2021 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.

3. Revenues

Disaggregation of Revenue

The following table depicts the disaggregation of revenue according to categories consistent with how the Company evaluates its financial performance and economic risk. International revenue consists of international geo-targeted campaigns, which are campaigns targeted at an audience of members outside of North America.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
North America	$	21,106	$	23,353	$	40,855	$	43,631
International		13,690		10,933		25,357		20,627
Total	$	34,796	$	34,286	$	66,212	$	64,258

Contract Liabilities

Timing may differ between the satisfaction of performance obligations and the invoicing and collections of amounts related to the Company’s contracts with customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. Additionally, certain customers may receive credits, which are accounted for as a material right. The Company estimates these amounts based on the expected amount of future services to be provided to customer and allocates a portion of the transaction price to these material rights. The Company recognizes these material rights as the material rights are exercised. The resulting amounts included in the contract liabilities on the accompanying Consolidated Balance Sheets were $2.6 million and $2.4 million at June 30, 2020, and December 31, 2019, respectively.

	Contract Liabilities
Year-to-Date Activity
Balance at December 31, 2019	$	4,335
Deferral of revenue		2,178
Recognition of previously unearned revenue		(1,965	)
Balance at March 31, 2020	$	4,548
Deferral of revenue		1,822
Recognition of previously unearned revenue		(1,319	)
Balance at June 30, 2020	$	5,051

The Company elected to apply the following practical expedients:

• Existence of a Significant Financing Component in a Contract.  As a practical expedient, the Company has not assessed whether a contract has a significant financing component because the Company expects at contract inception that the period between payment by the customer and the transfer of promised goods or services by the Company to the customer will be one year or less. Payment terms and conditions vary by contract type, although terms generally include a

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requirement of payment within 30 to 90 days. In addition, the Company has determined that the payment terms that the Company provides to its customers are structured primarily for reasons other than the provision of financing to the customer.

• Costs to Fulfill a Contract.  The Company’s revenues are primarily generated from customer contracts that are for one year or less. Costs primarily consist of incentive compensation paid based on the achievements of sales targets in a given period for related revenue streams and are recognized in the month when the revenue is earned. As a practical expedient, for amortization periods that are determined to be one year or less, the Company expenses any incremental costs of obtaining the contract with a customer when incurred. For those customer contracts greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

• Revenues Invoiced.  The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

4. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including short-term and long-term investments and contingent consideration. The Company’s bank and money market accounts are in bank deposits and are not quoted instruments. As such they are all considered cash.  The fair value of these financial assets and liabilities for was determined based on three levels of input as follows: 

• Level 1. Quoted prices in active markets for identical assets and liabilities;

• Level 2. Observable inputs other than quoted prices in active markets; and

• Level 3. Unobservable inputs.

The fair value hierarchy of the Company’s financial assets carried at fair value and measured on a recurring basis is as follows:

			Fair Value Measurements at June 30, 2020
	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Short-term investments(1)	$	5,023	$	—	$	5,023	$	—
Total assets	$	5,023	$	—	$	5,023	$	—
Liabilities:
Contingent consideration - current (2)	$	711	$	—	$	—	$	711
Contingent consideration - non-current (2)		426		—		—		426
Total liabilities	$	1,137	$	—	$	—	$	1,137

			Fair Value Measurements at December 31, 2019
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Short-term investments(1)	$	5,012	$	—	$	5,012	$	—
Total assets	$	5,012	$	—	$	5,012	$	—

(1) Short-term investments consist of a bond fund, their fair value is calculated using an interest rate yield curve for similar instruments.

(2) The Company’s valuation techniques and Level 3 inputs used to estimate the fair value of contingent consideration payable in connection with the acquisition are described in Note 14.

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5. Cash and Investments

Cash is carried at cost, which approximates fair market value. Cash consisted of the following:    

	June 30, 2020		December 31, 2019
Cash	$	50,390	$	52,487
Total cash	$	50,390	$	52,487

Investments are recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders’ equity, net of tax. Realized gains and losses on the sale of these investments are determined using the specific identification method. The cumulative unrealized loss, net of taxes, was $47 thousand as of June 30, 2020. There were no realized gains or losses as of December 31, 2019. 

Short-term investments consisted of the following:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term investments:
Bond funds	$	5,084	$	—	$	(61	)	$	5,023
Total short-term investments	$	5,084	$	—	$	(61	)	$	5,023

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Short-term investments:
Bond funds	$	5,012	$	—	$	—	$	5,012
Total short-term investments	$	5,012	$	—	$	—	$	5,012

6. Goodwill and Intangible Assets

The following table summarizes the Company’s intangible assets, net:

			June 30, 2020
	Estimated Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net
Customer, affiliate and advertiser relationships	5-17		$	8,684	$	6,326	$	2,358
Developed websites, technology and patents		10		2,005		1,079		926
Trademark, trade name and domain name	5-8			1,798		1,753		45
Proprietary user information database and internet traffic		5		1,094		1,094		—
Non-Compete agreement		3		170		28		142
Total intangible assets			$	13,751	$	10,280	$	3,471

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			December 31, 2019
	Estimated Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Customer, affiliate and advertiser relationships	5-17		$	6,520	$	(6,290	)	$	230
Developed websites, technology and patents		10		1,476		(1,026	)		450
Trademark, trade name and domain name	5-8			1,792		(1,763	)		29
Proprietary user information database and internet traffic		5		1,122		(1,122	)		—
Non-Compete agreement		1.5		10		(9	)		1
Total intangible assets			$	10,920	$	(10,210	)	$	710

 Intangible assets are amortized over their estimated useful lives, which range from approximately 3 to 17 years, using methods of amortization that are expected to reflect the estimated pattern of economic use. The remaining amortization expense will be recognized over a weighted-average period of approximately 5.01 years. Amortization expense was $0.1 million for each of the six months ended June 30, 2020 and 2019. Amortization expense is recorded within operating expenses as the intangible assets consist of customer-related assets which generate website traffic that the Company considers to be in support of selling and marketing activities. The Company did not write off any fully amortized intangible assets in the first six months of 2020.  

The Company expects amortization expense of intangible assets to be as follows:

Years Ending December 31:	Amortization Expense
2020 (July 1 – December 31)	$	223
2021		463
2022		492
2023		329
2024		319
Thereafter		1,645
Total	$	3,471

Goodwill and indefinite-lived intangible assets are not amortized but are reviewed annually for impairment or more frequently if impairment indicators arise. The Company did not have any intangible assets other than goodwill with indefinite lives as of June 30, 2020 or December 31, 2019. There were no indications of impairment as of June 30, 2020, and the Company believes that, as of the balance sheet dates presented, none of the Company’s goodwill or intangible assets was impaired

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7. Net Income Per Common Share

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per common share is as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Numerator:
Net income	$	4,773	$	4,151	$	6,980	$	7,441
Denominator:
Basic:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding		27,532,786		27,640,207		27,768,224		27,722,521
Diluted:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding		27,532,786		27,640,207		27,768,224		27,722,521
Effect of potentially dilutive shares (1)		630,127		591,538		535,844		503,469
Total weighted average shares of common stock and vested, undelivered restricted stock units outstanding and potentially dilutive shares		28,162,913		28,231,745		28,304,068		28,225,990
Net Income Per Share:
Basic net income per share	$	0.17	$	0.15	$	0.25	$	0.27
Diluted net income per share	$	0.17	$	0.15	$	0.25	$	0.26

(1) In calculating diluted net income per share, 29 thousand shares and 26 thousand shares related to outstanding stock options and unvested, undelivered restricted stock units were excluded for the three and six months ended June 30, 2020, respectively, and 0.6 million and 0.5 million shares related to outstanding stock options and unvested, undelivered restricted stock units were excluded for the three and six months ended June 30, 2019, respectively.

8. Term Loan Agreement and Subsequent Event

On December 24, 2018, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Western Alliance Bank (the “Bank”) as the lender. The Loan Agreement provides for a $25 million term loan facility with a maturity date of December 10, 2023 (the “Term Loan”).

The Term Loan is secured by a lien on substantially all of the assets of the Company, including a pledge of the stock of certain of its wholly-owned subsidiaries (limited, in the case of the stock of certain foreign subsidiaries of the Company, to no more than 65% of the capital stock of such subsidiaries).

The Term Loan must be repaid quarterly, with applicable interest paid monthly, in the following manner: 1.25% of the initial aggregate borrowings are due and payable each quarter for the first two loan years, 1.88% of the initial aggregate borrowings are due and payable each quarter for the third loan year, and 2.50% of the initial aggregate borrowings are due and payable each quarter for the fourth and fifth loan years. At maturity, all outstanding amounts, including unpaid principal and accrued and unpaid interest, under the Loan Agreement will be due and payable.

The Term Loan bears interest at a floating per annum rate equal to one and three-eighths percent (1.375%) above the greater of (a) the one-month U.S. LIBOR rate reported in The Wall Street Journal or (b) two percent (2.00%).

On July 2, 2020, the Company entered into a Loan and Security Modification Agreement (“Modification Agreement”) with the Bank pursuant to which the Company and the Bank agreed to amend the Loan Agreement. The Modification Agreement, among other things, added or amended certain definitions in the Loan Agreement, added a financial covenant requiring the Company to maintain an Asset Coverage Ratio (as defined in the Loan Agreement) of no less than 1.0 to 1.0 tested as of the end of each quarter, and provided

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the Company with a new revolving line of credit facility of $20,000,000 (“Line of Credit”). The Line of Credit allows the Company to request non-formula advances in an aggregate principal amount not to exceed the Line of Credit and to use the proceeds of such advances until the facility matures on July 2, 2022. Advances under the Line of Credit bear interest at a floating rate equal to one-quarter percent (0.25%) above the Prime Rate (as published in the Money Rates section of the Western Edition of The Wall Street Journal, or such other rate of interest publicly announced from time to time by Western Alliance as its Prime Rate); provided that at no time shall the interest rate on such advances be less than three and one half percent (3.50%). The Modification Agreement also establishes a process by which the Company and the Bank will determine an alternative interest rate for the Company’s existing Term Loan under the Loan Agreement in the event that the Bank determines that LIBOR ceases to exist or is no longer available. In addition, the Company will be required to pay customary fees and expenses, including an annual facility fee with respect to the Line of Credit. Together, the Loan Agreement and Line of Credit are guaranteed by the Company and secured by substantially all assets of the Company and its subsidiaries.

9. Leases and Contingencies

On January 1, 2019, the Company adopted Topic 842 Leases using the modified retrospective approach.  The Company recorded operating lease assets (right-of-use assets) of $27.5 million and operating lease liabilities of $32.1 million.  There was no impact to retained earnings upon adoption of Topic 842.

The Company has various non-cancelable lease agreements for certain of its offices with original lease periods expiring between 2019 and 2029. Lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Leases with a renewal option allow the Company to extend the lease term typically between 1 and 5 years.  When determining the lease term, renewal options reasonably certain of being exercised are included in the lease term.  When determining if a renewal option is reasonably certain of being exercised, the Company considers several economic factors, including but not limited to, the significance of leasehold improvements incurred on the property, whether the asset is difficult to replace, underlying contractual obligations, or specific characteristics unique to that particular lease that would make it reasonably certain that the Company would exercise such option.  Renewal and termination options were generally not included in the lease term for the Company's existing operating leases. Certain of the arrangements have discounted rent periods or escalating rent payment provisions. Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets. The Company recognizes rent expense on a straight-line basis over the lease term.  The Company’s lease agreements do not contain any material residual value guarantee or material restrictive covenants.

As of June 30, 2020, operating lease assets were $25.5 million and operating lease liabilities were $29.6 million. The maturity of the Company’s operating lease liabilities as of June 30, 2020 are as follows:

	Minimum Lease
Years Ending December 31:	Payments
2020 (June 30 – December 31)	$	2,063
2021		4,132
2022		3,778
2023		3,696
2024		3,725
Thereafter		17,760
Total future minimum lease payments	$	35,154
Less imputed interest		5,540
Total operating lease liabilities	$	29,614

Included in the Consolidated Balance Sheet:
Current operating lease liabilities	$	2,769
Non-current operating lease liabilities		26,845
Total operating lease liabilities	$	29,614

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For the three and six months ended June 30, 2020 and 2019, the total lease cost is comprised of the following amounts:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Operating lease expense	$	946	$	975	$	1,893	$	1,950
Short-term lease expense		26		21		54		42
Total lease expense	$	972	$	996	$	1,947	$	1,992

The following summarizes additional information related to operating leases:

	As of
	June 30, 2020
Weighted-average remaining lease term — operating leases		5.1
Weighted-average discount rate — operating leases		4	%

If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgment when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.

Litigation

From time to time and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. At June 30, 2020 and December 31, 2019, the Company did not have any pending claims, charges, or litigation that it expects would have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

10. Stock-Based Compensation

Stock Option and Incentive Plans

In April 2007, the Board approved the 2007 Stock Option and Incentive Plan (the “2007 Plan”), which was approved by the stockholders of the Company and became effective upon the consummation of the Company’s IPO in May 2007. The 2007 Plan allowed the Company to grant ISOs, NSOs, stock appreciation rights, deferred stock awards, restricted stock units and other awards. Under the 2007 Plan, stock options could not be granted at less than fair market value on the date of grant, and grants generally vested over a three- to four-year period. Stock options granted under the 2007 Plan expire no later than ten years after the grant date. Additionally, beginning with awards made in August 2015, the Company had the option to direct a net issuance of shares for satisfaction of tax liability with respect to vesting of awards and delivery of shares. Prior to August 2015, this choice of settlement method was solely at the discretion of the award recipient. The 2007 Plan expired in May 2017.

No new awards may be granted under the 2007 Plan; however, the shares of common stock remaining in the 2007 Plan are available for issuance in connection with previously awarded grants under the 2007 Plan. There are 77,500 shares of common stock that remain subject to outstanding stock grants under the 2007 Plan as of June 30, 2020.

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In March 2017, the Board approved the 2017 Stock Option and Incentive Plan (the “2017 Plan”), which was approved by the stockholders of the Company at the 2017 Annual Meeting and became effective June 16, 2017. The 2017 Plan replaces the Company’s 2007 Plan. On that date, 3,000,000 shares of Common Stock were reserved for issuance under the 2017 Plan and, generally, shares that are forfeited or canceled from awards under the 2017 Plan also will be available for future awards. Under the 2017 Plan, the Company may grant restricted stock and restricted stock units, non-qualified stock options, stock appreciation rights, performance awards, and other stock-based and cash-based awards. Grants generally vest in equal tranches over a three-year period. Stock options granted under the 2017 Plan expire no later than ten years after the grant date. Shares of stock issued pursuant to restricted stock awards are restricted in that they are not transferable until they vest. Stock underlying awards of restricted stock units are not issued until the units vest. Non-qualified stock options cannot be exercised until they vest. Under the 2017 Plan, all stock options and stock appreciation rights must be granted with an exercise price that is at least equal to the fair market value of the stock on the date of grant. The 2017 Plan broadly prohibits the repricing of options and stock appreciation rights without stockholder approval and requires that no dividends or dividend equivalents be paid with respect to options or stock appreciation rights. The 2017 Plan further provides that, in the event any dividends or dividend equivalents are declared with respect to restricted stock, restricted stock units, other stock-based awards and performance awards (referred to as “full-value awards”), they would be subject to the same vesting and forfeiture provisions as the underlying award. There is a total of 1,368,630 shares of common stock that remain subject to outstanding stock grants under the 2017 Plan as of June 30, 2020.

Accounting for Stock-Based Compensation

The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of an award.

The expected volatility of options granted has been determined using a weighted average of the historical volatility of the Company’s stock for a period equal to the expected life of the option. The expected life of options has been determined utilizing the “simplified” method. The risk-free interest rate is based on a zero coupon U.S. treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. The Company applied an estimated annual forfeiture rate based on historical averages in determining the expense recorded in each period.

A summary of the stock option activity under the Company’s plans for the six months ended June 30, 2020 is presented below:

Year-to-Date Activity	Options Outstanding		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding at December 31, 2019		140,000	$	13.14
Granted		25,000	$	29.64
Exercised		—		—
Forfeited		—		—
Cancelled		—		—
Options outstanding at June 30, 2020		165,000	$	15.64		6.11	$	2,375
Options exercisable at June 30, 2020		137,500	$	12.96		5.36	$	2,347
Options vested or expected to vest at June 30, 2020		162,880	$	15.46		6.06	$	2,374

There were no options exercised during the six months ended June 30, 2020. The total intrinsic value of options exercised (i.e. the difference between the market price at exercise and the price paid by the employee to exercise the options) was $20 thousand during the six months ended June 30, 2019. The total amount of cash received from exercise of these options was approximately $23 thousand during the six months ended, June 30, 2019.

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Restricted Stock Units

Restricted stock units are valued at the market price of a share of the Company’s common stock on the date of the grant. A summary of the restricted stock unit activity under the Company’s plans for the six months ended June 30, 2020 is presented below:

Year-to-Date Activity	Shares			Weighted- Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value
Nonvested outstanding at December 31, 2019		1,301,130		$	21.82
Granted		95,688		$	21.10
Vested		(103,688	)	$	21.12
Forfeited		(12,000	)	$	25.21
Nonvested outstanding at June 30, 2020		1,281,130		$	21.79	$	38,472

There were 103,688 restricted stock units with a total grant-date fair value of $2.2 million that vested during the six months ended June 30, 2020. There were 12,000 shares forfeited with a total value of $303 thousand for the six months ended June 30, 2020.  There were 98,811 restricted stock units with a total grant-date fair value of $1.9 million that vested during the six months ended June 30, 2019.

As of, June 30, 2020 there was $17.2 million of total unrecognized compensation expense related to stock options and restricted stock units, which is expected to be recognized over a weighted average period of 1.5 years.

11. Stockholders’ Equity

Reserved Common Stock

As of, June 30, 2020 the Company has reserved 2,376,015 shares of common stock for use in settling outstanding options and unvested restricted stock units that have not been issued as well as future awards available for grant under the 2007 and 2017 Plans.

Common Stock Repurchase Programs

In November 2018, the Company announced that the Board had authorized a $25.0 million stock repurchase program (the “November 2018 Repurchase Program”) under which the Company is authorized to repurchase the Company’s common stock from time to time on the open market or in privately negotiated transactions at prices and in a manner that may be determined by management. The Company repurchased 736,760 shares at an aggregate purchase price of approximately $14.8 million during the first quarter of 2020 under the November 2018 Stock Repurchase Program. No amounts were repurchased under this plan during the second quarter of 2020 and the November 2018 Repurchase Program was terminated in May 2020.

