UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

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

Commission File Number: 1-33472

TECHTARGET, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		04-3483216 (I.R.S. Employer Identification No.)

275 Grove Street
Newton, Massachusetts 02466
(Address of principal executive offices) (zip code)

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

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

     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 þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes o No o

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

Large Accelerated Filer o		Accelerated Filer þ		Non-Accelerated Filer o (Do not check if a smaller reporting company)		Smaller Reporting Company o

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

     The registrant had 42,652,132 shares of Common Stock, $0.001 par value per share, outstanding as of October 29, 2010.

 

 

TABLE OF CONTENTS

Item		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009			3
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009 (unaudited)			4
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 (unaudited)			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			38
Item 1A. Risk Factors			38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			50
Item 3. Defaults upon Senior Securities			50
Item 4. [Removed and reserved]			51
Item 5. Other Information			51
Item 6. Exhibits			51
Signatures			52
EX-31.1
EX-31.2
EX-32.1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TECHTARGET, INC.

Consolidated Balance Sheets

(In thousands, except share data)

		September 30,				December 31,
		2010				2009
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	23,810			$	20,884
Short-term investments			42,877				50,496
Accounts receivable, net of allowance for doubtful accounts of $515 and $483 as of September 30, 2010 and December 31, 2009, respectively			23,593				16,623
Prepaid expenses and other current assets			1,423				1,929
Deferred tax assets			945				2,399
Total current assets			92,648				92,331
Property and equipment, net			6,087				3,760
Long-term investments			18,177				11,177
Goodwill			90,222				88,958
Intangible assets, net of accumulated amortization			10,841				12,528
Deferred tax assets			7,987				5,182
Other assets			119				127
Total assets		$	226,081			$	214,063
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	2,986			$	3,106
Accrued expenses and other current liabilities			2,438				2,910
Accrued compensation expenses			1,347				808
Income taxes payable			812				398
Deferred revenue			9,083				8,402
Total current liabilities			16,666				15,624
Long-term liabilities:
Other liabilities			3,955				575
Total liabilities			20,621				16,199
Commitments and contingencies (Note 9)			—				—
Stockholders’ equity:
Preferred stock, 5,000,000 shares authorized; no shares issued or outstanding			—				—
Common stock, $0.001 par value per share, 100,000,000 shares authorized, 42,647,623 and 42,109,965 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively			43				42
Additional paid-in capital			243,733				233,555
Warrants			—				2
Accumulated other comprehensive (loss) income			(67	)			8
Accumulated deficit			(38,249	)			(35,743	)
Total stockholders’ equity			205,460				197,864
Total liabilities and stockholders’ equity		$	226,081			$	214,063

See accompanying notes.

TECHTARGET, INC.

Consolidated Statements of Operations

(In thousands, except per share data)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
						(Unaudited)
Revenues:
Online		$	18,878			$	18,191			$	58,065			$	52,274
Events			3,123				4,865				10,052				10,991
Total revenues			22,001				23,056				68,117				63,265
Cost of revenues:
Online(1)			4,574				4,789				13,902				14,445
Events(1)			1,084				1,741				3,250				4,277
Total cost of revenues			5,658				6,530				17,152				18,722
Gross profit			16,343				16,526				50,965				44,543
Operating expenses:
Selling and marketing(1)			8,568				9,157				26,472				24,696
Product development(1)			1,947				2,276				6,153				6,551
General and administrative(1)			4,535				4,973				14,834				12,956
Depreciation			592				510				1,759				1,544
Amortization of intangible assets			1,126				1,166				3,401				3,562
Total operating expenses			16,768				18,082				52,619				49,309
Operating loss			(425	)			(1,556	)			(1,654	)			(4,766	)
Interest income, net			79				130				270				194
Loss before provision for (benefit from) income taxes			(346	)			(1,426	)			(1,384	)			(4,572	)
Provision for (benefit from) income taxes			266				12				1,122				(283	)
Net loss		$	(612	)		$	(1,438	)		$	(2,506	)		$	(4,289	)
Net loss per common share:
Basic and Diluted		$	(0.01	)		$	(0.03	)		$	(0.06	)		$	(0.10	)
Weighted average common shares outstanding:
Basic and Diluted			43,209				41,812				42,878				41,775
(1) Amounts include stock-based compensation expense as follows:
Cost of online revenues		$	(38	)		$	95			$	136			$	407
Cost of events revenues			23				64				69				117
Selling and marketing			1,708				1,992				5,172				4,798
Product development			104				89				420				352
General and administrative			785				2,008				3,369				3,818

See accompanying notes.

