TechTarget, Inc. Common Stock 2026 Q2 Earnings Call

Thank you. Good afternoon, everyone. The speakers joining us here today are Gary Nugent, our Chief Executive Officer, and Dan Noreck, our Chief Financial Officer. Before turning the call over to Gary, we would like to remind you that in advance of this call, we posted a press release to the investor relations section of our website and furnished it on an 8-K. You can also find these materials on the SEC's website at www.sec.gov. A replay of today's conference call will be made available on the investor relations section of our website. Following opening remarks from Gary and Dan, they'll be available to answer questions. Any statements made today by Informa TechTarget that are not historical, including during the Q&A, may be considered forward-looking statements. These forward-looking statements, which are subject to risks and uncertainties, are based on assumptions and are not guarantees of our future performance.

Actual results may differ materially from our forecast and from these forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the Risk Factors section of our most recent periodic report filed on Form 10-Q and the forward-looking statement disclaimer in our earnings release filed earlier today. These statements speak only as of the date of this call. Informa TechTarget undertakes no obligation to revise or update any forward-looking statements in order to reflect events that may arise after this conference call, except as required by law. Finally, we may also refer to certain financial measures not prepared in accordance with GAAP. A reconciliation of certain of these non-GAAP financial measures to the most directly comparable GAAP measures, to the extent available without unreasonable efforts, accompanies our press release. With that, I'll turn the call over to Gary.

Thank you, Charlie. Good afternoon, everyone. As always, we appreciate you taking the time to join us today. I'm pleased to share our second quarter and first half 2026 results, which reflect progressive execution of our strategy and the fundamentals of our business continuing to strengthen amidst a market environment that remains challenging. Dan will run through the numbers in detail more shortly. In summary, first half revenues were broadly flat year-over-year at approximately $222.2 million, reflecting the modest growth in Q1 and a modest decline against a stronger comparative in Q2. At the half year, I&A revenues declined by 5.5% year-on-year, reflecting softer consulting bookings. Intelligence subscription ACV, the annualized contract value, is broadly flat, with double-digit growth in our AI data center and cloud portfolio offset by weakness in the telecoms market.

At the half year, B2B revenues grew by 1.2% year-on-year. Adjusted EBITDA and Adjusted EBITDA margin for the first half were also relatively stable and displayed a similar pattern to the revenue performance between Q1 and Q2 and reflected a reduction in gross margins as a result of changing product mix and inflation, offset by strong improvement in our ongoing operational year-on-year, benefiting from the delivery of cost savings and synergies. As we discussed last quarter, the B2B technology market continues to be challenged by two forces. First is an uncertain macro that's causing customers to be more deliberate in their spending decisions. Second is the acceleration of AI, which is changing how buyers research and make buying decisions and how sellers therefore raise awareness and establish thought leadership and ensure consideration and demand for their business.

Despite this, our go-to-market strategy to focus on our largest clients and the highest growth markets is yielding benefits in terms of revenue growth in those areas and a greatly expanded opportunity pipeline as we roll into the second half. We also enter the second half of the year with an enhanced portfolio of products and services, including AI features to our existing products, new products, and indeed, new commercial partnerships. Our audience membership and membership activity continues to grow as decision-makers and influencers seek trusted sources of knowledge to shape buying decisions. Our timeliness, quality, and productivity all improved year-on-year and quarter-on-quarter as the investments and initiatives that we have made to make ourselves easier to do business with and easier to work for began to deliver.

Finally, as the evolving dynamic of this new AI-enabled answer engine economy takes shape, our role as the indispensable partner to B2B technology companies is becoming even more strategically relevant. During the quarter, we continued to see many of the same customer dynamics we discussed on our Q1 call. Technology vendors continue to focus on and prioritize AI-related research and development over their go-to-market investments. As such, our customers' go-to-market budgets remain subdued, and therefore growth is to be had by growing market share and taking share of wallet. Our clients are all trying to do more marketing with the same or less money whilst looking for strategic partners to help them navigate a changing world. This environment, I believe, ultimately plays into our strengths as we leverage the breadth and scale of our offering to grow market share and increase our share of wallet.