On May 1, 2020, the Company’s Board of Directors approved a new two-year $25.0 million stock repurchase program (the “May 2020 Repurchase Program”). Repurchases of the Company's stock under the May 2020 Repurchase Program may be made in the open market, in privately negotiated transactions, or pursuant to one or more trading plans. The timing and amount of repurchases, if any, will be determined by the Company's management at its discretion and be based on a variety of factors such as the market price of the Company's common stock, corporate and contractual requirements, prevailing market and economic conditions and legal requirements. The May 2020 Repurchase Program may be modified, suspended or discontinued at any time. No amounts were repurchased under May 2020 Repurchase Program during the second quarter of 2020.

Repurchased shares are recorded under the cost method and are reflected as treasury stock in the accompanying Consolidated Balance Sheets. All share repurchases were funded with cash on hand.

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12. Income Taxes

The Company measures its interim period tax expense using an estimated annual effective tax rate and adjustments for discrete taxable events that occur during the interim period. The estimated annual effective income tax rate is based upon the Company’s estimations of annual pre-tax income, the geographic mix of pre-tax income, and its interpretations of tax laws. The Company updates the estimate of its annual effective tax rate at the end of each quarterly period. The Company recorded income tax expense of $3.0 million and $2.6 million the six months ended June 30, 2020 and June 30, 2019 respectively.

13. Segment Information

The Company views its operations and manages its business as one operating segment based on factors such as how the Company manages its operations and how its executive management team reviews results and makes decisions on how to allocate resources and assess performance.

Geographic Data

Net sales by campaign target area were as follows (1):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
North America	$	21,106	$	23,353	$	40,855	$	43,631
International		13,690		10,933		25,357		20,627
Total	$	34,796	$	34,286	$	66,212	$	64,258

(1) Net sales to customers by campaign target area is based on the geo-targeted (target audience) location of the campaign.

Net sales to unaffiliated customers by geographic area were as follows (2):

	For the Three Months Ended 2020				For the Six Months Ended June 30,
	2020		2019		2020		2019
United States	$	24,197	$	25,813	$	46,634	$	48,063
United Kingdom		4,531		3,324		8,323		6,433
Other international		6,068		5,149		11,255		9,762
Total	$	34,796	$	34,286	$	66,212	$	64,258

(2) Net sales to unaffiliated customers by geographic area is based on the customers’ current billing addresses and does not consider the geo-targeted (target audience) location of the campaign.

Long-lived assets by geographic area were as follows:

	June 30, 2020		December 31, 2019
United States	$	109,402	$	102,572
International		4,043		4,148
Total	$	113,445	$	106,720

Long-lived assets are comprised of property and equipment, net; goodwill; and intangible assets, net. No single country outside of the U.S. accounted for 10% or more of the Company’s long-lived assets during either of these periods.

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14. Acquisition

On February 18, 2020, the Company acquired substantially all of the operating assets of Data Science Central LLC, which is a niche digital publishing and media company focused on data science and business analytics for $5.5 million, plus a potential future earnout valued at $0.9 million at the time of acquisition, which is currently valued at $1.1 million (Note 4).  A $5.0 million cash payment was made at closing, with the remainder due in fiscal year 2021. The earnout is subject to certain revenue growth targets and the payment is adjusted based on actual results. If all targets are met, the total purchase price, including the earnout, shall not exceed $7.5 million which will become payable upon the achievement of certain revenue objectives during the next two years.  

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors including those discussed below in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2019 under Part I, Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 under Part II, Item 1A, “Risk Factors” under Part I, Item 1A, “Risk Factors,” and in the other documents we file with the Securities and Exchange Commission. Please refer to our “Forward-Looking Statements” section on page 35.

Overview

TechTarget, Inc. (“we” or “the Company”) is a Delaware corporation incorporated on September 14, 1999. Through continued innovation around our specialized online content for buyers of enterprise technology solutions we have become a global leader in purchase intent-driven marketing and sales services that deliver business impact for enterprise business-to-business “B2B” technology companies. Our offerings enable B2B technology companies to better identify, reach and influence corporate enterprise technology decision makers actively researching specific enterprise technology purchases. We improve a vendor’s ability to impact these audiences for business growth using advanced targeting, analytics and data services complemented with customized marketing programs that integrate demand generation, brand marketing and advertising techniques.

Enterprise technology has become increasingly specialized, and the websites within our network of over 140 websites address every major enterprise technology segment such as storage, security, networking, and business applications.  Enterprise technology and business professionals rely on us for key decision support information tailored to their specific areas of responsibility.

We enable enterprise technology and business professionals to navigate the complex and rapidly-changing enterprise technology landscape where purchasing decisions can have significant financial and operational consequences. Our content strategy includes three primary sources that enterprise technology and business professionals use to assist them in their pre-purchase research: independent content provided by our professionals, vendor-generated content provided by our customers and member-generated, or peer-to-peer, content. In addition to utilizing our independent editorial content, registered members appreciate the ability to deepen their pre-purchase research by accessing the extensive vendor supplied content available across our website network. Likewise, these members derive significant additional value from the ability our network provides to seamlessly interact with and contribute to information exchanges in a given field.

We had approximately 20.5 million and 19.8 million registered members – our “audiences” – as of June 30, 2020 and 2019 respectively. During the second quarter of 2020, the Company ended a partnership with a company covering the Belgium, Netherlands, and Luxembourg (“Benelux”) region.  This reduced our member number by 0.5 million.  Additionally, we restated our 2019 membership to remove the Benelux member number as of June 30, 2019 (0.5 million).  We believe that we have sufficient members within our remaining database to support our business needs within the Benelux region.  While the size of our registered member base does not provide direct insight into our customer numbers or our revenues, the value of our services sold to our customers is a direct result of the breadth and reach of this content footprint. This footprint creates the opportunity for our customers to gain business leverage by targeting our audiences through customized marketing programs. Likewise, the behavior exhibited by these audiences enables us to provide our customers with data products to improve their marketing and sales efforts. The targeted nature of our member base enables B2B technology companies to reach a specialized audience efficiently because our content is highly segmented and aligned with the B2B technology companies’ specific products. With it, we have developed a broad customer base and, in 2020 expect to deliver marketing and sales services programs to approximately 1,400 customers.

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Executive Summary

COVID-19 Business Update

We finished the second quarter of 2020 in a strong financial position. As of June 30, 2020, our balance sheet included:

Cash and investments:	$55.4 million
Current portion debt:	$1.6 million
Long-term portion debt:	$21.5 million

Our remaining debt obligation for 2020, including required interest payments, is approximately $1.0 million.  We generated $21.8 million in cash from operations during the six months ended June 30, 2020. In July 2020, we obtained a $20 million line of credit with Western Alliance Bank.  While we do not have any current plans to utilize the line of credit, we feel that the line of credit provides us with additional flexibility in the current economic environment.  We expect to be able to maintain adequate liquidity to satisfy our cash needs as we navigate through the current environment, although we could experience significant fluctuations in our cash flows from period to period. If necessary, we may take additional steps to preserve adequate liquidity, including through accessing capital markets and other sources of external financing.

During the second quarter we saw similar trends that we saw at the end of the first quarter.  We saw a general shift in customer behavior moving away from longer term contracts in favor of shorter term contracts, which allow our customers greater flexibility.  Additionally, our ability to attract new customer to longer term contracts was impacted as a result of the general cautiousness related to the COVID-19 environment.  These factors resulted in Priority Engine revenue growth of only 1% over last year.  We saw weakness from the Global 10 accounts, in particular their investments in their branding.

Our revenue growth in quarter was driven in large part due to increases in our international revenue.  We believe the increase in international revenue was driven by three items:

• We continue to benefit from the opt-in nature of our audience.

• We own our own and operate our own websites which provides us with first party data.

• Historically, face to face events were more prevalent outside the United States and we are seeing some of those budgets reallocated to online, intent-based offerings.

We continue to prepare for a new release of Priority Engine (expected after Labor Day). This release will include further enhancements for field sales use cases.

Even after the easing of governmental restrictions and the severity of the COVID-19 crisis lessens, we could experience further fluctuations in our results of operations and cash flows resulting from the ongoing global impacts of the crisis and our customers’ realignment of their marketing and sales budgets.

Our priorities remain to ensuring the health and safety of our employees, customers, vendors, members, stockholders, and other stakeholders, while delivering our content and services to our customers around the world and continuing to drive long-term growth.

Impacts on Future Financial Results

At the beginning of 2020, we expected the strong demand we saw in 2019 to continue.  However, beginning in March, we saw certain customers extend their normal sales cycles and shift their budgets away from long-term commitments to shorter-term marketing campaigns as they began to navigate through the pandemic. This trend continued throughout the second quarter of 2020 and through the date of this report. We expect these adverse impacts to result in lower revenue for the duration of the pandemic. The impact COVID-19 will have on our 2020 results remains uncertain, and we continue to evaluate the impacts the pandemic will have on our business operations and strategy going forward. We believe we will return to normal growth rates when the macro environment improves.

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For the Six Months Ended June 30, 2020 Financial Results

Our revenues for the six months ended June 30, 2020 increased by $2.0 million, or 3%, to $66.2 million, compared with $64.3 million, during the same period in 2019. Priority Engine™ revenues increased 6% to more than $25.0 million, in the first six months of 2020 compared with $23.6 million in the first six months of 2019. This increase was offset, in part, by our legacy Global customers, who decreased their spend, particularly as it related to our brand offerings.

The amount of revenue that we derived from longer-term contracts in the second quarter of 2020 increased 6%, compared to the second quarter of 2019. As we noted above, we saw some of our customers shift from long-term commitments to shorter-term commitments.

We continue to benefit from our customers’ increasing demand for purchase intent data to fuel their sales and marketing outreach. Another important factor in our revenue trajectory relates to the evolving way our customers use our purchase intent data relative to our offerings. Our offerings help customers identify “in-market” prospects for their products and services – our offerings help them reach, influence, and activate these prospects. A growing number of customers purchase “always on” programs from us that combine offerings to identify and influence active buyers throughout the year. The growth in our longer-term revenue component is evidence of our continued traction for these types of integrated programs. Additionally, customers use our offerings to support quarterly sales and marketing campaigns. These purchases are more fluid – customers of this type may focus more on offerings in a particular campaign, and shift objectives as opposed to an “always on” program.

Our international geo-targeted revenues, where our target audience is outside North America (“International”), increased 25% for the three months ended June 30, 2020, compared with the prior year period driven by the items noted above.

Gross profit percentage was 75% and 77% for the three months ended June 30, 2020 and 2019, respectively. Gross profit decreased by $0.3 million, mainly due to product mix compared to the same period a year ago.

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Business Trends

The following discussion highlights key trends affecting our business not including items relating to the global pandemic, which is discussed in further detail above.

• Brexit. The United Kingdom’s June 2016 referendum, in which voters approved an exit of the United Kingdom from the European Union, commonly referred to as “Brexit,” resulted in significant general economic uncertainty as well as volatility in global stock markets and currency exchange rate fluctuations. In March 2017, the United Kingdom served notice to the European Council under Article 50 of the Lisbon Treaty of its intention to withdraw from the European Union. As of January 30, 2020, the United Kingdom’s membership in the European Union was terminated and an eleven month transition period began which will allow time for a free trade agreement to be negotiated. If no agreement can be reached at the end of this transition period, it could mean that the United Kingdom will face tariffs on goods traveling to the EU. Brexit could subject us to new regulatory costs and compliance obligations (including regarding the treatment and transfer of personal data). The full effect of Brexit remains uncertain and depends on any agreements the United Kingdom may make to retain access to the EU market. Moreover, the overall impact of Brexit may create further global economic uncertainty, which may cause a subset of our customers to more closely monitor their costs in the affected region. Our revenue generated from customers who have billing addresses within the United Kingdom was approximately 10% of our total revenues for both periods ended June 30, 2020 and 2019, respectively.

• Privacy. On July 16, 2020, the Court of Justice of the European Union invalidated the EU-US Privacy Shield Framework and upheld the adequacy of the use of EU Standard Contractual Clauses. We, along with thousands of other companies, relied on this EU-US Privacy Shield Framework, among other mechanisms, for the transfer of personal data to data processors established outside of the EU. The U.S Department of Commerce, European Commission and the European Data Protection Board remain in close contact regarding the impact of the CJEU decision and supervisory authorities are expected to issue further guidance to business. We are evaluating what additional mechanisms or actions may be required to establish adequate safeguards for the further transfer of personal data.

• Product. Purchase intent data continues to drive our product strategy.  During 2020, we intend to make our purchase intent data more readily available for salespersons at our customers, focusing on connectivity, ROI metrics and attribution. (expected release after Labor Day).  Additionally, we will be focusing on extending the market reach of our purchase intent data, with a Priority Engine offering (Priority Engine Express) tailored for the SMB market.  We continue to anticipate Priority Engine Express will ramp up the back half of 2020.

• Customer Demographics. In the three months ended June 30, 2020, revenues from our legacy global customers decreased approximately 26% compared to the same period a year ago. Revenues from our largest 100 customers, excluding the legacy global customers described above increased by approximately 16% compared to the same period a year ago. Revenues attributable to remaining customers, which tend to be venture capital-backed start-ups that primarily operate in North America, increased by approximately 5% over the prior year period.

• Geographic. During the three months ended, June 30, 2020 approximately 39% of our revenues were derived from International campaigns.    

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Revenues

Revenue changes for the three and six month period ended, June 30, 2020 as compared to the same period in 2019, are shown in the table below. See the discussion above and Note 3 and Note 13 to our consolidated financial statements for additional information on our revenues.

	For the Three Months Ended June 30,				Percent Change	For the Six Months Ended June 30,				Percent Change
	2020		2019			2020		2019
North America	$	21,106	$	23,353	-10%	$	40,855	$	43,631	-6%
International		13,690		10,933	25%		25,357		20,627	23%
Total	$	34,796	$	34,286	1%	$	66,212	$	64,258	3%

We sell customized marketing programs to B2B technology companies targeting a specific audience within a particular enterprise technology or business sector or sub-sector. We maintain multiple points of contact with our customers to provide support throughout their organizations and their customers’ enterprise technology sales cycles. As a result, our customers often run multiple advertising programs with us in order to target their desired audience of enterprise technology and business professionals more effectively. There are multiple factors that can impact our customers’ marketing and advertising objectives and spending with us, including but not limited to, enterprise technology product launches, increases or decreases to their advertising budgets, the timing of key industry marketing events, responses to competitor activities and efforts to address specific marketing objectives such as creating brand awareness or generating sales leads. Our products and services are generally delivered under short-term contracts that run for the length of a given program, typically less than nine months. We continue to enter into longer-term contracts with certain customers, and in the quarter ended, June 30, 2020 approximately 34% of our revenues were from longer-term contracts of approximately twelve months.   

Product and Service Offerings

We use our offerings to provide B2B technology companies with numerous touch points to identify, reach and influence key enterprise technology decision makers. The following is a description of the products and services we offer:

IT Deal Alert. IT Deal Alert is a suite of products and services for B2B technology companies that leverages the detailed purchase intent data that we collect about end-user enterprise technology organizations. Through proprietary scoring methodologies, we use this insight to help our customers identify and prioritize accounts whose content consumption around specific enterprise technology topics indicates that they are “in-market” for a particular product or service. We also use the data directly to identify and further profile accounts’ upcoming purchase plans.

• Priority Engine™. Priority Engine is a subscription service powered by our Activity Intelligence platform, which integrates with customer relationship management and marketing automation platforms from salesforce.com, Marketo, Eloqua, Pardot, and Integrate. The service delivers information that enables marketers and sales personnel to identify and understand accounts and individuals actively researching new technology purchases and then to engage those active prospects within the organizations that are relevant to the purchase. We sell this service in approximately 200 technology-specific segments which our customers use for demand generation, account-based marketing and other marketing and sales activities. Priority Engine is also available with specific geographic focus, bringing the total available segments to over 300.

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• Sales Quality Leads. Are a suite of products which accelerate inside sales efforts by enabling our customers to prioritize their resources.  Qualified Sales Opportunities™ is a product that profiles specific in-progress purchase projects, including information on scope and purchase considerations, in approximately 80 technology-specific segments.  Building on the success of our Qualified Sales Opportunities product, Sales-Ready Leads and High-Quality Leads, which were launched in 2020, round out our qualified sales solutions with levels of pre-qualification tailored to the specific needs of our clients and their varied use cases.

• Deal Data™. Deal Data is a customized solution aimed at sales intelligence and data scientist functions within our customer organizations. It renders our Activity Intelligence data into one-time offerings directly consumable by the customer's internal applications.

Demand Solutions. Our offerings enable our customers to reach and influence prospective buyers through content marketing programs designed to generate demand for their solutions, and through display advertising and other brand programs that influence consideration by prospective buyers. This allows B2B technology companies to maximize return on investment by capturing sales leads from the distribution and promotion of content to our audience of enterprise technology and business professionals. Our demand solutions offerings may include the following program components:

• White Papers. White papers are technical documents created by B2B technology companies to describe business or technical problems which are addressed by the vendors’ products or services. In a program that includes demand solutions, we post white papers on our relevant websites and our members receive targeted promotions about these content assets. Prior to viewing white papers, our registered members and visitors supply their corporate contact information and agree to receive further information from the vendor. The corporate contact and other qualification information for these leads are supplied to the vendor in near real time through our proprietary lead management software.

• Webcasts, Podcasts, Videocasts and Virtual Trade Shows. Webcasts, podcasts, videocasts, virtual trade shows and similar content bring informational sessions directly to attendees’ desktops and mobile devices. As is the case with white papers, our members supply their corporate contact and qualification information to the webcast, podcast, videocast or virtual trade show sponsor when they view or download the content. Sponsorship includes access to the registrant information and visibility before, during and after the event.

• Content Sponsorships. B2B technology companies, or groups of vendors, pay us to sponsor independent editorially created content vehicles on specific technology topics where the registrant information is then provided to all participating sponsors. In some cases, these vehicles are supported by multiple sponsors in a single segment, with the registrant information provided to all participating sponsors. Because these offerings are editorially driven, our customers get the benefit of association with independently created content as well as access to sales leads that are researching the topic.