TECHTARGET, INC.

Consolidated Statements of Cash Flows

(In thousands)

		Nine Months Ended
		September 30,
		2010				2009
		(Unaudited)
Operating Activities:
Net loss		$	(2,506	)		$	(4,289	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			5,160				5,106
Provision for bad debt			74				105
Amortization of investment premiums			1,214				1,247
Stock-based compensation expense			9,166				9,492
Non-cash interest expense			—				7
Deferred tax benefit			(1,805	)			(1,013	)
Excess tax benefit — stock options			(211	)			—
Changes in operating assets and liabilities, net of businesses acquired:
Accounts receivable			(6,266	)			1,901
Prepaid expenses and other current assets			506				1,285
Other assets			8				39
Accounts payable			(120	)			(79	)
Income taxes payable			1,260				59
Accrued expenses and other current liabilities			(472	)			(1,058	)
Accrued compensation expenses			539				(65	)
Deferred revenue			111				525
Other liabilities			1,936				283
Net cash provided by operating activities			8,594				13,545
Investing activities:
Purchases of property and equipment, and other assets			(4,041	)			(1,141	)
Purchases of investments			(38,256	)			(39,575	)
Proceeds from sales and maturities of investments			37,545				27,050
Acquisition of businesses			(1,790	)			—
Net cash used in investing activities			(6,542	)			(13,666	)
Financing activities:
Payments on bank term loan payable			—				(2,250	)
Excess tax benefit—stock options			211				—
Proceeds from exercise of stock options			663				125
Net cash provided by (used in) financing activities			874				(2,125	)
Net increase (decrease) in cash and cash equivalents			2,926				(2,246	)
Cash and cash equivalents at beginning of period			20,884				24,130
Cash and cash equivalents at end of period		$	23,810			$	21,884
Supplemental disclosure of cash flow information:
Cash paid for interest		$	—			$	102
Cash paid (refunded) for taxes		$	1,341			$	(959	)

See accompanying notes.

TECHTARGET, INC.

Notes to Consolidated Financial Statements
(In thousands, except share and per share data)

1. Organization and Operations

          TechTarget, Inc. (the Company) is a leading provider of specialized online content that brings together buyers and sellers of corporate information technology (IT) products. The Company sells customized marketing programs that enable IT vendors to reach corporate IT decision makers who are actively researching specific IT purchases. Online content is specifically defined as those advertising and media offerings being available to users via internet websites as opposed to traditional “offline” media offerings available in print, radio and television advertising.

          The Company’s integrated content platform consists of a network of more than 80 websites that are complemented with targeted in-person events. During the critical stages of the purchase decision process, these content offerings meet IT professionals’ needs for expert, peer and IT vendor information, and provide a platform on which IT vendors can launch targeted marketing campaigns that generate measurable, high return on investment (ROI). As IT professionals have become increasingly specialized, they have come to rely on the Company’s sector-specific websites for purchasing decision support. The Company’s content enables IT professionals to navigate the complex and rapidly changing IT landscape where purchasing decisions can have significant financial and operational consequences. Based upon the logical clustering of users’ respective job responsibilities and the marketing focus of the products that the Company’s customers are advertising, content offerings are currently categorized across ten distinct media groups: Application Development; Channel; CIO/IT Strategy; Data Center and Virtualization Technologies; Enterprise Applications; Networking; Security; Storage; TechnologyGuide.com; and Vertical Software.

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 the consolidated financial statements.

Principles of Consolidation

          The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include KnowledgeStorm, Inc., Bitpipe, Inc., TechTarget Securities Corporation, TechTarget Limited and TechTarget (HK) Limited. KnowledgeStorm, Inc. and Bitpipe, Inc. are leading websites providing in-depth vendor generated content targeted toward corporate IT professionals. TechTarget Securities Corporation is a Massachusetts Securities Corporation incorporated in 2004. TechTarget Limited is a subsidiary doing business principally in the United Kingdom. TechTarget (HK) Limited is a subsidiary incorporated in Hong Kong in August 2010 in order to facilitate the Company’s activities in Asia-Pac. All significant intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

          The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 United States 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, 2009.

Reclassifications

          Certain amounts in the prior years’ financial statements have been reclassified to conform with the current year presentation.