We continue to see positive momentum in our largest clients, with year-on-year revenue growth as they increasingly recognize the value of the company's breadth and scale. These larger strategic relationships remain an important area of focus. My favorite example from the first half really is being a deepening relationship we have with a major global software company. In 2025, this relationship was already a material one, but limited to us supporting their demand generation activity in the United States. Through the tremendous efforts of our dedicated account team, and that relationship has grown 303% year-on-year, expanding to Europe, Middle East and Africa, and leveraging our content expertise. More broadly, we are encouraged by the significant expansion of our opportunity pipeline across all product segments.

This growth reflects the investments that we've made in the product roadmap and the relevance of our value proposition, and it gives us greater confidence as we move through the second half of this year. Our investment in product innovation continues to bear fruit. Through the first half of the year, we brought a whole series of new and enhanced capabilities to market that are directly aligned with the needs of our clients. We launched our new Nurture as a Service product on the BrightTALK platform. This capability strengthens the value of BrightTALK Channels, our video platform offering, by enabling clients to further nurture webinar leads with minimal additional effort, helping convert audience interest into more qualified opportunities before they hand off to sales.

Off the success we had in positioning NetLine as a demand offering for the volume end of the demand market, we enter H2 even stronger with our integration partnership with Demandbase in play and real momentum with our new NetLine HQL, the highly qualified lead product, which is now a multimillion-dollar product with over 50 clients. In the quarter, we also announced our partnership with Sherpa, rounding out our end-to-end value proposition to partner professionals. This is one of those hot markets that we've talked about, and we're religiously focused on as over 65% of all value in the B2B technology industry goes through partners, through distributors, value-added resellers, systems integrators, and managed service providers. It is an essential strategic foothold. Since the launch in March, we've experienced high demand for our AI visibility and geotopic planning services as our clients address traffic disruption on their own branded websites.

As we explained in the Q1 call, we do not expect these services to be material revenue generators in and of themselves, but to be demand generators for our broader content portfolio. In Q2, we saw our studio content bookings up double-digit year-over-year. Later this month, we'll also release our new DaaS intent offering. This offering complements our platform offering for those clients that are seeking direct access to our rich intent data. During this beta program, we were delighted to successfully integrate our first two clients via our native AI Model Context Protocol or MCP. Taken together, these products and platform developments are really important as they further strengthen our customer proposition, broaden our addressable opportunity, and demonstrate how we are applying AI in practical ways that improve the value proposition to our clients.

On the audience membership side of the business, we continue to focus on quality, engagement and visibility. As AI augments how buyers search for and consume information, our editorial authority, our trusted specialist brands, and our first-party audience relationships are becoming even more important. Audience membership trends remains healthy despite the ongoing broader traffic disruption across the digital media industry. With both our active membership up year-over-year and notably member activity up significantly quarter-over-quarter. For existing and prospective audience members, we launched our second-generation AI search across our network of publications. Our new AI-powered search is driving audience circulation across the entire network, and in the first few weeks, more than a third of search clicks have led readers to different publications than the one they started on.

With 78% of our click-throughs happening when a member engages in content from across the network instead of filtering onto a single publication. We continue to adapt our content creation and distribution strategies to support AI visibility while maintaining editorial excellence that has long differentiated our brands. We're encouraged to see that the two key performance indicators, citations and cited pages, trending positively in the second quarter. That editorial excellence continues to be recognized externally. Year to date, our trusted original journalism has received 57 prestigious industry awards. We view this recognition as more than just industry validation. In an environment where AI-generated content is proliferating, trusted original journalism, specialist expertise, and direct audience relationships are becoming more valuable. That reinforces the strategic importance of our audience platform and the relationships it builds, and the quality of the data that it generates.

We also continue to apply automation and AI across the business to improve productivity, quality and execution. As we said last quarter, our approach is to adopt a mindset of continuous improvement here, and we continue to see opportunities to simplify workflows, accelerate delivery, and improve the customer experience across sales, marketing, research, editorial, and operations. A good example of this is the excellent work by our delivery operations team to improve the elapsed time from receipt of a content syndication lead gen order to its delivery by over 30% quarter-on-quarter, thus accelerating the time to value for our clients. At the same time, we remain disciplined on cost. First half Adjusted EBITDA margin was stable year-over-year, even as we continued to invest in product development and absorb inflation, with cost savings and synergies helping to offset those pressures.