Brand Solutions. Our suite of brand solutions offerings provides B2B technology companies exposure to targeted audiences of enterprise technology and business professionals actively researching information related to their products and services. We leverage our Activity Intelligence to enable significant segmentation and targeting of specific audiences that can be accessed through these programs. Components of brand programs may include:

• On-Network Branding. These offerings enable our customers to influence prospective buyers through display advertising purchased on the websites we operate. Programs may include specific sites or audience segments across our sites.

• Off-Network Branding. Our Off-Network offerings allow our customers to influence prospective buyers through display advertising when they are visiting other websites on the internet. We identify audience segments that can be targeted based on their activity and demonstrated interests against our content and websites, and offer an array of audience extension and retargeting solutions that leverage Activity Intelligence.

• Microsites and Related Formats. We have a range of solutions that create stand-alone websites for B2B Technology Companies, or “embedded” websites that exist within the context of our existing websites, to enable a more immersive experience for enterprise technology and business professionals with the content and brand messaging of the vendor.

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Custom Content Creation. We will at times create white papers, case studies, webcasts or videos to our customers’ specifications through our Custom Content team. These customized content assets are then promoted to our audience within both demand solutions and brand solutions programs.

Our suite of demand solutions offerings allows B2B technology companies to maximize return on investment by capturing sales leads from the distribution and promotion of content to our audience of enterprise technology and business professionals. Our demand solutions campaigns typically offer the Activity Intelligence Dashboard, a tool that gives our customers’ marketers and sales representatives a near real-time view of their prospects including insights on the research activities

Cost of Revenues, Operating Expenses, and Other

Expenses consist of cost of revenues, selling and marketing, product development, general and administrative, depreciation and amortization, and interest and other expense, net. Personnel-related costs are a significant component of each of these expense categories except for depreciation and amortization and interest and other expense, net.

Cost of Revenues. Cost of revenues consists primarily of: salaries and related personnel costs; member acquisition expenses (primarily keyword purchases from leading internet search sites); freelance writer expenses; website hosting costs; vendor expenses associated with the delivery of webcast, podcast, videocast and similar content, and other offerings; stock-based compensation expenses; facility expenses, and other related overhead.

Selling and Marketing. Selling and marketing expenses consist primarily of: salaries and related personnel costs; sales commissions; travel-related expenses; stock-based compensation expenses; facility expenses and other related overhead. Sales commissions are recorded as expense when earned by the employee, based on recorded revenues.

Product Development. Product development includes the creation and maintenance of our network of websites, advertiser offerings and technical infrastructure. Product development expense consists primarily of salaries and related personnel costs; stock-based compensation expenses; facility expenses, and other related overhead.

General and Administrative. General and administrative expenses consist primarily of salaries and related personnel costs; facility expenses and related overhead; accounting, legal and other professional fees; and stock-based compensation expenses.

Depreciation and Amortization. Depreciation expense consists of the depreciation of our property and equipment and other capitalized assets. Depreciation is calculated using the straight-line method over their estimated useful lives, ranging from three to twelve years. Amortization of intangible assets expense consists of the amortization of intangible assets recorded in connection with our acquisitions. Separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives, which range from 2 to 17 years, using methods that are expected to reflect the estimated pattern of economic use.

Interest and Other Income (Expense), Net. Interest and other expense, net consists primarily of interest costs and the related amortization of deferred issuance costs on amounts borrowed under our Loan and Security Agreement (the “Loan Agreement”) with Western Alliance Bank and amortization of premiums on our investments, less any interest income earned on cash, and short-term and long-term investments. We historically have invested our cash in money market accounts, municipal bonds, government agency bonds, U.S. Treasury securities and corporate bonds. Other expense, net consists of non-operating gains or losses, primarily related to realized and unrealized foreign currency gains and losses on trade assets and liabilities.

Application of Critical Accounting Policies and Use of Estimates

The discussion of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”). The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenues, long-lived assets, goodwill, allowance for doubtful accounts, stock-based compensation, contingent liabilities, self-insurance accruals and income taxes. We based our estimates of the carrying value of certain

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assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies are those that affect our more significant judgments used in the preparation of our consolidated financial statements. A description of our critical accounting policies and estimates is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Other than those noted in Note 2 to our consolidated financial statements, there were no material changes to our critical accounting policies and estimates during the first six months of 2020.

Income Taxes

We are subject to income taxes in both the U.S. and foreign jurisdictions, and we use estimates in determining our provision for income taxes. We recognize deferred tax assets and liabilities based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates.

Our deferred tax assets are comprised primarily of book to tax differences on stock-based compensation and timing of deductions for rent expense, accrued expenses, depreciation, and amortization. As of June 30, 2020, we had foreign net operating loss (“NOL”) carryforwards of $0.2 million, which may be used to offset future taxable income in foreign jurisdictions indefinitely.

Results of Operations

The following table sets forth our results of operations for the periods indicated, including percentage of total revenues:

	Three Months Ended June 30,										Six Months Ended June 30,
	2020					2019					2020					2019
Revenues	$	34,796		100	%	$	34,286		100	%	$	66,212		100	%	$	64,258		100	%
Cost of revenues		8,785		25	%		7,952		23	%	$	16,936		26	%		14,964		23	%
Gross profit		26,011		75	%		26,334		77	%		49,276		74	%		49,294		77	%
Operating expenses:
Selling and marketing		12,570		36	%		13,976		41	%		25,519		39	%		26,422		41	%
Product development		1,846		5	%		2,001		6	%		3,878		6	%		3,988		6	%
General and administrative		3,267		9	%		3,123		9	%		6,622		10	%		6,145		10	%
Depreciation and amortization		1,453		4	%		1,146		3	%		2,798		4	%		2,276		4	%
Total operating expenses		19,136		55	%		20,246		59	%		38,817		59	%		38,831		60	%
Operating income		6,875		20	%		6,088		18	%		10,459		16	%		10,463		16	%
Interest and other expense, net		(10	)	0	%		(253	)	-1	%		(479	)	-1	%		(390	)	-1	%
Income before provision for income taxes		6,865		20	%		5,835		17	%		9,980		15	%		10,073		16	%
Provision for income taxes		2,092		6	%		1,684		5	%		3,000		5	%		2,632		4	%
Net income	$	4,773		14	%	$	4,151		12	%	$	6,980		11	%	$	7,441		12	%

Comparison of Three Months Ended June 30, 2020 and June 30, 2019

Revenues

	Three Months Ended June 30,
	2020		2019		Increase		Percent Change
Revenues	$	34,796	$	34,286	$	510		1	%

The increase in revenues was due to customers increasing their spend for data driven marketing products. Priority Engine revenue grew 1% versus last year to $12.5 million.  Increases in lead generation, driven by the customers movement to shorter term contracts, were offset by decreases in brand.

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Cost of Revenues and Gross Profit

	Three Months Ended June 30,
	2020			2019			Increase (Decrease)			Percent Change
Cost of revenues	$	8,785		$	7,952		$	833			10	%
Gross profit	$	26,011		$	26,334		$	(323	)		-1	%
Gross profit percentage		75	%		77	%

Gross Profit. Our gross profit is equal to the difference between our revenues and our cost of revenues for the period. Gross profit percentage was 75% for the three months ended 2020 and 77% for the three months of June 30, 2019. Gross profit decreased by $0.3 million in the three months ended June 30, 2020 compared to the same period in 2019, primarily attributable to the product mix as compared to the same period a year ago. Because the majority of our costs are labor-related, we expect our gross profit to fluctuate from period to period depending on the total revenues for the period.

Operating Expenses and Other   

	Three Months Ended June 30,
	2020			2019			Increase (Decrease)			Percent Change
Operating expenses:
Selling and marketing	$	12,570		$	13,976		$	(1,406	)		-10	%
Product development		1,846			2,001			(155	)		-8	%
General and administrative		3,267			3,123			144			5	%
Depreciation and amortization		1,453			1,146			307			27	%
Total operating expenses	$	19,136		$	20,246		$	(1,110	)		-5	%
Interest and other expense, net	$	(10	)	$	(253	)	$	243			96	%
Provision for income taxes	$	2,092		$	1,684		$	408			24	%

Selling and Marketing. Selling and marketing expenses decreased for the three months ended June 30, 2020, as compared to the same period in 2019, primarily due to decreases in stock-based compensation expense (accounting for 60% of the overall decrease) and contracted services as well as a reduction of travel and entertainment expenses related to COVID-19 circumstances.

Product Development. Product development expense decreased for the three months ended June 30, 2020, as compared to the same period in 2019, mainly due to an increase in labor and related costs capitalized offset, in part, by increases in contracted services.

General and Administrative. General and administrative expense increased for the three months ended June 30, 2020, compared to the same period in 2019, due to an increase in stock compensation expenses offset in part by decreases in other labor costs.

Depreciation and Amortization. Depreciation and amortization expense increased due to newly acquired intangible assets with high value, which were placed in service during 2020 and amortized during the three months ended June 30, 2020 Those intangible assets were not in service during the same period in 2019.

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Comparison of Six Months Ended June 30, 2020 and June 30, 2019

Revenues

	Six Months Ended June 30,
	2020		2019		Increase		Percent Change
Revenues	$	66,212	$	64,258	$	1,954		3	%

The increase in revenues was due to customers increasing their spending for data driven marketing products.  Priority Engine™ revenues were up 6% in the six months ended June 30, 2020. Increases in lead generation, driven by the customers movement to shorter term contracts, were offset by decreases in brand.

Cost of Revenues and Gross Profit

	Six Months Ended June 30,
	2020			2019			Increase (Decrease)			Percent Change
Cost of revenues	$	16,936		$	14,964		$	1,972			13	%
Gross profit	$	49,276		$	49,294		$	(18	)		(0	)%
Gross profit percentage		74	%		77	%

Gross Profit. Our gross profit is equal to the difference between our revenues and our cost of revenues for the period. Gross profit percentage was 74% for the first six months of 2020 and 77% for the six months ended June 30, 2019. Gross profit remained relatively flat in the six months ended June 30, 2020 compared to the same period in 2019, primarily attributable to a shift in the product mix compared to the same period a year ago. Because the majority of our costs are labor-related, we expect our gross profit to fluctuate from period to period depending on the total revenues for the period.

Operating Expenses and Other   

	Six Months Ended June 30,
	2020			2019			Increase (Decrease)			Percent Change
Operating expenses:
Selling and marketing	$	25,519		$	26,422		$	(903	)		-3	%
Product development		3,878			3,988			(110	)		-3	%
General and administrative		6,622			6,145			477			8	%
Depreciation and amortization		2,798			2,276			522			23	%
Total operating expenses	$	38,817		$	38,831		$	(14	)		0	%
Interest and other expense, net	$	(479	)	$	(390	)	$	(89	)		23	%
Provision for income taxes	$	3,000		$	2,632		$	368			14	%

Selling and Marketing. Selling and marketing expenses decreased for the six months ended June 30, 2020, as compared to the same period in 2019, primarily due to decreases in stock-based compensation expenses (accounting for 39% of the overall decrease) and contracted services as well as a reduction of travel and entertainment expenses related to COVID-19.

Product Development. Product development expense decreased for the six months ended June 30, 2020, as compared to the same period in 2019, primarily due to additional amounts that were capitalized over the six months ended June 30, 2019 offset in part by increases in contracted services.

General and Administrative. General and administrative expense increased for the six months ended June 30, 2020, compared to the same period in 2019, primarily due to increases in stock compensation expense.

Depreciation and Amortization. Depreciation and amortization expense increased for the six months ended June 30, 2020 when compared to the same period in 2019, due to increased amortization expense related to the Company’s acquisition during February of 2020.

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Seasonality

The timing of our revenues is affected by seasonal factors. Our revenues are seasonal primarily as a result of the annual budget approval process of many of our customers, the normal timing at which our customers introduce new products, and the historical decrease in advertising in summer months. The timing of revenues in relation to our expenses, many of which do not vary directly with revenues, has an impact on the cost of online revenues, selling and marketing, product development, and general and administrative expenses as a percentage of revenues in each calendar quarter during the year.

The majority of our expenses are personnel-related and includes salaries, stock-based compensation, benefits and incentive-based compensation plan expenses. As a result, we have not experienced significant seasonal fluctuations in the timing of our expenses period to period.

Liquidity and Capital Resources

Resources

Our cash and investments at June 30, 2020 totaled $55.4 million, a $2.1 million decrease from December 31, 2019, primarily driven by the repurchase of shares of our common stock under our November 2018 Repurchase Program, the acquisition of substantially all the operating assets of Data Science Central in February 2020, investments in property and equipment, and principal payments on our term loan partially offset by cash generated from operations.  We believe that our existing cash and investments and our cash flow from operating activities will be sufficient to meet our anticipated cash needs for at least the next twelve months. Additionally, we have $20 million available under a new line of credit agreement entered into in July 2020.  Our future working capital requirements will depend on many factors, including the operations of our existing business, our potential strategic expansion internationally, future acquisitions we might undertake, and any expansion into complementary businesses. To the extent that our cash and investments, cash flow from operating activities, and amounts available under our line of credit are insufficient to fund our future activities, we may need to raise additional funds through bank credit arrangements or public or private equity or debt financings. We also may need to raise additional funds in the event we determine in the future to effect one or more additional acquisitions of businesses.

	June 30, 2020		December 31, 2019
Cash and investments	$	55,413	$	57,499
Accounts receivable, net	$	25,568	$	27,102

Cash and Investments

Our cash and investments, at June 30, 2020 were held for working capital purposes. We do not enter into investments for trading or speculative purposes.

Accounts Receivable, Net

Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities. The fluctuations vary depending on the timing with which we meet our performance obligations and on the timing of our cash collections, as well as on changes to our allowance for doubtful accounts. We use days sales outstanding (“DSO”) as a measurement of the quality and status of our receivables. We define DSO as net accounts receivable at quarter end divided by total revenues for the applicable period, multiplied by the number of days in the applicable period. DSO was 67 days and 69 days at June 30, 2020 and December 31, 2019, respectively.

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Cash Flows

	Six Months Ended June 30,
	2020			2019
Net cash provided by operating activities	$	21,841		$	18,819
Net cash used in investing activities	$	(8,424	)	$	(2,879	)
Net cash used in financing activities	$	(15,517	)	$	(6,195	)

Operating Activities

Cash provided by operating activities primarily consists of net income adjusted for certain non-cash items including depreciation and amortization, provisions for bad debt, stock-based compensation, deferred income taxes, and the effect of changes in working capital and other activities. Cash provided by operating activities for the six months ended June 30, 2020 was $21.8 million compared to cash provided by operating activities of $18.8 million for the six months ended June 30, 2020.

The increase in cash provided by operating activities was primarily the result of changes in working capital (driven mainly by a increases in amounts payable for income and payroll taxes as compared to 2019) offset by decreases in amounts collected from accounts receivable.

Investing Activities

Cash used in investing activities in the six months ended June 30, 2020 was $8.4 million and was primarily a result of the acquisition of substantially all of the operating assets of Data Science Central in February 2020 ($5.0 million) and purchase of property and equipment, primarily for internal-use software, and to a lesser extent, computer equipment. We capitalized internal-use software and website development costs of $3.0 million and $2.6 million for the six months ended June 30, 2020 and 2019, respectively.

Financing Activities

In the first six months of June 30, 2020, we used $15.5 million for financing activities, consisting primarily of $14.8 million, for the purchase of treasury shares, $0.6 million for the repayment of principal under the Loan Agreement and related costs and $0.1 million for tax withholdings related to net share settlements. In the first six months of 2019 we used $6.2 million for financing activities, consisting primarily of $4.7 million for the purchase of treasury shares and related costs, $0.6 million for the repayment of principal on the Loan Agreement, and $0.9 million for tax withholdings related to net share settlements.

Common Stock Repurchase Program

In November 2018 the Company announced that the Board had authorized a $25.0 million stock repurchase program (the “November 2018 Repurchase Program”) under which the Company is authorized to repurchase the Company’s common stock from time to time on the open market or in privately negotiated transactions at prices and in a manner that may be determined by management. The Company repurchased 736,760 shares at an aggregate purchase price of approximately $14.8 million during the first quarter of 2020 under the November 2018 Stock Repurchase Program. No amounts were repurchased under this plan during the second quarter of 2020 and the November 2018 Repurchase Program was terminated in May 2020.  During the six months ended June 30, 2019 we repurchased 317,724 shares of common stock for an aggregate purchase price of approximately $4.7 million pursuant to the (“November 2018 Repurchase Program”).  The November 2018 Repurchase Program was terminated on May 1, 2020.

On May 1, 2020, the Company’s Board of Directors approved a new two-year $25.0 million stock repurchase program (the “May 2020 Repurchase Program”). Repurchases of the Company's stock under the May 2020 Repurchase Program may be made in the open market, in privately negotiated transactions, or pursuant to one or more trading plans. The timing and amount of repurchases, if any, will be determined by the Company's management at its discretion and be based on a variety of factors such as the market price of the Company's common stock, corporate and contractual requirements, prevailing market and economic conditions and legal requirements. The May 2020 Repurchase Program may be modified, suspended or discontinued at any time.  No amounts were repurchased under this program during the second quarter of 2020.

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Repurchased shares were recorded under the cost method and are reflected as treasury stock in the accompanying Consolidated Balance Sheets. All repurchased shares were funded with cash on hand.

Term Loan and Credit Facility Borrowings

On December 24, 2018, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Western Alliance Bank as the lender. The Loan Agreement provides for a $25 million term loan facility with a maturity date of December 10, 2023 (the “Term Loan”).

The borrowings under the Loan Agreement are secured by a lien on substantially all of our assets, including a pledge of the stock of certain wholly-owned subsidiaries (limited, in the case of the stock of certain foreign subsidiaries, to no more than 65% of the capital stock of such subsidiaries). The Term Loan must be repaid quarterly, with applicable interest paid monthly, in the following manner: 1.25% of the initial aggregate borrowings are due and payable each quarter for the first two loan years, 1.88% of the initial aggregate borrowings are due and payable each quarter for the third loan year, and 2.50% of the initial aggregate borrowings are due and payable each quarter for the fourth and fifth loan years. At maturity, all outstanding amounts, including unpaid principal and accrued and unpaid interest, under the Loan Agreement will be due and payable.

The borrowings are subject to a leverage ratio, measured quarterly. The Loan Agreement also requires us to make representations and warranties and to comply with certain other covenants and agreements that are customary in loan agreements of this type. At June 30, 2020, we were in compliance with all covenants under the Loan Agreement.