Use of Estimates

          The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

          The Company generates substantially all of its revenue from the sale of targeted advertising campaigns that are delivered via its network of websites and events. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

          Although each of the Company’s online media offerings can be sold separately, the majority of the Company’s online media sales involve multiple online offerings. Because objective evidence of fair value does not exist for all elements in the Company’s bundled advertising campaigns, no allocation can be made among the various elements, and the Company recognizes revenue on all items ratably over the term of the arrangement.

          Event Sponsorships. Sponsorship revenue from events is recognized upon completion of the event in the period the event occurs. The majority of the Company’s events are free to qualified attendees; however, certain events are based on a paid attendee model. The Company recognizes revenue for paid attendee events upon completion of the event and receipt of payment from the attendee. Amounts collected or billed prior to satisfying the above revenue recognition criteria are recorded as deferred revenue.

          Online Media. Revenue for online media offerings is recognized for specific online media offerings as follows when these items are sold separately:

	•		White Papers. White paper revenue is recognized ratably over the period in which the white paper is available on the Company’s websites.
	•		Webcasts, Podcasts, Videocasts and Virtual Trade Shows. Webcast, podcast, videocast and virtual trade show revenue is recognized ratably over the period in which the webcast, podcast, videocast or virtual trade show is available on the Company’s websites.
	•		Software Package Comparisons. Software package comparison revenue is recognized ratably over the period in which the software information is available on the Company’s websites or in the period in which leads are delivered, depending on the pricing model.
	•		Custom Media. Custom media revenue is recognized ratably over the period in which the custom media asset is available on the Company’s websites.
	•		Promotional E-mails and E-newsletters. Promotional e-mail revenue is recognized ratably over the period in which the related content asset is available on its websites because promotional e-mails do not have standalone value from the related content asset. E-newsletter revenue is recognized in the period in which the e-newsletter is sent.
	•		List Rentals. List rental revenue is recognized in the period in which the e-mail is sent to the list of registered members.
	•		Banners. Banner revenue is recognized in the period in which the banner impressions occur.
	•		Third Party Revenue Sharing Arrangements. Revenue from third party revenue sharing arrangements is recognized on a net basis in the period in which the services are performed.

          The Company offers customers the ability to purchase integrated ROI program offerings, which can include any of its online media offerings packaged together to address the particular customer’s specific advertising requirements. As part of these offerings, the Company will guarantee a minimum number of qualified sales leads to be delivered over the course of the advertising campaign. Scheduled end dates of advertising campaigns are sometimes extended to satisfy lead guarantees or fulfill all elements of the advertising campaign based on various factors, including delayed receipt of advertising media collateral from the customer. The Company estimates the revenue reserve necessary to properly defer revenue recognition for extended advertising campaigns. These estimates are based on the Company’s experience in

managing and fulfilling these integrated ROI program offerings. Historically, shortfalls in fulfilling lead guarantees before the scheduled completion date of an advertising campaign are satisfied within an average of 35 days of such scheduled completion date. These integrated ROI program offerings represented approximately 46% and 51% of online revenues, and 40% of total revenues for each of the three month periods ended September 30, 2010 and 2009, respectively, and approximately 46% and 47% of online revenues, and 39% of total revenues for each of the nine month periods ended September 30, 2010 and 2009.

          Amounts collected or billed prior to satisfying the above revenue recognition criteria are recorded as deferred revenue.

Fair Value of Financial Instruments

          Financial instruments consist of cash and cash equivalents, short and long-term investments, accounts receivable and accounts payable. The carrying value of these instruments approximates their estimated fair values.

Long-lived Assets

          Long-lived assets consist primarily of property and equipment, goodwill and other intangible assets. A specifically identified intangible asset must be recorded as a separate asset from goodwill if either of the following two criteria is met: (1) the intangible asset acquired arises from contractual or other legal rights; or (2) the intangible asset is separable. Accordingly, intangible assets consist of specifically identified intangible assets. Goodwill is the excess of any purchase price over the estimated fair market value of net tangible assets acquired not allocated to specific intangible assets.

          Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed annually for impairment or more frequently if impairment indicators arise. Separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives, which range from one to nine years, using methods of amortization that are expected to reflect the estimated pattern of economic use, and are reviewed for impairment when events or changes in circumstances suggest that the assets may not be recoverable. The Company performs its annual test of impairment of goodwill on December 31st of each year, and whenever events or changes in circumstances suggest that the carrying amount may not be recoverable. Based on this evaluation, the Company believes that, as of each of the balance sheet dates presented, none of the Company’s goodwill or other long-lived assets were impaired.