The Loan Agreement bears interest at a floating per annum rate equal to one and three-eighths percent (1.375%) above the greater of (a) the one (1) month U.S. LIBOR rate reported in The Wall Street Journal and (b) two percent (2.00%).  

The Loan Agreement may be prepaid at our option without penalty, provided we comply with the notice provision of the document. The Loan Agreement also contains customary events of default, subject to grace periods in certain cases, which may cause repayment of the Term Loan to be accelerated.

On July 2, 2020, the Company and the Bank entered in a Loan and Security Modification Agreement (the “Modification Agreement”) amending the Loan Agreement between the Company and the Bank. Among other things, the Modification Agreement added or amended certain definitions in the Loan Agreement, added a new asset coverage ratio financial covenant of no less than 1.0 to 1.0 tested as of the end of each quarter, and provided the Company with a new revolving line of credit facility of $20,000,000 (“Line of Credit”). The Line of Credit allows the Company to request non-formula advances in an aggregate principal amount not to exceed the Line of Credit and to use the proceeds of such advances until the facility matures on July 2, 2022. Advances under the Line of Credit bear interest at a floating rate equal to one-quarter percent (0.25%) above the Prime Rate (as published in the Money Rates section of the Western Edition of The Wall Street Journal, or such other rate of interest publicly announced from time to time by Western Alliance as its Prime Rate); provided that at no time shall the interest rate on such advances be less than three and one half percent (3.50%). Additionally, the Modification Agreement includes language providing for the Company and the Bank to mutually agree upon a LIBOR replacement if LIBOR ceases to exist or is no longer available.

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Capital Expenditures

We have made capital expenditures primarily for computer equipment and related software needed to host our websites, internal-use software development costs, as well as for leasehold improvements and other general purposes to support our growth. Our capital expenditures totaled $3.3 million and $3.4 million for the six month periods ended June 30, 2020 and, 2019 respectively. A majority of our capital expenditures in the first six months of 2020 were for internal-use software and website development costs and, to a lesser extent, computer equipment and related software. A majority of our capital expenditures in the first six months of 2019 were for leasehold improvements and internal-use software and website development costs and, to a lesser extent, computer equipment and related software. We capitalized internal-use software and website development costs of $3.0 million and $2.6 million for the six months ended June 30, 2020 and 2019, respectively. We are not currently party to any purchase contracts related to future capital expenditures.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

There were no material changes to our contractual obligations and commitments described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or referenced in this Quarterly Report that address activities, events or developments which we expect will or may occur in the future are forward-looking statements, including statements regarding our intent, beliefs or current expectations and those of our management team. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “going to,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, priorities, plans, or intentions. Such statements may include those regarding our future financial results and other projections or measures of our future operating performance, including the drivers of such growth, profitability, and performance (including, in each case, any potential impact of product and service development efforts, GDPR, potential changes to customer relationships, and other operational decisions); expectations concerning market opportunities and our ability to capitalize on them; the amount and timing of the benefits expected from acquisitions, new strategies, products or services and other potential sources of additional revenue; and the behavior of our members, partners, and customers. These statements speak only as of the date of this Quarterly Report and are based on our current plans and expectations. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, those relating to: market acceptance of our products and services, including continued increased sales of our IT Deal Alert offerings and continued increased international growth; relationships with customers, strategic partners and employees; the duration and extent of the COVID-19 pandemic; difficulties in integrating acquired businesses; changes in economic or regulatory conditions or other trends affecting the internet, internet advertising and information technology industries; data privacy laws, rules, and regulations; and other matters included in our SEC filings, including in our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contemplated by the forward-looking statements. We undertake no obligation to update our forward-looking statements to reflect future events or circumstances.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign exchange rates and interest rates. We do not hold or issue financial instruments for trading purposes.

Foreign Currency Exchange Risk

We currently have subsidiaries in the United Kingdom, Hong Kong, Australia, Singapore, Germany and France. Approximately 30% of our revenues for the six months ended June 30, 2020 were derived from customers with billing addresses outside of the United States and our foreign exchange gains/losses were not significant. We currently believe our exposure to foreign currency exchange rate fluctuations, is financially immaterial and therefore have not entered into foreign currency hedging transactions. We continue to review this issue and may consider hedging certain foreign exchange risks through the use of currency futures or options in the future. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Our continued international expansion increases our exposure to exchange rate fluctuations and as a result such fluctuations could have a significant impact on our future results of operations.

Interest Rate Risk

At June 30, 2020, we had cash and investments of, $55.4 million. The investments were in a bond fund. The cash and investments were held for working capital purposes. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value as a result of changes in interest rates. Declines in interest rates, however, would reduce future investment income.

Our exposure to market risk also relates to interest expense on borrowings under the Loan Agreement. The borrowings under the Loan Agreement bear interest at an annual rate of 1.375% plus the higher of the one-month U.S. LIBOR rate reported in the Wall Street Journal or two percent (2.00%) (see Note 8 to the consolidated financial statements). At June 30, 2020, there was $23.1 million of aggregate principal outstanding under the Loan Agreement.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) as appropriate, to allow timely decisions regarding required disclosure.

In connection with the preparation of this Quarterly Report on Form 10-Q for the period ended June 30, 2020, management, under the supervision of the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), conducted an evaluation of our disclosure controls and procedures as of June 30, 2020. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control, that occurred during the second quarter of 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material legal proceedings and we are not aware of any pending or threatened litigation against us that could have a material adverse effect on our business, operating results or financial condition.

Item 1A. Risk Factors

Our business is subject to a number of risks, including those identified in Item 1A – “Risk Factors” of our  Annual Report on Form 10-K, that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. As of, there have been no material changes to the risk factors disclosed in our  Annual Report on Form 10-K except to the risks relating to COVID-19 and EU-US Privacy Shield Framework, as amended below. We may disclose changes to any risk factors presented or disclose additional factors from time to time in our future filings with the Securities and Exchange Commission.

We were adversely impacted by the recent outbreak of the new coronavirus disease (COVID-19) and could experience additional adverse impacts that could be material to the Company’s business, operating results, financial condition and liquidity.

Our business was adversely impacted by the effects of the spread of the new coronavirus disease (COVID-19). We are witnessing the far-reaching impact that COVID-19 is having on our employees, customers, vendors, members, stockholders, and other stakeholders as well as the global economy and society at large. While we have responded proactively to address the effects of COVID-19 and to mitigate its potential impacts to our business, including through the elimination of all non-essential travel, transitioning our entire workforce to a remote work environment, and enhancing access to certain health and safety resources for our employees, beginning in March, 2020 we saw certain customers extend their normal sales cycles and budget shifts as some customers moved from long-term commitments to shorter term marketing campaigns as they began to navigate through the pandemic.  To date, we have only experienced a handful of cancellations but we continue to stay close to our customers to ensure they are continuing to see ROI.  New customer acquisition became harder as some potential customers were less apt to spend on new products or services.

We believe our strong financial position provides us with the flexibility to weather this period of economic uncertainty and the opportunity to respond quickly to our customers with the content and services they expect. However, the restrictive measures local, state, and federal governments (including in the other countries in which we operate) have implemented to prevent the spread of COVID-19, including restrictions on the operation of non-essential businesses, shelter in place orders, travel restrictions, quarantines, school closures, and other community response and social distancing policies and guidelines, will continue to affect the way we and our customers conduct and operate our respective businesses.  We remain open and continue to provide the content and services that are important to our customers. Moreover, our dedicated employees continue to collaborate with each other and our customers and their sales and marketing teams, to deliver high quality, impactful campaigns. While we will continue to actively monitor government restrictions impacting our business and remain focused on business continuity, including reducing expenses and managing liquidity, given the fluid nature of COVID-19, the uncertainty of its duration, the potential for resurgence, and the unknown effects of potential future government actions in response to COVID-19, we cannot estimate the duration or magnitude of its impact on the global economy, our business or our financial results.  

Changes in laws and standards relating to marketing, data collection and use, and the privacy of internet users could impact our ability to conduct our business and thereby decrease our marketing and advertising service revenues while imposing significant compliance costs on the Company.

We use e-mail as a significant means of communicating with our members. The laws and regulations governing the use of e-mail for marketing purposes continues to evolve, and the growth and development of the market for commerce over the internet may lead to the adoption of additional legislation and/or changes to existing laws. If new laws or regulations are adopted, or existing laws and regulations are interpreted and/or amended or modified to impose additional restrictions on our ability to send e-mail to our members or potential members, we may not be able to communicate with them in a cost-effective manner. In addition to legal restrictions on the use of e-mail, internet service providers and others typically attempt to block the transmission of unsolicited e-mail, commonly known as “spam.” If an internet service provider or software program identifies e-mail from us as “spam,” we could be placed on a restricted list that would block our e-mail to members or potential members who maintain e-mail accounts with these

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internet service providers or who use these software programs. If we are unable to communicate by e-mail with our members and potential members as a result of legislation, blockage or otherwise, our business, operating results and financial condition could be harmed.

We collect information from those who visit or register as members on our websites, co-branded sites, or for services, respond to surveys or, in some cases, view our content. Subject to each member’s permission (or right to decline, which we refer to as an “opt-out”, a practice that may differ across our various websites, depending on the applicable needs and requirements of different countries’ laws), we may use this information to inform our members of services that they have indicated may be of interest to them. We may also share this information with our customers for members who have elected to receive additional promotional materials and have expressly or implicitly granted us permission to share their information with third parties. We also collect information on our members based on their activity on our sites. The U.S. federal government and certain states have adopted or proposed limitations on the collection, distribution and use of personal information of internet users.

Although, to date, our efforts to comply with applicable federal and state laws and regulations have not hurt our business, additional, more burdensome laws or regulations, including more restrictive consumer privacy and data security laws, could be enacted or applied to us or our customers. Such laws or regulations could impair our ability to collect member information that helps us to provide more targeted content to our website visitors and members and detailed lead data to our customers, thereby impairing our ability to maintain and grow our audience and maximize revenue from our customers. Additionally, the FTC and many state attorneys general are applying federal and state consumer protection laws to require that the online collection, use and dissemination of data, and the presentation of website content, comply with certain standards for notice, choice, security and access. Courts may also adopt these developing standards. In many cases, the specific limitations imposed by these standards are subject to interpretation by courts and other governmental authorities. A few states have also introduced legislation that, if enacted, would restrict or prohibit behavioral marketing and advertising within the state. In the absence of a federal law pre-empting their enforcement, such state legislation would likely have the practical effect of regulating behavioral marketing and advertising nationwide because of the difficulties behind implementing state-specific policies or sending targeted advertising to individuals based on their perceived commercial interests. In the event of additional legislation in this area, our ability to effectively target our website visitors and members may be limited. We believe that we are in compliance with applicable consumer protection laws, but a determination by a state or federal agency or court that any of our practices do not meet these laws and regulations could create liability to us, result in adverse publicity and affect negatively our businesses. New interpretations of these standards could also require us to incur additional costs and restrict our business operations.

The EU and its member states, California and Canada have regulations dealing with the collection and use of personal information obtained from their citizens. Regulations in these jurisdictions have focused on the collection, processing, transfer, use, disclosure and security of information that may be used to identify or that actually identifies an individual, such as a name, e-mail address or online identifier (such as an IP address in certain cases). These laws also provide consumers the right to access the information a company has collected on them, correct it, request that it be deleted, or to stop the sale of such information to third parties.

The General Data Protection Regulation (“GDPR”) became effective in May 2018 and was designed to, among other things, harmonize disparate data privacy laws found across Europe. GDPR implemented more rigorous principles relating to the data privacy and data protection, including, among other things, enhanced disclosure requirements regarding how personal information is obtained, used, and shared, limitations on the purpose and storage of personal information, mandatory data breach notification requirements and enhanced standards for data controllers to demonstrate that they have obtained valid consent for certain data processing activities. Its application and scope are extensive and penalties for non-compliance are significant, including fines of up to 20 million Euros or 4% of total worldwide revenue. In the event the Company is deemed not in compliance with GDPR, or fails to maintain compliance, then the Company would be exposed to material damages, costs and/or fines if an EU regulator or EU resident commenced an action. Failure to comply or maintain compliance could cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or members), cause a loss of confidence in our services, and deter current and potential customers from using our services.

Further, the presidency of the council of the EU released a revised draft of the pending Proposal for Regulation on Privacy and Electronic Communications (“ePrivacy Regulation”) which will replace the ePrivacy Directive and is intended to align with the overall EU data privacy and protection framework, including GDPR. The ePrivacy Regulation was defeated by the council of the EU, but it is expected to be proposed again. The ePrivacy Regulation could disrupt the Company’s ability to use or transfer data or to market and sell its products and services, which could have a material adverse effect on our business, financial condition, and operating results.

Our customers may implement compliance measures that do not align with our services, which could limit the scope and delivery of services we are able to provide. Our customers may also require us to take on additional privacy and security obligations,

38

causing us to incur potential disruption and expense related to our business processes. If our policies and practices, or those of our customers, are, or are perceived to be, insufficient or if our members, website visitors or customers have concerns regarding our data privacy and data protection practices, particularly with respect to GDPR or the pending ePrivacy Regulation, then we could be subject to enforcement actions or investigations by regulators or lawsuits by private parties, member engagement could decline and our business could be negatively impacted.

For certain data transfers and processing activities between the EU and the U.S., many companies previously relied on the Department of Commerce Safe Harbor Principles (“Safe Harbor”) and self-certification process in order to lawfully transfer and process the personal data of people in the EU to the U.S. in a manner that the EU deemed adequate to protect the security of such information. On October 6, 2015, the Court of Justice of the European Union (“CJEU”) declared that Safe Harbor was no longer valid. U.S. and EU lawmakers in February 2016 announced a replacement for Safe Harbor, called the EU-U.S. Privacy Shield Framework (“the EU Privacy Shield”). On July 12, 2016, the European Commission deemed the EU-US Privacy Shield adequate to enable data transfers of personal data from the EU to the U.S. Similarly, a Swiss-U.S. Privacy Shield (the “Swiss Privacy Shield”) was announced in January 2017, replacing the former Swiss-U.S. Safe Harbor, enabling data transfers of personal data from Switzerland to the U.S. The Company self-certified to the EU Privacy Shield and Swiss Privacy Shield most recently on March 6, 2020. On July 16, 2020, the CJEU invalidated the EU Privacy Shield. The CJEU upheld the adequacy of EU Standard Contractual Clauses (“SCCs”) issued by the European Commission for the transfer of personal data to data processors established outside of the EU, however, the court made clear that reliance on SCCs alone may not necessarily be sufficient in all circumstances and that their use must be assessed on a case-by-case basis taking into account the surveillance laws and right of individuals in the destination country. The CJEU’s decision takes effect immediately. The CJEU decision does not impact the Swiss Privacy Shield. The Company uses several mechanisms to transfer personal data from the EU to the U.S. (including having previously relied on the EU Privacy Shield) and are evaluating what additional mechanisms may be required to establish adequate safeguards for the further transfer of personal data. If supervisory authorities issue guidance on transfer mechanisms, including circumstances where the SCCs cannot be used and/or start taking enforcement action, we could suffer additional costs, complaints, and/or regulatory investigations or fines. Moreover, if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services and could adversely affect our financial results. 

In order to continue receiving personal data from the United Kingdom in reliance on the EU Privacy Shield following Brexit, the Company may be required to meet standards for cross-border transfer imposed by the UK itself.

Our digital properties collect and use data about our website visitors’ and members’ online behavior, and the revenue associated with this activity could be impacted by government regulation and enforcement, industry trends, self-regulation, technology changes, consumer behavior and attitude, and private action. We also use such information to call website visitors and members who have provided their telephone numbers to be enrolled as a member (for free). Our partners may then follow-up to try to sell products or services to such individuals. 

We also work with our partners to deliver targeted advertisements based on members and website visitors’ perceived commercial interests. Many of our users voluntarily provide us with contact and other information when they visit our websites. We may utlize data from third-party sources to augment our user profiles and marketing databases so we are better able to personalize content, enhance our analytical capabilities, better target our marketing programs, and better qualify leads for our partners. If changes in user sentiment regarding the sharing of information results in a significant number of visitors to our websites refusing to provide us with contact and other information, our ability to personalize content for our users and provide targeted marketing solutions for our partners would be impaired. If our users choose to opt-out of having their data used for behavioral targeting, it would be more difficult for us to offer targeted marketing programs for our partners.  If we are unable to acquire data from third-party sources for whatever reason, or if there is a marked increase in the cost of obtaining such data, our ability to personalize content and provide marketing solutions could be negatively impacted.

The use of such consumer data by online service providers and advertising networks is a topic of active interest among federal, state, and international regulatory bodies, as well as self-regulatory organizations, and the regulatory environment is unsettled.  Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing and security of data that we receive from and about our website visitors and members through cookies and other similar technologies. Our privacy policies and practices concerning the collection, use, and disclosure of user data are posted on our websites.

There are new and expanding proposals for laws and regulations regarding “Do Not Track” requirements that protect users’ right to choose whether or not to be tracked online. These proposals seek, among other things, to allow consumers to have greater control over the use of private information collected online, to forbid the collection or use of online information, to demand a business to comply with their choice to opt out of such collection or use, and to place limits upon the disclosure of information to third party websites. Any such laws and regulations could have a significant impact on the operation of our advertising and data businesses. U.S. regulatory agencies have also placed an increased focus on online privacy matters and, in particular, on online advertising activities

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that utilize cookies or other tracking tools. Consumer and industry groups have expressed concerns about online data collection and use by companies, which has resulted in the release of various industry self-regulatory codes of conduct and best practice guidelines that are binding for member companies engaged in online behavioral advertising (“OBA”) and similar activities. These codes of conduct and best practice guidelines govern, among other things, the ways in which companies can collect, use and disclose user information for OBA purposes, how companies must give notice of these practices, and what choices companies must provide to consumers regarding these practices.

We may be required or otherwise choose to adopt Do Not Track mechanisms, and we may be required to abide by certain self-regulatory principles promulgated by the Digital Advertising Alliance and others for OBA and similar activities, in which case our ability to use our existing tracking technologies, to collect and sell user behavioral data, and permit their use by other third parties could be impaired. This could cause our net revenues to decline and adversely affect our operating results.  