Internal Use Software and Website Development Costs

          The Company capitalizes costs incurred during the development of its website applications and infrastructure as well as certain costs relating to internal use software. The estimated useful life of costs capitalized is evaluated for each specific project. Capitalized internal use software and website development costs are reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss shall be recognized only if the carrying amount of the asset is not recoverable and exceeds its fair value. The Company capitalized internal-use software and website development costs of $0.6 million and $0.5 million for the three months ended September 30, 2010 and 2009, respectively, and $1.6 million and $0.8 million for the nine months ended September 30, 2010 and 2009, respectively.

Deferred Rent

          Certain of the Company’s operating leases provide for an initial period of free rent as an inducement to enter into the lease agreement (rent holidays). The Company recognizes rent expense for rent holidays on a straight-line basis over the terms of the underlying leases, without regard to when rent payments are made. The difference between the rent paid and the amounts expensed for operating leases is recorded as “deferred rent”.

Income Taxes

          The Company’s deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates. If required, a valuation allowance is established against net deferred tax assets if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company recognizes any interest and penalties related to uncertain tax positions in income tax expense.

Stock-Based Compensation

          At September 30, 2010, the Company had two stock-based employee compensation plans which are more fully described in Note 11. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized in the Statement of Operations using the straight-line method over the vesting period of the award or using the accelerated method if the award is contingent upon performance goals. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock option awards.

Net Income (Loss) Per Share

          Basic earnings per share is computed based on the weighted average number of common shares and vested restricted stock awards outstanding during the period. Because the holders of unvested restricted stock awards do not have nonforfeitable rights to dividends or dividend equivalents, the Company does not consider these awards to be participating securities that should be included in its computation of earnings per share under the two-class method. Diluted earnings per share is computed using the weighted average number of common shares and vested restricted stock awards outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other potentially dilutive securities using the treasury stock method. In calculating diluted earnings per share, the dilutive effect of stock options is computed using the average market price for the respective period. In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense and assumed tax benefit of stock options that are in-the-money. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of stock options.

Recent Accounting Pronouncements

          In September 2009, the Financial Accounting Standards Board (FASB) ratified Accounting Standards Update (ASU) 2009-13 (ASU 2009-13) (previously Emerging Issues Task Force (EITF) Issue No. 08-1, Revenue Arrangements with Multiple Deliverables (EITF 08-1)), which updates the existing multiple-element revenue arrangements guidance currently included in Accounting Standards Codification (ASC) 605-25. ASU 2009-13 will require companies to allocate the overall consideration to each deliverable by using a best estimate of the selling price of individual deliverables in the arrangement in the absence of vendor-specific objective evidence or other third-party evidence of the selling price. ASU 2009-13 will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 and early adoption is permitted. The Company will be adopting the new standard on January 1, 2011 and is currently evaluating the potential impact of the adoption of ASU 2009-13 on its consolidated results of operations and financial condition.

          In October 2009, the FASB issued Accounting Standards Update 2009-14, Certain Revenue Arrangements That Include Software Elements (ASU 2009-14). ASU 2009-14 amends guidance included within ASC Topic 985-605 to exclude tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. Entities that sell joint hardware and software products that meet this scope exception will be required to follow the guidance of ASU 2009-13. ASU 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption and retrospective application are also permitted. The Company has determined that adopting the provisions of ASU 2009-14 will not impact its consolidated financial statements.

          In December 2009, the FASB issued Accounting Standards Update 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (ASU 2009-17). ASU 2009-17 changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. The new standard requires a number of new disclosures, including additional disclosures about the reporting entity’s involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity is required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements. ASU 2009-17 is effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009, or January 1, 2010, for a calendar year-end entity. The Company is currently evaluating the impact of adopting the provisions of ASU 2009-17.

          Accounting Standards Update 2009-05, Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value allows entities determining the fair value of a liability to use the perspective of an investor that holds the related obligation as an asset. The ASU is effective for interim and annual periods beginning after August 27, 2009, and applies to all fair value measurements of liabilities required by GAAP. Additionally, effective January 1, 2010, the Company adopted ASU 2010-06, Improving Disclosures about Fair Value Measurements, which requires additional

disclosures regarding assets and liabilities measured at fair value. The adoption of these requirements did not have a material impact on the Company’s consolidated financial statements.

          In February 2010, the FASB issued ASU 2010-09, which amends the Subsequent Events Topic of the ASC to eliminate the requirement for public companies to disclose the date through which subsequent events have been evaluated. The Company will continue to evaluate subsequent events through the date of the issuance of the financial statements; however, consistent with the guidance, this date will no longer be disclosed. This change did not affect the Company’s consolidated financial statements.

3. Fair Value Measurements

          The Company measures certain financial assets at fair value on a recurring basis, including cash equivalents, and short and long-term investments. The fair value of these financial assets 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 and liabilities carried at fair value and measured on a recurring basis is as follows:

						Fair Value Measurements at Reporting
						Date Using
						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
		September 30,				Assets				Inputs				Inputs
		2010				(Level 1)				(Level 2)				(Level 3)
						(Unaudited)
Money market funds(1)		$	13,761			$	13,761			$	—			$	—
Short-term investments			42,877				—				42,877				—
Long-term investments			18,177				—				18,177				—
Total		$	74,815			$	13,761			$	61,054			$	—

						Fair Value Measurements at Reporting
						Date Using
						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
		December 31,				Assets				Inputs				Inputs
		2009				(Level 1)				(Level 2)				(Level 3)
Money market funds(1)		$	6,271			$	6,271			$	—			$	—
Short-term investments			50,496				—				50,496				—
Long-term investments			11,177				—				11,177				—
Total		$	67,944			$	6,271			$	61,673			$	—

4. Cash, Cash Equivalents and Investments

          Cash and cash equivalents consist of highly liquid investments with maturities of three months or less at date of purchase. Cash equivalents are carried at cost, which approximates their fair market value. Cash and cash equivalents consisted of the following:

		September 30,				December 31,
		2010				2009
		(Unaudited)
Cash		$	10,049			$	14,613
Money market funds			13,761				6,271
Total cash and cash equivalents		$	23,810			$	20,884

          The Company’s short and long-term investments are accounted for as available for sale securities. These investments are recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive (loss) income, a component of stockholders’ equity, net of tax. The unrealized (loss) gain, net of taxes, was $(66) and $6 as of September 30, 2010 and December 31, 2009, respectively. Realized gains and losses on the sale of these investments are determined using the specific identification method. There were no realized gains during the three and nine months ended September 30, 2010 or during the three months ended September 30, 2009. Realized gains totaled $17 in the nine months ended September 30, 2009.

          Short and long-term investments consisted of the following:

		September 30, 2010
						Gross				Gross
						Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value
						(Unaudited)
Short and long-term investments:
Government agency bonds		$	15,055			$	9			$	(3	)		$	15,061
Municipal bonds			46,105				7				(119	)			45,993
Total short and long-term investments		$	61,160			$	16			$	(122	)		$	61,054

		December 31, 2009
						Gross				Gross
						Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value
Short and long-term investments:
Government agency bonds		$	8,168			$	—			$	(9	)		$	8,159
Municipal bonds			53,495				42				(23	)			53,514
Total short and long-term investments		$	61,663			$	42			$	(32	)		$	61,673

          The Company had 24 debt securities in an unrealized loss position at September 30, 2010. All of these securities have been in such a position for less than 12 months. The unrealized loss on those securities was approximately $0.1 million and the fair value was $31.6 million. As of September 30, 2010, the Company does not consider these investments to be other-than-temporarily impaired.

          Municipal bonds have contractual maturity dates within eighteen months. All income generated from these investments is recorded as interest income.

5. Acquisitions

          On April 12, 2010, the Company acquired certain assets of Powell Media LLC for $1.3 million in cash plus a potential future earnout valued at $0.9 million. Powell Media LLC operates the BeyeNETWORK, a group of online technology sites that provide news, expert information and exclusive resources on the business information management lifecycle, including business intelligence (BI) best practices, business analytics, data integration, and data governance. All of the sites’ content is written by industry experts who share their experiences and research in a collection of articles, podcasts, and blogs focused on specific vertical industries.

          In connection with this acquisition, the Company purchased $0.2 million of net tangible assets and recorded $0.9 million of goodwill and $1.0 million of intangible assets related to customer relationships, a member database, a non-compete agreement and trade names with estimated useful lives ranging from three to six years.