We believe that we are in material compliance with all laws, regulations and self-regulatory regimes that are applicable to us. However, as referenced above, these laws, regulations, and self-regulatory regimes may be modified, and new laws may be enacted in the future that may apply to us and affect our business. Further, data protection authorities may interpret existing laws in new ways. We may deploy new products and services from time to time, which may also require us to change our compliance practices. Any such developments (or developments stemming from enactment or modification of other laws) or the failure to anticipate accurately the application or interpretation of these laws could create liability for us, result in adverse publicity, increase our future compliance costs, make our products and services less attractive to our members and customers, or cause us to change or limit our business practices, and materially affect our business and operating results. Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil, criminal or contractual liabilities.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(101) Sales of Unregistered Securities

None.

(b) Use of Proceeds from Registered Securities

None.

(c)       Purchases of Equity Securities by the Issuer

None.

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Item 6. Exhibits

The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q.

Exhibit No.	Description of Exhibit
31.1*	Certification of Michael Cotoia, Chief Executive Officer of TechTarget, Inc., pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Daniel Noreck, Chief Financial Officer and Treasurer of TechTarget, Inc., pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certifications of Michael Cotoia, Chief Executive Officer of TechTarget, Inc. and Daniel Noreck, Chief Financial Officer and Treasurer of TechTarget, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document* The instance document does not appear in the Interactive Data File because its XBRL tags are
	Embedded within the Inline XBRL document.
101.SCH	XBRL Inline Taxonomy Extension Schema Document*
101.CAL	XBRL Inline Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Inline Taxonomy Extension Definition Linkbase Document*
101.LAB	XBRL Inline Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Inline Taxonomy Extension Presentation Linkbase Document*
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exbibit 101)

* Filled here with.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TECHTARGET, INC.
	(Registrant)
Date: August 5, 2020	By:	/s/ MICHAEL COTOIA
		Michael Cotoia, Chief Executive Officer and Director (Principal Executive Officer)
Date: August 5, 2020	By:	/s/ DANIEL NORECK
		Daniel Noreck, Chief Financial Officer and Treasurer (Principal Accounting and Financial Officer)

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Cotoia, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of TechTarget, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2020

/s/ Michael Cotoia

Michael Cotoia

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel Noreck, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of TechTarget, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2020

/s/ Daniel Noreck

Daniel Noreck

Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of Michael Cotoia and Daniel Noreck hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his/her capacity as Chief Executive Officer and Chief Financial Officer and Treasurer, respectively of TechTarget, Inc. (the Company), that, to his/her knowledge, the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 5, 2020	By:	/s/ Michael Cotoia
		Michael Cotoia
		Chief Executive Officer
Date: August 5, 2020	By:	/s/ Daniel Noreck
		Daniel Noreck
		Chief Financial Officer and Treasurer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Jul. 31, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Registrant Name	TECHTARGET, INC.
Entity Central Index Key	0001293282
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		27,536,786
Entity Shell Company	false
Title of 12(b) Security	Common Stock, $0.001 Par Value
Trading Symbol	TTGT
Security Exchange Name	NASDAQ
Entity File Number	1-33472
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	04-3483216
Entity Address, Address Line One	275 Grove Street
Entity Address, City or Town	Newton
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02466
City Area Code	617
Local Phone Number	431-9200
Document Quarterly Report	true
Document Transition Report	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash	$ 50,390	$ 52,487
Short-term investments	5,023	5,012
Accounts receivable, net of allowance for doubtful accounts of $2,028 and $1,899 respectively	25,568	27,102
Prepaid taxes		1,017
Prepaid expenses and other current assets	1,830	1,813
Total current assets	82,811	87,431
Property and equipment, net	12,951	12,371
Goodwill	97,023	93,639
Intangible assets, net	3,471	710
Operating lease assets with right-of-use	25,485	26,385
Deferred tax assets	616	136
Other assets	903	936
Total assets	223,260	221,608
Current liabilities:
Accounts payable	1,847	2,036
Current operating lease liability	2,769	2,571
Current portion of term loan	1,554	1,241
Accrued expenses and other current liabilities	3,737	2,476
Accrued compensation expenses	1,164	3,679
Income taxes payable	3,217	65
Contract liabilities	5,051	4,335
Total current liabilities	19,339	16,403
Long-term portion of term loan	21,540	22,473
Non-current operating lease liability	26,845	28,170
Deferred tax liabilities	850	1,611
Other liabilities	1,140
Total liabilities	69,714	68,657
Leases and contingencies (see Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding
Common stock, $0.001 par value; 100,000,000 shares authorized; 55,035,081 and 54,903,824 shares issued, respectively; 27,536,786 and 28,142,519 shares outstanding, respectively	55	55
Treasury stock, at cost; 27,498,295 and 26,761,305 shares, respectively	(199,796)	(184,972)
Additional paid-in capital	326,194	317,675
Accumulated other comprehensive loss	(399)	(319)
Retained earnings	27,492	20,512
Total stockholders’ equity	153,546	152,951
Total liabilities and stockholders’ equity	$ 223,260	$ 221,608

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts, accounts receivable	$ 2,028	$ 1,899
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	55,035,081	54,903,824
Common stock, shares outstanding	27,536,786	28,142,519
Treasury stock, shares	27,498,295	26,761,305

XML

Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Revenues		$ 34,796	$ 34,286	$ 66,212	$ 64,258
Cost of revenues	[1]	8,785	7,952	16,936	14,964
Gross profit		26,011	26,334	49,276	49,294
Operating expenses:
Selling and marketing	[1]	12,570	13,976	25,519	26,422
Product development	[1]	1,846	2,001	3,878	3,988
General and administrative	[1]	3,267	3,123	6,622	6,145
Depreciation and amortization, excluding depreciation of $221, $56, $392, and $69, respectively, included in cost of revenues		1,453	1,146	2,798	2,276
Total operating expenses		19,136	20,246	38,817	38,831
Operating income		6,875	6,088	10,459	10,463
Interest and other expense, net		(10)	(253)	(479)	(390)
Income before provision for income taxes		6,865	5,835	9,980	10,073
Provision for income taxes		2,092	1,684	3,000	2,632
Net income		4,773	4,151	6,980	7,441
Other comprehensive income (loss), net of tax:
Unrealized loss on investments (net of tax provision of $(24), $0, $13, and $0, respectively)		84		(48)
Foreign currency translation gain (loss)		21	(58)	(32)	(17)
Other comprehensive income (loss)		105	(58)	(80)	(17)
Comprehensive income		$ 4,878	$ 4,093	$ 6,900	$ 7,424
Net income per common share:
Basic		$ 0.17	$ 0.15	$ 0.25	$ 0.27
Diluted		$ 0.17	$ 0.15	$ 0.25	$ 0.26
Weighted average common shares outstanding:
Basic		27,533	27,640	27,768	27,723
Diluted		28,163	28,232	28,304	28,226

[1] Amounts include stock-based compensation expense as follows:

XML

Consolidated Statements of Income and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Depreciation included in cost of revenues	$ 221	$ 56	$ 392	$ 69
Unrealized gain loss on investments, tax effect	(24)	0	13	0
Cost of Revenues [Member]
Allocated stock-based compensation expense	71	41	140	80
Selling and Marketing [Member]
Allocated stock-based compensation expense	2,118	2,964	4,307	4,655
Product Development [Member]
Allocated stock-based compensation expense	125	93	321	186
General and Administrative [Member]
Allocated stock-based compensation expense	$ 979	$ 664	$ 1,953	$ 1,303

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands		Total	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive (Loss) [Member]	Retained Earnings [Member]
Beginning balance at Dec. 31, 2018		$ 132,585	$ 54	$ (177,905)	$ 307,014	$ (215)	$ 3,637
Beginning balance, shares at Dec. 31, 2018			54,117,325	26,326,280
Issuance of common stock from exercise of options		23			23
Issuance of common stock from exercise of options, shares			10,000
Issuance of common stock from restricted stock awards, shares			112,545
Purchase of common stock through stock buyback		(3,125)		$ (3,125)
Purchase of common stock through stock buyback, shares				220,297
Impact of net settlements		(868)			(868)
Impact of net settlements, shares			6,391	6,391
Stock-based compensation expense		3,179			3,179
Comprehensive income:
Unrealized gain (loss) on foreign currency exchange		41				41
Net income		3,290					3,290
Ending balance at Mar. 31, 2019		135,125	$ 54	$ (181,030)	309,348	(174)	6,927
Ending balance, shares at Mar. 31, 2019			54,246,261	26,552,968
Beginning balance at Dec. 31, 2018		132,585	$ 54	$ (177,905)	307,014	(215)	3,637
Beginning balance, shares at Dec. 31, 2018			54,117,325	26,326,280
Comprehensive income:
Net income		7,441
Ending balance at Jun. 30, 2019		141,380	$ 54	$ (182,630)	313,110	(232)	11,078
Ending balance, shares at Jun. 30, 2019			54,302,468	26,650,395
Beginning balance at Mar. 31, 2019		135,125	$ 54	$ (181,030)	309,348	(174)	6,927
Beginning balance, shares at Mar. 31, 2019			54,246,261	26,552,968
Issuance of common stock from exercise of options, shares			56,207
Issuance of common stock from restricted stock awards		(1,600)		$ (1,600)
Issuance of common stock from restricted stock awards, shares				97,427
Purchase of common stock through stock buyback		(3,762)			(3,762)
Comprehensive income:
Unrealized gain (loss) on foreign currency exchange		(58)				(58)
Net income		4,151					4,151
Ending balance at Jun. 30, 2019		141,380	$ 54	$ (182,630)	313,110	(232)	11,078
Ending balance, shares at Jun. 30, 2019			54,302,468	26,650,395
Beginning balance at Dec. 31, 2019		152,951	$ 55	$ (184,972)	317,675	(319)	20,512
Beginning balance, shares at Dec. 31, 2019			54,903,824	26,761,305
Issuance of common stock from restricted stock awards, shares			123,027
Purchase of common stock through stock buyback		(14,824)		$ (14,824)
Purchase of common stock through stock buyback, shares				736,760
Impact of net settlements		(68)			(68)
Impact of net settlements, shares			230	230
Stock-based compensation expense	[1]	5,294			5,294
Comprehensive income:
Unrealized gain (loss) on investments		(132)				(132)
Unrealized gain (loss) on foreign currency exchange		(53)				(53)
Net income		2,207					2,207
Ending balance at Mar. 31, 2020		145,375	$ 55	$ (199,796)	322,901	(504)	22,719
Ending balance, shares at Mar. 31, 2020			55,027,081	27,498,295
Beginning balance at Dec. 31, 2019		$ 152,951	$ 55	$ (184,972)	317,675	(319)	20,512
Beginning balance, shares at Dec. 31, 2019			54,903,824	26,761,305
Issuance of common stock from exercise of options, shares		0
Comprehensive income:
Unrealized gain (loss) on investments		$ (48)
Net income		6,980
Ending balance at Jun. 30, 2020		153,546	$ 55	$ (199,796)	326,194	(399)	27,492
Ending balance, shares at Jun. 30, 2020			55,035,081	27,498,295
Beginning balance at Mar. 31, 2020		145,375	$ 55	$ (199,796)	322,901	(504)	22,719
Beginning balance, shares at Mar. 31, 2020			55,027,081	27,498,295
Issuance of common stock from restricted stock awards, shares			8,000
Stock-based compensation expense		3,293			3,293
Comprehensive income:
Unrealized gain (loss) on investments		84				84
Unrealized gain (loss) on foreign currency exchange		21				21
Net income		4,773					4,773
Ending balance at Jun. 30, 2020		$ 153,546	$ 55	$ (199,796)	$ 326,194	$ (399)	$ 27,492
Ending balance, shares at Jun. 30, 2020			55,035,081	27,498,295

[1] Includes $1.8 million of accrued compensation expense from 2019.

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
Statement Of Stockholders Equity [Abstract]
Accrued compensation expense	$ 1.8

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating activities:
Net income	$ 6,980	$ 7,441
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,190	2,345
Provision for bad debt	317	367
Stock-based compensation	6,721	6,224
Amortization of debt issuance costs	4	4
Deferred tax provision	(1,236)	(80)
Changes in operating assets and liabilities:
Accounts receivable	1,217	2,600
Prepaid expenses and other current assets	(17)	(112)
Other assets	15	(94)
Accounts payable	(187)	(843)
Income taxes payable	4,162	1,153
Accrued expenses and other current liabilities	(346)	(175)
Operating lease right-of-use assets and liabilities, net	(182)	(161)
Accrued compensation expenses	(637)	(763)
Contract liabilities	700	913
Other liabilities	1,140
Net cash provided by operating activities	21,841	18,819
Investing activities:
Purchases of property and equipment, and other capitalized assets	(3,338)	(3,379)
Purchases of investments and maturities of investments	(71)	500
Acquisitions of businesses, net	(5,015)
Net cash used in investing activities	(8,424)	(2,879)
Financing activities:
Tax withholdings related to net share settlements	(68)	(868)
Purchase of treasury shares and related costs	(14,824)	(4,725)
Proceeds from exercise of stock options		23
Term loan principal payment	(625)	(625)
Net cash used in financing activities	(15,517)	(6,195)
Effect of exchange rate changes on cash	3	(13)
Net (decrease) increase in cash	(2,097)	9,732
Cash at beginning of period	52,487	34,673
Cash at end of period	50,390	44,405
Supplemental disclosure of cash flow information:
Cash paid for taxes, net	$ 92	$ 1,407

XML

Organization and Operations

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Operations

1. Organization and Operations

TechTarget, Inc. and its subsidiaries (the “Company”) is a leading provider of specialized online content for buyers of enterprise technology products and services, and a leading provider of purchase-intent marketing and sales services for business-to-business “B2B” technology companies. The Company’s service offerings enable enterprise B2B technology companies to better identify, reach, and influence corporate enterprise technology decision makers actively researching specific enterprise technology purchases. The Company improves B2B technology companies’ ability to impact these audiences for business growth using advanced targeting, analytics, and data services complemented with customized marketing programs that integrate demand generation and brand advertising techniques. The Company operates a network of over 140 websites, each of which focuses on a major enterprise technology sector such as storage, security, or networking. Enterprise technology and business professionals have become increasingly specialized, and they have come to rely on the Company’s sector-specific websites for purchasing decision support. The Company’s content platform enables enterprise technology and business professionals to navigate the complex and rapidly changing enterprise technology landscape where purchasing decisions can have significant financial and operational consequences. At critical stages of the purchase decision process, these content offerings, through different channels, meet enterprise technology and business professionals’ needs for expert, peer, and IT vendor information and provide a platform on which IT vendors can launch targeted marketing campaigns which generate measurable return on investment. Based upon the logical clustering of members’ respective job responsibilities and the marketing focus of the products being promoted by the Company’s customers, the Company categorizes its content offerings to address the key market opportunities and audience extensions across a portfolio of distinct market categories including: Security, Networking, Storage, Data Center and Virtualization Technologies, CIO/IT Strategy, Business Applications and Analytics, Application Architecture and Development, and ANCL Channel.

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these Notes to Consolidated Financial Statements. The Company’s critical accounting policies are those that affect its more significant judgments used in the preparation of its consolidated financial statements. A description of the Company’s critical accounting policies and estimates is contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in this note to the consolidated financial statements.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, TechTarget Securities Corporation (“TSC”), TechTarget Limited, TechTarget (HK) Limited (“TTGT HK”), TechTarget (Australia) Pty Ltd., TechTarget (Singapore) Pte Ltd., E-Magine Médias SAS (“LeMagIT”) and TechTarget Germany GmbH. TSC is a Massachusetts corporation. TechTarget Limited is a subsidiary doing business principally in the United Kingdom. TTGT HK is a subsidiary incorporated in Hong Kong in order to facilitate the Company’s activities in the Asia-Pacific region. TechTarget (Australia) Pty Ltd. and TechTarget (Singapore) Pte Ltd. are the entities through which the Company does business in Australia and Singapore, respectively; LeMagIT and TechTarget Germany GmbH, both wholly-owned subsidiaries of TechTarget Limited, are entities through which the Company does business in France and Germany, respectively.

.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted (Generally Accepted Accounting Principles or “GAAP”) in the United States (“U.S.”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. All adjustments, which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown, are of a normal, recurring nature and have been reflected in the consolidated financial statements. The results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim periods or for the full year. The information included in these consolidated financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report and the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenues, long-lived assets, goodwill, the allowance for doubtful accounts, stock-based compensation, self-insurance accruals, and income taxes. The Company reduces its accounts receivable for an allowance for doubtful accounts based on its best estimate of the amount of probable credit losses. Estimates of the carrying value of certain assets and liabilities are based on historical experience and on various other assumptions that the Company believes to be reasonable. Actual results could differ from those estimates.

Revenue Recognition

The Company generates its revenues from the sale of targeted marketing and advertising campaigns, which it delivers via its network of websites and data analytics solutions. Revenue is recognized when performance obligations are satisfied by transferring promised goods or services to customers, as determined by applying a five-step process consisting of: a) identifying the contract, or contracts, with a customer, b) identifying the performance obligations in the contract, c) determining the transaction price, d) allocating the transaction price to the performance obligations in the contract, and e) recognizing revenue when, or as, performance obligations are satisfied.

Accounts Receivable

We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the Consolidated Statements of Income and Comprehensive Income. We assess collectability by reviewing accounts receivable on an individual basis when we identify specific customers with known disputes, overdue amounts or collectability issues and also reserve for losses on all accounts based on historical information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status and make judgments about the creditworthiness of customers based on ongoing credit evaluations.

At June 30, 2020, the Company’s assessment considered business and market disruptions caused by COVID-19 and estimates of expected emerging credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict causing variability and volatility that may have a material impact on our allowance for credit losses in future periods. 

Other Liabilities

Other liabilities consist of the long-term portions of amounts payable related to our acquisition of substantially all of the assets of Data Science Central LLC (see Notes 4 and 14) and the amounts deferred under the Coronavirus, Aid, Relief and Economic

Security Act (CARES Act) which allows employers to defer the payment of the Company’s employer share of FICA payroll taxes. The amount of the employer share of FICA payroll taxes (6.2% of the first $137,700 of employee pay) due for the period beginning on March 27, 2020, and ending December 31, 2020, can be deferred. The deferred amounts will then be payable in equal installments at December 31, 2021 and December 31, 2022.

Recent Accounting Pronouncements

Recently Adopted Accounting Guidance

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Income and Comprehensive Income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees, capital and operating leases, existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company adopted ASU 2016-02 in the first quarter of 2019 using the modified retrospective approach, and elected the package of practical expedients permitted under the transition guidance. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842.