          The estimated fair value of the $1.0 million of acquired intangible assets is assigned as follows:

				Estimated Fair
		Useful Life		Value
Customer relationship intangible asset		72 months		$	460
Member database intangible asset		60 months			350
Non-compete agreement intangible asset		36 months			110
Trade name intangible asset		60 months			100
Total intangible assets				$	1,020

          The Company engaged a third party valuation specialist to assist management in determining the fair value of the earnout and the intangible assets of Powell Media LLC. The potential future earnout was valued using a probability approach under which the earnout was calculated based on the weighted probability of several forecasted outcomes. The estimated earnout was then discounted using a rate of 5.75%. To value the customer relationship assets, an income approach was used, specifically a variation of the discounted cash-flow method known as the multi-period excess earnings method. The projected net cash flows for Powell Media LLC were tax affected using an effective rate of 41% and then discounted using a discount rate of 23% to calculate the value of the customer relationship asset. Additionally, the present value of the sum of projected tax benefits was added to arrive at the total fair value of the customer relationship asset. To value the member database, a replacement cost approach was used, specifically a calculation of costs to acquire new members based on TechTarget’s cost history over the past two years divided by new members acquired. The calculated cost per new member acquired was used to calculate the cost to acquire the members in the Powell Media LLC member database. Additionally, the present value of the sum of projected tax benefits was added to the calculated replacement cost to calculate the total fair value of the member database asset. To value the non-compete agreement a comparative business valuation method was used. Based on a non-compete term of 36 months, management projected net cash flows for the Company with and without the non-compete agreement in place. The present value of the sum of the difference between the net cash flows with and without the non-compete agreement in place was calculated, based on a discount rate of 23%. To value the trade name intangible asset a relief from royalty method was used to estimate the pre-tax royalty savings to the Company related to the Powell Media LLC trade names. The projected net cash flows from the pre-tax royalty savings were tax affected using an effective rate of 41% and then discounted using a discount rate of 23% to calculate the value of the trade name intangible asset.

          On March 1, 2010, the Company acquired ebizQ.net and certain other assets from IT Quadrant, Inc. for $0.5 million in cash plus a potential future earnout valued at $0.6 million. ebizQ.net is a leading website for business and information technology (IT) decision makers focused on Business Process Management (BPM) and Service-Oriented Architecture (SOA). ebizQ.net maintains an online community with more than 100,000 members that provides original editorial and independent content from leading industry analysts and experts via blogs, webinars, podcasts, white papers, and virtual events.

          In connection with this acquisition, the Company purchased $0.1 million of tangible assets and recorded $0.3 million of goodwill and $0.7 million of intangible assets related to customer relationships, a member database, a non-compete agreement and trade names with estimated useful lives ranging from three to six years.

          The estimated fair value of $0.7 million of acquired intangible assets is assigned as follows:

				Estimated Fair
		Useful Life		Value
Customer relationship intangible asset		72 months		$	280
Member database intangible asset		60 months			240
Non-compete agreement intangible asset		36 months			80
Trade name intangible asset		60 months			60
Total intangible assets				$	660

          The Company engaged a third party valuation specialist to assist management in determining the fair value of the earnout and the intangible assets of IT Quadrant, Inc. The potential future earnout was valued using a probability approach under which the earnout was calculated based on the weighted probability of several forecasted outcomes. The estimated earnout was then discounted using a rate of 5.75%. To value the customer relationship assets, an income approach was used, specifically a variation of the discounted cash-flow method known as the multi-period excess earnings method. The projected net cash flows for IT Quadrant, Inc. were tax affected using an effective rate of 41% and then discounted using a discount rate of 23% to calculate the value of the customer relationship asset. Additionally, the

present value of the sum of projected tax benefits was added to arrive at the total fair value of the customer relationship asset. To value the member database, a replacement cost approach was used, specifically a calculation of costs to acquire new members based on TechTarget’s cost history over the past two years divided by new members acquired. The calculated cost per new member acquired was used to calculate the cost to acquire the members in the IT Quadrant, Inc. member database. Additionally, the present value of the sum of projected tax benefits was added to the calculated replacement cost to calculate the total fair value of the member database asset. To value the non-compete agreement a comparative business valuation method was used. Based on a non-compete term of 36 months, management projected net cash flows for the Company with and without the non-compete agreement in place. The present value of the sum of the difference between the net cash flows with and without the non-compete agreement in place was calculated, based on a discount rate of 23%. To value the trade name intangible asset a relief from royalty method was used to estimate the pre-tax royalty savings to the Company related to the IT Quadrant, Inc. trade names. The projected net cash flows from the pre-tax royalty savings were tax affected using an effective rate of 41% and then discounted using a discount rate of 23% to calculate the value of the trade name intangible asset.