The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract was or contains a lease, and our initial direct costs for any leases that existed prior to January 1, 2019. We also elected to combine our lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the Consolidated Statements of Income and Comprehensive Income on a straight-line basis over the lease term. The Company recorded operating lease assets with right-of-use of $27.5 million and $2.9 million current operating lease liability and $29.2 million non-current operating lease liability as of January 1, 2019, of which $4.9 million and $0.3 million were reclassified from deferred rent and prepaid rent, respectively (see Note 9).

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (step 2 of the goodwill impairment test) and instead requires only a one-step quantitative impairment test, performed by comparing the fair value of goodwill with its carrying amount. ASU 2017-04 is effective on a prospective basis effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangements plus any optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” (ASU 2016-13) which amends ASC 326 “Financial Instruments—Credit Losses” which introduces a new methodology for accounting for credit losses on financial instruments. The guidance establishes a new forward -looking "expected loss model" that requires entities to estimate current expected credit losses on accounts receivable and financial instruments by using all practical and relevant information. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued Accounting Standard Update No. 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements” (Topic 820) (ASU 2018-13), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Accounting Guidance Not Yet Adopted

In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): “Simplifying the Accounting for Income Taxes” (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for us in the first quarter of 2021 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.

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Revenues

6 Months Ended

Jun. 30, 2020

Revenue Recognition [Abstract]

Revenues

3. Revenues

Disaggregation of Revenue

The following table depicts the disaggregation of revenue according to categories consistent with how the Company evaluates its financial performance and economic risk. International revenue consists of international geo-targeted campaigns, which are campaigns targeted at an audience of members outside of North America.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
North America	$	21,106	$	23,353	$	40,855	$	43,631
International		13,690		10,933		25,357		20,627
Total	$	34,796	$	34,286	$	66,212	$	64,258

Contract Liabilities

Timing may differ between the satisfaction of performance obligations and the invoicing and collections of amounts related to the Company’s contracts with customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. Additionally, certain customers may receive credits, which are accounted for as a material right. The Company estimates these amounts based on the expected amount of future services to be provided to customer and allocates a portion of the transaction price to these material rights. The Company recognizes these material rights as the material rights are exercised. The resulting amounts included in the contract liabilities on the accompanying Consolidated Balance Sheets were $2.6 million and $2.4 million at June 30, 2020, and December 31, 2019, respectively.

	Contract Liabilities
Year-to-Date Activity
Balance at December 31, 2019	$	4,335
Deferral of revenue		2,178
Recognition of previously unearned revenue		(1,965	)
Balance at March 31, 2020	$	4,548
Deferral of revenue		1,822
Recognition of previously unearned revenue		(1,319	)
Balance at June 30, 2020	$	5,051

The Company elected to apply the following practical expedients:

• Existence of a Significant Financing Component in a Contract.  As a practical expedient, the Company has not assessed whether a contract has a significant financing component because the Company expects at contract inception that the period between payment by the customer and the transfer of promised goods or services by the Company to the customer will be one year or less. Payment terms and conditions vary by contract type, although terms generally include a

requirement of payment within 30 to 90 days. In addition, the Company has determined that the payment terms that the Company provides to its customers are structured primarily for reasons other than the provision of financing to the customer.

• Costs to Fulfill a Contract.  The Company’s revenues are primarily generated from customer contracts that are for one year or less. Costs primarily consist of incentive compensation paid based on the achievements of sales targets in a given period for related revenue streams and are recognized in the month when the revenue is earned. As a practical expedient, for amortization periods that are determined to be one year or less, the Company expenses any incremental costs of obtaining the contract with a customer when incurred. For those customer contracts greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

• Revenues Invoiced.  The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including short-term and long-term investments and contingent consideration. The Company’s bank and money market accounts are in bank deposits and are not quoted instruments. As such they are all considered cash.  The fair value of these financial assets and liabilities for was determined based on three levels of input as follows: 

• Level 1. Quoted prices in active markets for identical assets and liabilities;

• Level 2. Observable inputs other than quoted prices in active markets; and

• Level 3. Unobservable inputs.

The fair value hierarchy of the Company’s financial assets carried at fair value and measured on a recurring basis is as follows:

			Fair Value Measurements at June 30, 2020
	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Short-term investments(1)	$	5,023	$	—	$	5,023	$	—
Total assets	$	5,023	$	—	$	5,023	$	—
Liabilities:
Contingent consideration - current (2)	$	711	$	—	$	—	$	711
Contingent consideration - non-current (2)		426		—		—		426
Total liabilities	$	1,137	$	—	$	—	$	1,137

			Fair Value Measurements at December 31, 2019
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Short-term investments(1)	$	5,012	$	—	$	5,012	$	—
Total assets	$	5,012	$	—	$	5,012	$	—

(1) Short-term investments consist of a bond fund, their fair value is calculated using an interest rate yield curve for similar instruments.

(2) The Company’s valuation techniques and Level 3 inputs used to estimate the fair value of contingent consideration payable in connection with the acquisition are described in Note 14.

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Cash and Investments

6 Months Ended

Jun. 30, 2020

Cash And Cash Equivalents [Abstract]

Cash and Investments

5. Cash and Investments

Cash is carried at cost, which approximates fair market value. Cash consisted of the following:    

	June 30, 2020		December 31, 2019
Cash	$	50,390	$	52,487
Total cash	$	50,390	$	52,487

Investments are recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders’ equity, net of tax. Realized gains and losses on the sale of these investments are determined using the specific identification method. The cumulative unrealized loss, net of taxes, was $47 thousand as of June 30, 2020. There were no realized gains or losses as of December 31, 2019. 

Short-term investments consisted of the following:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term investments:
Bond funds	$	5,084	$	—	$	(61	)	$	5,023
Total short-term investments	$	5,084	$	—	$	(61	)	$	5,023

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Short-term investments:
Bond funds	$	5,012	$	—	$	—	$	5,012
Total short-term investments	$	5,012	$	—	$	—	$	5,012

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

6. Goodwill and Intangible Assets

The following table summarizes the Company’s intangible assets, net:

			June 30, 2020
	Estimated Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net
Customer, affiliate and advertiser relationships	5-17		$	8,684	$	6,326	$	2,358
Developed websites, technology and patents		10		2,005		1,079		926
Trademark, trade name and domain name	5-8			1,798		1,753		45
Proprietary user information database and internet traffic		5		1,094		1,094		—
Non-Compete agreement		3		170		28		142
Total intangible assets			$	13,751	$	10,280	$	3,471

			December 31, 2019
	Estimated Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Customer, affiliate and advertiser relationships	5-17		$	6,520	$	(6,290	)	$	230
Developed websites, technology and patents		10		1,476		(1,026	)		450
Trademark, trade name and domain name	5-8			1,792		(1,763	)		29
Proprietary user information database and internet traffic		5		1,122		(1,122	)		—
Non-Compete agreement		1.5		10		(9	)		1
Total intangible assets			$	10,920	$	(10,210	)	$	710

 Intangible assets are amortized over their estimated useful lives, which range from approximately 3 to 17 years, using methods of amortization that are expected to reflect the estimated pattern of economic use. The remaining amortization expense will be recognized over a weighted-average period of approximately 5.01 years. Amortization expense was $0.1 million for each of the six months ended June 30, 2020 and 2019. Amortization expense is recorded within operating expenses as the intangible assets consist of customer-related assets which generate website traffic that the Company considers to be in support of selling and marketing activities. The Company did not write off any fully amortized intangible assets in the first six months of 2020.  

The Company expects amortization expense of intangible assets to be as follows:

Years Ending December 31:	Amortization Expense
2020 (July 1 – December 31)	$	223
2021		463
2022		492
2023		329
2024		319
Thereafter		1,645
Total	$	3,471

Goodwill and indefinite-lived intangible assets are not amortized but are reviewed annually for impairment or more frequently if impairment indicators arise. The Company did not have any intangible assets other than goodwill with indefinite lives as of June 30, 2020 or December 31, 2019. There were no indications of impairment as of June 30, 2020, and the Company believes that, as of the balance sheet dates presented, none of the Company’s goodwill or intangible assets was impaired

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Net Income Per Common Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Net Income Per Common Share

7. Net Income Per Common Share

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per common share is as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Numerator:
Net income	$	4,773	$	4,151	$	6,980	$	7,441
Denominator:
Basic:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding		27,532,786		27,640,207		27,768,224		27,722,521
Diluted:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding		27,532,786		27,640,207		27,768,224		27,722,521
Effect of potentially dilutive shares (1)		630,127		591,538		535,844		503,469
Total weighted average shares of common stock and vested, undelivered restricted stock units outstanding and potentially dilutive shares		28,162,913		28,231,745		28,304,068		28,225,990
Net Income Per Share:
Basic net income per share	$	0.17	$	0.15	$	0.25	$	0.27
Diluted net income per share	$	0.17	$	0.15	$	0.25	$	0.26

(1) In calculating diluted net income per share, 29 thousand shares and 26 thousand shares related to outstanding stock options and unvested, undelivered restricted stock units were excluded for the three and six months ended June 30, 2020, respectively, and 0.6 million and 0.5 million shares related to outstanding stock options and unvested, undelivered restricted stock units were excluded for the three and six months ended June 30, 2019, respectively.

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Term Loan Agreement and Subsequent Event

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Term Loan Agreement and Subsequent Event

8. Term Loan Agreement and Subsequent Event

On December 24, 2018, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Western Alliance Bank (the “Bank”) as the lender. The Loan Agreement provides for a $25 million term loan facility with a maturity date of December 10, 2023 (the “Term Loan”).

The Term Loan is secured by a lien on substantially all of the assets of the Company, including a pledge of the stock of certain of its wholly-owned subsidiaries (limited, in the case of the stock of certain foreign subsidiaries of the Company, to no more than 65% of the capital stock of such subsidiaries).

The Term Loan must be repaid quarterly, with applicable interest paid monthly, in the following manner: 1.25% of the initial aggregate borrowings are due and payable each quarter for the first two loan years, 1.88% of the initial aggregate borrowings are due and payable each quarter for the third loan year, and 2.50% of the initial aggregate borrowings are due and payable each quarter for the fourth and fifth loan years. At maturity, all outstanding amounts, including unpaid principal and accrued and unpaid interest, under the Loan Agreement will be due and payable.

The Term Loan bears interest at a floating per annum rate equal to one and three-eighths percent (1.375%) above the greater of (a) the one-month U.S. LIBOR rate reported in The Wall Street Journal or (b) two percent (2.00%).

On July 2, 2020, the Company entered into a Loan and Security Modification Agreement (“Modification Agreement”) with the Bank pursuant to which the Company and the Bank agreed to amend the Loan Agreement. The Modification Agreement, among other things, added or amended certain definitions in the Loan Agreement, added a financial covenant requiring the Company to maintain an Asset Coverage Ratio (as defined in the Loan Agreement) of no less than 1.0 to 1.0 tested as of the end of each quarter, and provided

the Company with a new revolving line of credit facility of $20,000,000 (“Line of Credit”). The Line of Credit allows the Company to request non-formula advances in an aggregate principal amount not to exceed the Line of Credit and to use the proceeds of such advances until the facility matures on July 2, 2022. Advances under the Line of Credit bear interest at a floating rate equal to one-quarter percent (0.25%) above the Prime Rate (as published in the Money Rates section of the Western Edition of The Wall Street Journal, or such other rate of interest publicly announced from time to time by Western Alliance as its Prime Rate); provided that at no time shall the interest rate on such advances be less than three and one half percent (3.50%). The Modification Agreement also establishes a process by which the Company and the Bank will determine an alternative interest rate for the Company’s existing Term Loan under the Loan Agreement in the event that the Bank determines that LIBOR ceases to exist or is no longer available. In addition, the Company will be required to pay customary fees and expenses, including an annual facility fee with respect to the Line of Credit. Together, the Loan Agreement and Line of Credit are guaranteed by the Company and secured by substantially all assets of the Company and its subsidiaries.

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Leases and Contingencies

6 Months Ended

Jun. 30, 2020

Lessee Disclosure [Abstract]

Leases and Contingencies

9. Leases and Contingencies

On January 1, 2019, the Company adopted Topic 842 Leases using the modified retrospective approach.  The Company recorded operating lease assets (right-of-use assets) of $27.5 million and operating lease liabilities of $32.1 million.  There was no impact to retained earnings upon adoption of Topic 842.

The Company has various non-cancelable lease agreements for certain of its offices with original lease periods expiring between 2019 and 2029. Lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Leases with a renewal option allow the Company to extend the lease term typically between 1 and 5 years.  When determining the lease term, renewal options reasonably certain of being exercised are included in the lease term.  When determining if a renewal option is reasonably certain of being exercised, the Company considers several economic factors, including but not limited to, the significance of leasehold improvements incurred on the property, whether the asset is difficult to replace, underlying contractual obligations, or specific characteristics unique to that particular lease that would make it reasonably certain that the Company would exercise such option.  Renewal and termination options were generally not included in the lease term for the Company's existing operating leases. Certain of the arrangements have discounted rent periods or escalating rent payment provisions. Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets. The Company recognizes rent expense on a straight-line basis over the lease term.  The Company’s lease agreements do not contain any material residual value guarantee or material restrictive covenants.

As of June 30, 2020, operating lease assets were $25.5 million and operating lease liabilities were $29.6 million. The maturity of the Company’s operating lease liabilities as of June 30, 2020 are as follows:

	Minimum Lease
Years Ending December 31:	Payments
2020 (June 30 – December 31)	$	2,063
2021		4,132
2022		3,778
2023		3,696
2024		3,725
Thereafter		17,760
Total future minimum lease payments	$	35,154
Less imputed interest		5,540
Total operating lease liabilities	$	29,614

Included in the Consolidated Balance Sheet:
Current operating lease liabilities	$	2,769
Non-current operating lease liabilities		26,845
Total operating lease liabilities	$	29,614

For the three and six months ended June 30, 2020 and 2019, the total lease cost is comprised of the following amounts:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Operating lease expense	$	946	$	975	$	1,893	$	1,950
Short-term lease expense		26		21		54		42
Total lease expense	$	972	$	996	$	1,947	$	1,992

The following summarizes additional information related to operating leases:

	As of
	June 30, 2020
Weighted-average remaining lease term — operating leases		5.1
Weighted-average discount rate — operating leases		4	%

If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgment when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.

Litigation

From time to time and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. At June 30, 2020 and December 31, 2019, the Company did not have any pending claims, charges, or litigation that it expects would have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

10. Stock-Based Compensation

Stock Option and Incentive Plans

In April 2007, the Board approved the 2007 Stock Option and Incentive Plan (the “2007 Plan”), which was approved by the stockholders of the Company and became effective upon the consummation of the Company’s IPO in May 2007. The 2007 Plan allowed the Company to grant ISOs, NSOs, stock appreciation rights, deferred stock awards, restricted stock units and other awards. Under the 2007 Plan, stock options could not be granted at less than fair market value on the date of grant, and grants generally vested over a three- to four-year period. Stock options granted under the 2007 Plan expire no later than ten years after the grant date. Additionally, beginning with awards made in August 2015, the Company had the option to direct a net issuance of shares for satisfaction of tax liability with respect to vesting of awards and delivery of shares. Prior to August 2015, this choice of settlement method was solely at the discretion of the award recipient. The 2007 Plan expired in May 2017.

No new awards may be granted under the 2007 Plan; however, the shares of common stock remaining in the 2007 Plan are available for issuance in connection with previously awarded grants under the 2007 Plan. There are 77,500 shares of common stock that remain subject to outstanding stock grants under the 2007 Plan as of June 30, 2020.

In March 2017, the Board approved the 2017 Stock Option and Incentive Plan (the “2017 Plan”), which was approved by the stockholders of the Company at the 2017 Annual Meeting and became effective June 16, 2017. The 2017 Plan replaces the Company’s 2007 Plan. On that date, 3,000,000 shares of Common Stock were reserved for issuance under the 2017 Plan and, generally, shares that are forfeited or canceled from awards under the 2017 Plan also will be available for future awards. Under the 2017 Plan, the Company may grant restricted stock and restricted stock units, non-qualified stock options, stock appreciation rights, performance awards, and other stock-based and cash-based awards. Grants generally vest in equal tranches over a three-year period. Stock options granted under the 2017 Plan expire no later than ten years after the grant date. Shares of stock issued pursuant to restricted stock awards are restricted in that they are not transferable until they vest. Stock underlying awards of restricted stock units are not issued until the units vest. Non-qualified stock options cannot be exercised until they vest. Under the 2017 Plan, all stock options and stock appreciation rights must be granted with an exercise price that is at least equal to the fair market value of the stock on the date of grant. The 2017 Plan broadly prohibits the repricing of options and stock appreciation rights without stockholder approval and requires that no dividends or dividend equivalents be paid with respect to options or stock appreciation rights. The 2017 Plan further provides that, in the event any dividends or dividend equivalents are declared with respect to restricted stock, restricted stock units, other stock-based awards and performance awards (referred to as “full-value awards”), they would be subject to the same vesting and forfeiture provisions as the underlying award. There is a total of 1,368,630 shares of common stock that remain subject to outstanding stock grants under the 2017 Plan as of June 30, 2020.

Accounting for Stock-Based Compensation

The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of an award.

The expected volatility of options granted has been determined using a weighted average of the historical volatility of the Company’s stock for a period equal to the expected life of the option. The expected life of options has been determined utilizing the “simplified” method. The risk-free interest rate is based on a zero coupon U.S. treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. The Company applied an estimated annual forfeiture rate based on historical averages in determining the expense recorded in each period.

A summary of the stock option activity under the Company’s plans for the six months ended June 30, 2020 is presented below:

Year-to-Date Activity	Options Outstanding		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding at December 31, 2019		140,000	$	13.14
Granted		25,000	$	29.64
Exercised		—		—
Forfeited		—		—
Cancelled		—		—
Options outstanding at June 30, 2020		165,000	$	15.64		6.11	$	2,375
Options exercisable at June 30, 2020		137,500	$	12.96		5.36	$	2,347
Options vested or expected to vest at June 30, 2020		162,880	$	15.46		6.06	$	2,374

There were no options exercised during the six months ended June 30, 2020. The total intrinsic value of options exercised (i.e. the difference between the market price at exercise and the price paid by the employee to exercise the options) was $20 thousand during the six months ended June 30, 2019. The total amount of cash received from exercise of these options was approximately $23 thousand during the six months ended, June 30, 2019.

Restricted Stock Units

Restricted stock units are valued at the market price of a share of the Company’s common stock on the date of the grant. A summary of the restricted stock unit activity under the Company’s plans for the six months ended June 30, 2020 is presented below:

Year-to-Date Activity	Shares			Weighted- Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value
Nonvested outstanding at December 31, 2019		1,301,130		$	21.82
Granted		95,688		$	21.10
Vested		(103,688	)	$	21.12
Forfeited		(12,000	)	$	25.21
Nonvested outstanding at June 30, 2020		1,281,130		$	21.79	$	38,472

There were 103,688 restricted stock units with a total grant-date fair value of $2.2 million that vested during the six months ended June 30, 2020. There were 12,000 shares forfeited with a total value of $303 thousand for the six months ended June 30, 2020.  There were 98,811 restricted stock units with a total grant-date fair value of $1.9 million that vested during the six months ended June 30, 2019.

As of, June 30, 2020 there was $17.2 million of total unrecognized compensation expense related to stock options and restricted stock units, which is expected to be recognized over a weighted average period of 1.5 years.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Stockholders' Equity

11. Stockholders’ Equity

Reserved Common Stock

As of, June 30, 2020 the Company has reserved 2,376,015 shares of common stock for use in settling outstanding options and unvested restricted stock units that have not been issued as well as future awards available for grant under the 2007 and 2017 Plans.

Common Stock Repurchase Programs

In November 2018, the Company announced that the Board had authorized a $25.0 million stock repurchase program (the “November 2018 Repurchase Program”) under which the Company is authorized to repurchase the Company’s common stock from time to time on the open market or in privately negotiated transactions at prices and in a manner that may be determined by management. The Company repurchased 736,760 shares at an aggregate purchase price of approximately $14.8 million during the first quarter of 2020 under the November 2018 Stock Repurchase Program. No amounts were repurchased under this plan during the second quarter of 2020 and the November 2018 Repurchase Program was terminated in May 2020.

On May 1, 2020, the Company’s Board of Directors approved a new two-year $25.0 million stock repurchase program (the “May 2020 Repurchase Program”). Repurchases of the Company's stock under the May 2020 Repurchase Program may be made in the open market, in privately negotiated transactions, or pursuant to one or more trading plans. The timing and amount of repurchases, if any, will be determined by the Company's management at its discretion and be based on a variety of factors such as the market price of the Company's common stock, corporate and contractual requirements, prevailing market and economic conditions and legal requirements. The May 2020 Repurchase Program may be modified, suspended or discontinued at any time. No amounts were repurchased under May 2020 Repurchase Program during the second quarter of 2020.

Repurchased shares are recorded under the cost method and are reflected as treasury stock in the accompanying Consolidated Balance Sheets. All share repurchases were funded with cash on hand.

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Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

The Company measures its interim period tax expense using an estimated annual effective tax rate and adjustments for discrete taxable events that occur during the interim period. The estimated annual effective income tax rate is based upon the Company’s estimations of annual pre-tax income, the geographic mix of pre-tax income, and its interpretations of tax laws. The Company updates the estimate of its annual effective tax rate at the end of each quarterly period. The Company recorded income tax expense of $3.0 million and $2.6 million the six months ended June 30, 2020 and June 30, 2019 respectively.

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Segment Information

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Information

13. Segment Information

The Company views its operations and manages its business as one operating segment based on factors such as how the Company manages its operations and how its executive management team reviews results and makes decisions on how to allocate resources and assess performance.

Geographic Data

Net sales by campaign target area were as follows (1):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
North America	$	21,106	$	23,353	$	40,855	$	43,631
International		13,690		10,933		25,357		20,627
Total	$	34,796	$	34,286	$	66,212	$	64,258

(1) Net sales to customers by campaign target area is based on the geo-targeted (target audience) location of the campaign.

Net sales to unaffiliated customers by geographic area were as follows (2):

	For the Three Months Ended 2020				For the Six Months Ended June 30,
	2020		2019		2020		2019
United States	$	24,197	$	25,813	$	46,634	$	48,063
United Kingdom		4,531		3,324		8,323		6,433
Other international		6,068		5,149		11,255		9,762
Total	$	34,796	$	34,286	$	66,212	$	64,258

(2) Net sales to unaffiliated customers by geographic area is based on the customers’ current billing addresses and does not consider the geo-targeted (target audience) location of the campaign.

Long-lived assets by geographic area were as follows:

	June 30, 2020		December 31, 2019
United States	$	109,402	$	102,572
International		4,043		4,148
Total	$	113,445	$	106,720

Long-lived assets are comprised of property and equipment, net; goodwill; and intangible assets, net. No single country outside of the U.S. accounted for 10% or more of the Company’s long-lived assets during either of these periods.

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Acquisition

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Acquisition

14. Acquisition

On February 18, 2020, the Company acquired substantially all of the operating assets of Data Science Central LLC, which is a niche digital publishing and media company focused on data science and business analytics for $5.5 million, plus a potential future earnout valued at $0.9 million at the time of acquisition, which is currently valued at $1.1 million (Note 4).  A $5.0 million cash payment was made at closing, with the remainder due in fiscal year 2021. The earnout is subject to certain revenue growth targets and the payment is adjusted based on actual results. If all targets are met, the total purchase price, including the earnout, shall not exceed $7.5 million which will become payable upon the achievement of certain revenue objectives during the next two years.  

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, TechTarget Securities Corporation (“TSC”), TechTarget Limited, TechTarget (HK) Limited (“TTGT HK”), TechTarget (Australia) Pty Ltd., TechTarget (Singapore) Pte Ltd., E-Magine Médias SAS (“LeMagIT”) and TechTarget Germany GmbH. TSC is a Massachusetts corporation. TechTarget Limited is a subsidiary doing business principally in the United Kingdom. TTGT HK is a subsidiary incorporated in Hong Kong in order to facilitate the Company’s activities in the Asia-Pacific region. TechTarget (Australia) Pty Ltd. and TechTarget (Singapore) Pte Ltd. are the entities through which the Company does business in Australia and Singapore, respectively; LeMagIT and TechTarget Germany GmbH, both wholly-owned subsidiaries of TechTarget Limited, are entities through which the Company does business in France and Germany, respectively.

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted (Generally Accepted Accounting Principles or “GAAP”) in the United States (“U.S.”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. All adjustments, which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown, are of a normal, recurring nature and have been reflected in the consolidated financial statements. The results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim periods or for the full year. The information included in these consolidated financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report and the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenues, long-lived assets, goodwill, the allowance for doubtful accounts, stock-based compensation, self-insurance accruals, and income taxes. The Company reduces its accounts receivable for an allowance for doubtful accounts based on its best estimate of the amount of probable credit losses. Estimates of the carrying value of certain assets and liabilities are based on historical experience and on various other assumptions that the Company believes to be reasonable. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition

The Company generates its revenues from the sale of targeted marketing and advertising campaigns, which it delivers via its network of websites and data analytics solutions. Revenue is recognized when performance obligations are satisfied by transferring promised goods or services to customers, as determined by applying a five-step process consisting of: a) identifying the contract, or contracts, with a customer, b) identifying the performance obligations in the contract, c) determining the transaction price, d) allocating the transaction price to the performance obligations in the contract, and e) recognizing revenue when, or as, performance obligations are satisfied.

Accounts Receivable

Accounts Receivable

We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the Consolidated Statements of Income and Comprehensive Income. We assess collectability by reviewing accounts receivable on an individual basis when we identify specific customers with known disputes, overdue amounts or collectability issues and also reserve for losses on all accounts based on historical information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status and make judgments about the creditworthiness of customers based on ongoing credit evaluations.

At June 30, 2020, the Company’s assessment considered business and market disruptions caused by COVID-19 and estimates of expected emerging credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict causing variability and volatility that may have a material impact on our allowance for credit losses in future periods. 

Other Liabilities

Other Liabilities

Other liabilities consist of the long-term portions of amounts payable related to our acquisition of substantially all of the assets of Data Science Central LLC (see Notes 4 and 14) and the amounts deferred under the Coronavirus, Aid, Relief and Economic

Security Act (CARES Act) which allows employers to defer the payment of the Company’s employer share of FICA payroll taxes. The amount of the employer share of FICA payroll taxes (6.2% of the first $137,700 of employee pay) due for the period beginning on March 27, 2020, and ending December 31, 2020, can be deferred. The deferred amounts will then be payable in equal installments at December 31, 2021 and December 31, 2022.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Accounting Guidance

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Income and Comprehensive Income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees, capital and operating leases, existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company adopted ASU 2016-02 in the first quarter of 2019 using the modified retrospective approach, and elected the package of practical expedients permitted under the transition guidance. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842.

The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract was or contains a lease, and our initial direct costs for any leases that existed prior to January 1, 2019. We also elected to combine our lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the Consolidated Statements of Income and Comprehensive Income on a straight-line basis over the lease term. The Company recorded operating lease assets with right-of-use of $27.5 million and $2.9 million current operating lease liability and $29.2 million non-current operating lease liability as of January 1, 2019, of which $4.9 million and $0.3 million were reclassified from deferred rent and prepaid rent, respectively (see Note 9).

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (step 2 of the goodwill impairment test) and instead requires only a one-step quantitative impairment test, performed by comparing the fair value of goodwill with its carrying amount. ASU 2017-04 is effective on a prospective basis effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangements plus any optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” (ASU 2016-13) which amends ASC 326 “Financial Instruments—Credit Losses” which introduces a new methodology for accounting for credit losses on financial instruments. The guidance establishes a new forward -looking "expected loss model" that requires entities to estimate current expected credit losses on accounts receivable and financial instruments by using all practical and relevant information. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued Accounting Standard Update No. 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements” (Topic 820) (ASU 2018-13), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The Company adopted the new standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Accounting Guidance Not Yet Adopted

In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): “Simplifying the Accounting for Income Taxes” (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for us in the first quarter of 2021 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.

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Revenues (Tables)

6 Months Ended

Jun. 30, 2020

Revenue Recognition [Abstract]

Disaggregated Revenue

The following table depicts the disaggregation of revenue according to categories consistent with how the Company evaluates its financial performance and economic risk. International revenue consists of international geo-targeted campaigns, which are campaigns targeted at an audience of members outside of North America.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
North America	$	21,106	$	23,353	$	40,855	$	43,631
International		13,690		10,933		25,357		20,627
Total	$	34,796	$	34,286	$	66,212	$	64,258

Schedule of Deferred Revenue Included in Contract Liabilities

	Contract Liabilities
Year-to-Date Activity
Balance at December 31, 2019	$	4,335
Deferral of revenue		2,178
Recognition of previously unearned revenue		(1,965	)
Balance at March 31, 2020	$	4,548
Deferral of revenue		1,822
Recognition of previously unearned revenue		(1,319	)
Balance at June 30, 2020	$	5,051

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Assets Carried at Fair Value and Measured on Recurring Basis

The fair value hierarchy of the Company’s financial assets carried at fair value and measured on a recurring basis is as follows:

			Fair Value Measurements at June 30, 2020
	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Short-term investments(1)	$	5,023	$	—	$	5,023	$	—
Total assets	$	5,023	$	—	$	5,023	$	—
Liabilities:
Contingent consideration - current (2)	$	711	$	—	$	—	$	711
Contingent consideration - non-current (2)		426		—		—		426
Total liabilities	$	1,137	$	—	$	—	$	1,137

			Fair Value Measurements at December 31, 2019
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Short-term investments(1)	$	5,012	$	—	$	5,012	$	—
Total assets	$	5,012	$	—	$	5,012	$	—

(1) Short-term investments consist of a bond fund, their fair value is calculated using an interest rate yield curve for similar instruments.

(2) The Company’s valuation techniques and Level 3 inputs used to estimate the fair value of contingent consideration payable in connection with the acquisition are described in Note 14.

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Cash and Investments (Tables)

6 Months Ended

Jun. 30, 2020

Cash And Cash Equivalents [Abstract]

Cash

Cash is carried at cost, which approximates fair market value. Cash consisted of the following:    

	June 30, 2020		December 31, 2019
Cash	$	50,390	$	52,487
Total cash	$	50,390	$	52,487

Short-term Investments

Short-term investments consisted of the following:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term investments:
Bond funds	$	5,084	$	—	$	(61	)	$	5,023
Total short-term investments	$	5,084	$	—	$	(61	)	$	5,023

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Short-term investments:
Bond funds	$	5,012	$	—	$	—	$	5,012
Total short-term investments	$	5,012	$	—	$	—	$	5,012

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

The following table summarizes the Company’s intangible assets, net:

			June 30, 2020
	Estimated Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net
Customer, affiliate and advertiser relationships	5-17		$	8,684	$	6,326	$	2,358
Developed websites, technology and patents		10		2,005		1,079		926
Trademark, trade name and domain name	5-8			1,798		1,753		45
Proprietary user information database and internet traffic		5		1,094		1,094		—
Non-Compete agreement		3		170		28		142
Total intangible assets			$	13,751	$	10,280	$	3,471

			December 31, 2019
	Estimated Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Customer, affiliate and advertiser relationships	5-17		$	6,520	$	(6,290	)	$	230
Developed websites, technology and patents		10		1,476		(1,026	)		450
Trademark, trade name and domain name	5-8			1,792		(1,763	)		29
Proprietary user information database and internet traffic		5		1,122		(1,122	)		—
Non-Compete agreement		1.5		10		(9	)		1
Total intangible assets			$	10,920	$	(10,210	)	$	710

Schedule of Amortization Expense of Intangible Assets

The Company expects amortization expense of intangible assets to be as follows:

Years Ending December 31:	Amortization Expense
2020 (July 1 – December 31)	$	223
2021		463
2022		492
2023		329
2024		319
Thereafter		1,645
Total	$	3,471

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Net Income Per Common Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Reconciliation of Numerator and Denominator Used in Calculation of Basic and Diluted Net Income Per Common Share

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per common share is as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Numerator:
Net income	$	4,773	$	4,151	$	6,980	$	7,441
Denominator:
Basic:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding		27,532,786		27,640,207		27,768,224		27,722,521
Diluted:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding		27,532,786		27,640,207		27,768,224		27,722,521
Effect of potentially dilutive shares (1)		630,127		591,538		535,844		503,469
Total weighted average shares of common stock and vested, undelivered restricted stock units outstanding and potentially dilutive shares		28,162,913		28,231,745		28,304,068		28,225,990
Net Income Per Share:
Basic net income per share	$	0.17	$	0.15	$	0.25	$	0.27
Diluted net income per share	$	0.17	$	0.15	$	0.25	$	0.26

(1) In calculating diluted net income per share, 29 thousand shares and 26 thousand shares related to outstanding stock options and unvested, undelivered restricted stock units were excluded for the three and six months ended June 30, 2020, respectively, and 0.6 million and 0.5 million shares related to outstanding stock options and unvested, undelivered restricted stock units were excluded for the three and six months ended June 30, 2019, respectively.

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Leases and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

Lessee Disclosure [Abstract]

Summary of Maturity of Operating Lease Liabilities

As of June 30, 2020, operating lease assets were $25.5 million and operating lease liabilities were $29.6 million. The maturity of the Company’s operating lease liabilities as of June 30, 2020 are as follows:

	Minimum Lease
Years Ending December 31:	Payments
2020 (June 30 – December 31)	$	2,063
2021		4,132
2022		3,778
2023		3,696
2024		3,725
Thereafter		17,760
Total future minimum lease payments	$	35,154
Less imputed interest		5,540
Total operating lease liabilities	$	29,614

Included in the Consolidated Balance Sheet:
Current operating lease liabilities	$	2,769
Non-current operating lease liabilities		26,845
Total operating lease liabilities	$	29,614

Summary of Lease Costs

For the three and six months ended June 30, 2020 and 2019, the total lease cost is comprised of the following amounts:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Operating lease expense	$	946	$	975	$	1,893	$	1,950
Short-term lease expense		26		21		54		42
Total lease expense	$	972	$	996	$	1,947	$	1,992

Lessee Operating Lease Term and Discount Rate

The following summarizes additional information related to operating leases:

	As of
	June 30, 2020
Weighted-average remaining lease term — operating leases		5.1
Weighted-average discount rate — operating leases		4	%

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Activity Under Company's Plans

A summary of the stock option activity under the Company’s plans for the six months ended June 30, 2020 is presented below:

Year-to-Date Activity	Options Outstanding		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding at December 31, 2019		140,000	$	13.14
Granted		25,000	$	29.64
Exercised		—		—
Forfeited		—		—
Cancelled		—		—
Options outstanding at June 30, 2020		165,000	$	15.64		6.11	$	2,375
Options exercisable at June 30, 2020		137,500	$	12.96		5.36	$	2,347
Options vested or expected to vest at June 30, 2020		162,880	$	15.46		6.06	$	2,374

Summary of Restricted Stock Unit Activity Under Company's Plans

Restricted stock units are valued at the market price of a share of the Company’s common stock on the date of the grant. A summary of the restricted stock unit activity under the Company’s plans for the six months ended June 30, 2020 is presented below:

Year-to-Date Activity	Shares			Weighted- Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value
Nonvested outstanding at December 31, 2019		1,301,130		$	21.82
Granted		95,688		$	21.10
Vested		(103,688	)	$	21.12
Forfeited		(12,000	)	$	25.21
Nonvested outstanding at June 30, 2020		1,281,130		$	21.79	$	38,472

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2020

Long-Lived Assets by Geographic Area

Long-lived assets by geographic area were as follows:

	June 30, 2020		December 31, 2019
United States	$	109,402	$	102,572
International		4,043		4,148
Total	$	113,445	$	106,720

Customers by Campaign Target Area [Member]

Net Sales by Campaign Target Area and Geographic Area

Net sales by campaign target area were as follows (1):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
North America	$	21,106	$	23,353	$	40,855	$	43,631
International		13,690		10,933		25,357		20,627
Total	$	34,796	$	34,286	$	66,212	$	64,258

(1) Net sales to customers by campaign target area is based on the geo-targeted (target audience) location of the campaign.

Unaffiliated Customers by Geographic Area [Member]

Net Sales by Campaign Target Area and Geographic Area

Net sales to unaffiliated customers by geographic area were as follows (2):

	For the Three Months Ended 2020				For the Six Months Ended June 30,
	2020		2019		2020		2019
United States	$	24,197	$	25,813	$	46,634	$	48,063
United Kingdom		4,531		3,324		8,323		6,433
Other international		6,068		5,149		11,255		9,762
Total	$	34,796	$	34,286	$	66,212	$	64,258

(2) Net sales to unaffiliated customers by geographic area is based on the customers’ current billing addresses and does not consider the geo-targeted (target audience) location of the campaign.

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Organization and Operations - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2020 Website
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of websites	140

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)		9 Months Ended
	Jan. 01, 2019	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Significant Accounting Policies [Line Items]
Operating lease, right-of-use asset	$ 27,500,000		$ 25,485,000	$ 26,385,000
Operating lease, liability, current			2,769,000	2,571,000
Operating lease, liability, noncurrent			$ 26,845,000	$ 28,170,000
Accounting Standards Update 2016-02 [Member]
Significant Accounting Policies [Line Items]
Operating lease, right-of-use asset	27,500,000
Operating lease, liability, current	2,900,000
Operating lease, liability, noncurrent	29,200,000
Accounting Standards Update 2016-02 [Member] | Deferred Rent [Member]
Significant Accounting Policies [Line Items]
Operating lease, expense	4,900,000
Accounting Standards Update 2016-02 [Member] | Prepaid Rent [Member]
Significant Accounting Policies [Line Items]
Operating lease, expense	$ 300,000
Coronavirus, Aid, Relief and Economic Security Act (CARES Act) [Member] | Forecast [Member]
Significant Accounting Policies [Line Items]
Percentage of deferred employee share of FICA taxes		6.20%
Deferred payroll tax payment		$ 137,700

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Revenues - Disaggregated Revenue (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 34,796	$ 34,286	$ 66,212	$ 64,258
North America [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	21,106	23,353	40,855	43,631
International [Member]
Disaggregation Of Revenue [Line Items]
Total Revenues	$ 13,690	$ 10,933	$ 25,357	$ 20,627

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Revenues - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Minimum [Member]
Deferred Revenue Arrangement [Line Items]
Deferred revenue payment terms	30 days
Maximum [Member]
Deferred Revenue Arrangement [Line Items]
Deferred revenue payment terms	90 days
Revenue recognition timing of invoicing period	1 year
Contract Liabilities [Member]
Deferred Revenue Arrangement [Line Items]
Accrued sales incentives	$ 2.6	$ 2.4

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Revenues - Schedule of Deferred Revenue Included in Contract Liabilities (Detail) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Mar. 31, 2020
Deferred Revenue Arrangement [Line Items]
Contract Liabilities, Balance		$ 4,335
Contract Liabilities, Balance	$ 5,051
ASU 2014-09 [Member]
Deferred Revenue Arrangement [Line Items]
Contract Liabilities, Balance	4,548	4,335
Contract Liabilities, Deferral of revenue	1,822	2,178
Contract Liabilities, Recognition of previously unearned revenue	(1,319)	(1,965)
Contract Liabilities, Balance	$ 5,051	$ 4,548

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Fair Value Measurements - Assets Carried at Fair Value and Measured on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets:
Total assets	$ 5,023	$ 5,012
Liabilities:
Total liabilities	1,137
Short-Term Investments [Member]
Assets:
Total assets	5,023	5,012
Contingent Consideration - Current [Member]
Liabilities:
Total liabilities	711
Contingent Consideration - Non-current [Member]
Liabilities:
Total liabilities	426
Significant Other Observable Inputs (Level 2) [Member]
Assets:
Total assets	5,023	5,012
Significant Other Observable Inputs (Level 2) [Member] | Short-Term Investments [Member]
Assets:
Total assets	5,023	$ 5,012
Significant Unobservable Inputs (Level 3) [Member]
Liabilities:
Total liabilities	1,137
Significant Unobservable Inputs (Level 3) [Member] | Contingent Consideration - Current [Member]
Liabilities:
Total liabilities	711
Significant Unobservable Inputs (Level 3) [Member] | Contingent Consideration - Non-current [Member]
Liabilities:
Total liabilities	$ 426

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Cash and Investments - Cash (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Cash And Cash Equivalents [Abstract]
Cash	$ 50,390	$ 52,487
Total cash	$ 50,390	$ 52,487

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Cash and Investments - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Jun. 30, 2020
Cash And Cash Equivalents [Abstract]
Cumulative unrealized loss, net of taxes		$ 47,000
Realized gains or losses	$ 0

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Cash and Investments - Short-term Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 5,084	$ 5,012
Gross Unrealized Losses	(61)
Estimated Fair Value	5,023	5,012
Bond Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,084	5,012
Gross Unrealized Losses	(61)
Estimated Fair Value	$ 5,023	$ 5,012

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Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 13,751	$ 10,920
Accumulated Amortization	10,280	(10,210)
Total intangible assets	$ 3,471	710
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	3 years
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	17 years
Customer, Affiliate and Advertiser Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 8,684	6,520
Accumulated Amortization	6,326	(6,290)
Total intangible assets	$ 2,358	$ 230
Customer, Affiliate and Advertiser Relationships [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	5 years	5 years
Customer, Affiliate and Advertiser Relationships [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	17 years	17 years
Developed Websites, Technology and Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	10 years	10 years
Gross Carrying Amount	$ 2,005	$ 1,476
Accumulated Amortization	1,079	(1,026)
Total intangible assets	926	450
Trademarks, Trade Name and Domain Name [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,798	1,792
Accumulated Amortization	1,753	(1,763)
Total intangible assets	$ 45	$ 29
Trademarks, Trade Name and Domain Name [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	5 years	5 years
Trademarks, Trade Name and Domain Name [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	8 years	8 years
Proprietary User Information Database and Internet Traffic [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	5 years	5 years
Gross Carrying Amount	$ 1,094	$ 1,122
Accumulated Amortization	$ 1,094	$ (1,122)
Non-Compete Agreement [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	3 years	1 year 6 months
Gross Carrying Amount	$ 170	$ 10
Accumulated Amortization	28	(9)
Total intangible assets	$ 142	$ 1

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Goodwill and Intangible Assets - Additional Information (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Goodwill And Intangible Assets [Line Items]
Remaining amortization period	5 years 3 days
Amortization of intangible assets	$ 100,000	$ 100,000
Write off of intangible assets	0
Intangible assets other than goodwill with indefinite lives	$ 0		$ 0
Minimum [Member]
Goodwill And Intangible Assets [Line Items]
Estimated useful lives	3 years
Maximum [Member]
Goodwill And Intangible Assets [Line Items]
Estimated useful lives	17 years

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Goodwill and Intangible Assets - Schedule of Amortization Expense of Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Goodwill And Intangible Assets Disclosure [Abstract]
2020 (July 1 – December 31)	$ 223
2021	463
2022	492
2023	329
2024	319
Thereafter	1,645
Total intangible assets	$ 3,471	$ 710

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Net Income Per Common Share - Reconciliation of Numerator and Denominator Used in Calculation of Basic and Diluted Net Income Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Numerator:
Net income	$ 4,773	$ 2,207	$ 4,151	$ 3,290	$ 6,980	$ 7,441
Basic:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding	27,532,786		27,640,207		27,768,224	27,722,521
Diluted:
Weighted average shares of common stock and vested, undelivered restricted stock units outstanding	27,532,786		27,640,207		27,768,224	27,722,521
Effect of potentially dilutive shares	630,127		591,538		535,844	503,469
Total weighted average shares of common stock and vested, undelivered restricted stock units outstanding and potentially dilutive shares	28,162,913		28,231,745		28,304,068	28,225,990
Net Income Per Share:
Basic net income per share	$ 0.17		$ 0.15		$ 0.25	$ 0.27
Diluted net income per share	$ 0.17		$ 0.15		$ 0.25	$ 0.26

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Net Income Per Common Share - Reconciliation of Numerator and Denominator Used in Calculation of Basic and Diluted Net Income Per Common Share (Parenthetical) (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Outstanding stock options and unvested restricted stock units excluded from computation of diluted EPS	29	600	26	500

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Term Loan Agreement and Subsequent Event - Additional Information (Detail)			6 Months Ended
	Jul. 02, 2020 USD ($)	Dec. 24, 2018 USD ($)	Jun. 30, 2020
Loan and Security Agreement [Member]
Line Of Credit Facility [Line Items]
Debt instrument payment frequency			quarterly
Debt instrument basis spread on variable rate		1.375%
Loan and Security Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member]
Line Of Credit Facility [Line Items]
Debt instrument basis spread on variable rate		2.00%
Loan and Security Agreement [Member] | Term Loan Agreement Year One and Two [Member]
Line Of Credit Facility [Line Items]
Debt instrument interest rate		1.25%
Loan and Security Agreement [Member] | Term Loan Agreement Year Three [Member]
Line Of Credit Facility [Line Items]
Debt instrument interest rate		1.88%
Loan and Security Agreement [Member] | Term Loan Agreement Year Four and Five [Member]
Line Of Credit Facility [Line Items]
Debt instrument interest rate		2.50%
Loan and Security Agreement [Member] | Maximum [Member]
Line Of Credit Facility [Line Items]
Percentage of capital stock pledge in foreign subsidiaries		65.00%
Loan and Security Agreement [Member] | Western Alliance Bank [Member]
Line Of Credit Facility [Line Items]
Aggregate principal amount of term loan borrowed		$ 25,000,000
Loan facility maturity date		Dec. 10, 2023
Loan and Security Modification Agreement [Member] | Western Alliance Bank [Member] | Subsequent Event [Member]
Line Of Credit Facility [Line Items]
Aggregate principal amount of term loan borrowed	$ 20,000,000
Loan facility maturity date	Jul. 02, 2022
Loan and Security Modification Agreement [Member] | Western Alliance Bank [Member] | Prime Rate [Member] | Subsequent Event [Member]
Line Of Credit Facility [Line Items]
Debt instrument basis spread on variable rate	0.25%
Loan and Security Modification Agreement [Member] | Western Alliance Bank [Member] | Maximum [Member] | Subsequent Event [Member]
Line Of Credit Facility [Line Items]
Debt instrument basis spread on variable rate	3.50%
Loan and Security Modification Agreement [Member] | Western Alliance Bank [Member] | Minimum [Member] | Subsequent Event [Member]
Line Of Credit Facility [Line Items]
Asset coverage ratio	1.0

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Leases and Contingencies - Additional Information (Detail) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Jan. 01, 2019
Lessee Lease Description [Line Items]
Operating lease assets (right -of-use assets)	$ 25,485,000	$ 25,485,000	$ 26,385,000	$ 27,500,000
Operating lease liabilities	29,614,000	$ 29,614,000		$ 32,100,000
Lessee, operating lease, existence of option to extend		true
Charges, claims related to litigation	$ 0		$ 0
Minimum [Member]
Lessee Lease Description [Line Items]
Lessee, operating lease, renewal term	1 year	1 year
Maximum [Member]
Lessee Lease Description [Line Items]
Lessee, operating lease, renewal term	5 years	5 years

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Leases and Contingencies - Summary of Maturity of Operating Lease Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Jan. 01, 2019
Operating Lease Liabilities Payments Due [Abstract]
2020 (June 30 – December 31)	$ 2,063
2021	4,132
2022	3,778
2023	3,696
2024	3,725
Thereafter	17,760
Total future minimum lease payments	35,154
Less imputed interest	5,540
Operating lease liabilities	$ 29,614	$ 32,100

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Leases and Contingencies - Summary of Operating Lease Liabilities Included in Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jan. 01, 2019
Assets And Liabilities Lessee [Abstract]
Current operating lease liability	$ 2,769	$ 2,571
Non-current operating lease liabilities	26,845	$ 28,170
Total operating lease liabilities	$ 29,614		$ 32,100

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Leases and Contingencies - Summary of Lease Costs (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Operating Lease Liabilities Payments Due [Abstract]
Operating lease expense	$ 946	$ 975	$ 1,893	$ 1,950
Short-term lease expense	26	21	54	42
Total lease expense	$ 972	$ 996	$ 1,947	$ 1,992

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Leases and Contingencies - Summary of Additional Information Related to Operating Leases (Detail)	Jun. 30, 2020
Lease Cost [Abstract]
Weighted-average remaining lease term — operating leases	5 years 1 month 6 days
Weighted-average discount rate — operating leases	4.00%

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Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Jun. 16, 2017
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Common stock outstanding under the plan	165,000		140,000
Expected dividend yield	0.00%
Options exercised	0
Intrinsic value of options exercised		$ 20
Cash received from exercise of options		$ 23
Employee service share-based compensation, nonvested units, compensation cost not yet recognized	$ 17,200
Employee service share-based compensation, nonvested units, compensation cost not yet recognized, period for recognition	1 year 6 months
Restricted Stock Units [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock options vested	103,688	98,811
Shares, forfeited	12,000
Grant date fair value of restricted stock units forfeited	$ 303
Grant date fair value of restricted stock units vested	$ 2,200	$ 1,900
Stock Option 2007 Plan [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
New awards granted	0
Common stock outstanding under the plan	77,500
Stock Option 2017 Plan [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Common stock outstanding under the plan	1,368,630
Common stock shares reserved for issuance				3,000,000
Plan effective date	Jun. 16, 2017
Minimum [Member] | Stock Option 2007 Plan [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Period of grants vested	3 years
Minimum [Member] | Stock Option 2017 Plan [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Period of grants vested	3 years
Maximum [Member] | Stock Option 2007 Plan [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Period of grants vested	4 years
Period of grants expired	10 years
Maximum [Member] | Stock Option 2017 Plan [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Period of grants expired	10 years

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Stock-Based Compensation - Summary of Stock Option Activity under Company's Plans (Detail) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Options outstanding, beginning balance	140,000
Options Outstanding, Granted	25,000
Options Outstanding, Exercised	0
Options outstanding, ending balance	165,000
Options Outstanding, Options exercisable	137,500
Options Outstanding, Options vested or expected to vest	162,880
Weighted-Average Exercise Price Per Share, Options outstanding, beginning balance	$ 13.14
Weighted-Average Exercise Price Per Share, Granted	29.64
Weighted- Average Exercise Price Per Share, Options outstanding, ending balance	15.64
Weighted- Average Exercise Price Per Share, Options exercisable	12.96
Weighted-Average Exercise Price Per Share, Options vested or expected to vest	$ 15.46
Weighted-Average Remaining Contractual Term in Years, Options outstanding	6 years 1 month 9 days
Weighted-Average Remaining Contractual Term in Years, Options exercisable	5 years 4 months 9 days
Weighted-Average Remaining Contractual Term in Years, Options vested or expected to vest	6 years 21 days
Aggregate Intrinsic Value, Exercised		$ 20
Aggregate Intrinsic Value, Options outstanding	$ 2,375
Aggregate Intrinsic Value, Options exercisable	2,347
Aggregate Intrinsic Value, Options vested or expected to vest	$ 2,374

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Stock-Based Compensation - Summary of Restricted Stock Unit Activity Under Company's Plans (Detail) - Restricted Stock [Member] - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Nonvested outstanding, beginning balance	1,301,130
Shares, Granted	95,688
Shares, Vested	(103,688)	(98,811)
Shares, Forfeited	(12,000)
Shares, Nonvested outstanding, ending balance	1,281,130
Weighted-Average Grant Date Fair Value Per Share, Nonvested outstanding, beginning balance	$ 21.82
Weighted-Average Grant Date Fair Value Per Share, Granted	21.10
Weighted-Average Grant Date Fair Value Per Share, Vested	21.12
Weighted-Average Grant Date Fair Value Per Share, Forfeited	25.21
Weighted-Average Grant Date Fair Value Per Share, Nonvested outstanding, ending balance	$ 21.79
Aggregate Intrinsic Value, Nonvested outstanding	$ 38,472

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Stockholders' Equity - Additional Information (Detail) - USD ($)		3 Months Ended				6 Months Ended
	May 01, 2020	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Nov. 30, 2018
Schedule of Trading Securities and Other Trading Assets [Line Items]
Common stock repurchase, amount			$ 14,824,000	$ 3,762,000	$ 3,125,000
2007 and 2017 Plans [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Common stock reserved		2,376,015				2,376,015
November 2018 Repurchase Program [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Common stock repurchased, shares			736,760
Common stock repurchase, amount		$ 0	$ 14,800,000
Common stock repurchase termination period						2020-05
November 2018 Repurchase Program [Member] | Maximum [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Common stock repurchase authorized amount							$ 25,000,000.0
May 2020 Repurchase Program [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Common stock repurchase, amount		$ 0
Common stock repurchase program, term	2 years
May 2020 Repurchase Program [Member] | Maximum [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Common stock repurchase authorized amount	$ 25,000,000.0

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Income tax expense	$ 2,092	$ 1,684	$ 3,000	$ 2,632

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Segment Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2020 Segment
Segment Reporting [Abstract]
Number of operating segment	1

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Segment Information - Net Sales by Campaign Target Area (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	$ 34,796	$ 34,286	$ 66,212	$ 64,258
Customers by Campaign Target Area [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	34,796	34,286	66,212	64,258
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	21,106	23,353	40,855	43,631
North America [Member] | Customers by Campaign Target Area [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	21,106	23,353	40,855	43,631
International [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	13,690	10,933	25,357	20,627
International [Member] | Customers by Campaign Target Area [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenues	$ 13,690	$ 10,933	$ 25,357	$ 20,627

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Segment Information - Net Sales to Customers by Geographic Area (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales, Total	$ 34,796	$ 34,286	$ 66,212	$ 64,258
Unaffiliated Customers by Geographic Area [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales, Total	34,796	34,286	66,212	64,258
United States [Member] | Unaffiliated Customers by Geographic Area [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales, Total	24,197	25,813	46,634	48,063
United Kingdom [Member] | Unaffiliated Customers by Geographic Area [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales, Total	4,531	3,324	8,323	6,433
Other International [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales, Total	13,690	10,933	25,357	20,627
Other International [Member] | Unaffiliated Customers by Geographic Area [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales, Total	$ 6,068	$ 5,149	$ 11,255	$ 9,762

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Segment Information - Long-Lived Assets by Geographic Area (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets, Total	$ 113,445	$ 106,720
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets, Total	109,402	102,572
International [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets, Total	$ 4,043	$ 4,148

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Acquisition - Additional Information (Details) - Data Science Central LLC [Member] - USD ($)	Feb. 18, 2020	Jun. 30, 2020
Business Acquisition [Line Items]
Purchase price	$ 5,500,000
Potential future earn-out	900,000	$ 1,100,000
Cash paid for acquisition	$ 5,000,000.0
Total purchase price and earnout maximum amount payable on conditional basis		$ 7,500,000