6. Intangible Assets

          Intangible assets subject to amortization as of September 30, 2010 and December 31, 2009 consist of the following:

				As of September 30, 2010
		Estimated		Gross
		Useful Lives		Carrying				Accumulated
		(Years)		Amount				Amortization				Net
								(Unaudited)
Customer, affiliate and advertiser relationships		1 — 9		$	12,249			$	(7,119	)		$	5,130
Developed websites, technology and patents		3 — 6			5,400				(3,075	)			2,325
Trademark, trade name and domain name		1 — 7			2,373				(1,457	)			916
Proprietary user information database and Internet traffic		3 — 5			5,340				(3,099	)			2,241
Non-compete agreements		1 — 3			1,513				(1,284	)			229
Total intangible assets				$	26,875			$	(16,034	)		$	10,841

				As of December 31, 2009
		Estimated		Gross
		Useful Lives		Carrying				Accumulated
		(Years)		Amount				Amortization				Net
Customer, affiliate and advertiser relationships		1 — 9		$	11,508			$	(5,619	)		$	5,889
Developed websites, technology and patents		3 — 6			5,400				(2,400	)			3,000
Trademark, trade name and domain name		1 — 7			2,179				(1,261	)			918
Proprietary user information database and Internet traffic		3 — 5			4,750				(2,257	)			2,493
Non-compete agreements		1 — 3			1,323				(1,095	)			228
Total intangible assets				$	25,160			$	(12,632	)		$	12,528

          Intangible assets are amortized over their estimated useful lives, which range from one to nine 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 2.4 years. Amortization expense was $1.1 million and $1.2 million for the three months ended September 30, 2010 and 2009, respectively, and $3.4 million and $3.6 million for the nine months ended September 30, 2010 and 2009, respectively.

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

		Amortization
Years Ending December 31:		Expense
2010 (October 1st — December 31st)		$	1,088
2011			3,562
2012			2,798
2013			1,298
2014			934
Thereafter			1,161
		$	10,841

7. Net Loss Per Common Share

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

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
						(Unaudited)
Numerator:
Net loss		$	(612	)		$	(1,438	)		$	(2,506	)		$	(4,289	)
Denominator:
Basic:
Weighted average shares of common stock outstanding			43,209,433				41,811,821				42,877,631				41,775,152
Diluted:
Weighted average shares of common stock outstanding			42,209,433				41,811,821				42,877,631				41,775,152
Effect of potentially dilutive shares(1)			—				—				—				—
Total weighted average shares of common stock outstanding			43,209,433				41,811,821				42,877,631				41,775,152
Net Loss Per Common Share:
Basic and diluted net loss per common share		$	(0.01	)		$	(0.03	)		$	(0.06	)		$	(0.10	)

8. Bank Term Loan Payable

          In August 2006, the Company entered into a credit agreement (the Credit Agreement) with a commercial bank, which included a $10.0 million term loan (the Term Loan) and a $20.0 million revolving credit facility (the Revolving Credit Facility). The Credit Agreement was amended in August 2007, in December 2008 and again in December 2009. The amendment in 2009 reduced the Revolving Credit Facility to $5.0 million. The Company paid off the remaining balance of the Term Loan in December 2009.

          The Revolving Credit Facility matures on August 30, 2011. Unless earlier payment is required by an event of default, all principal and unpaid interest will be due and payable on August 30, 2011. At the Company’s option, the Revolving Credit Facility bears interest at either the Prime Rate less 1.00% or the London Interbank Offered Rate (LIBOR) plus the applicable LIBOR margin. The applicable LIBOR margin is based on the ratio of total funded debt to EBITDA for the preceding four fiscal quarters. As of September 30, 2010, the applicable LIBOR margin, which was the operative rate during the quarter ended September 30, 2010, was 1.25%.

          The Company is also required to pay an unused line fee on the daily unused amount of its Revolving Credit

Facility at a per annum rate based on the ratio of total funded debt to EBITDA for the preceding four fiscal quarters. As of September 30, 2010, unused availability under the Revolving Credit Facility totaled $3.5 million and the per annum unused line fee rate was 0.20%.

     Borrowings under the Credit Agreement are collateralized by a security interest in substantially all assets of the Company. Covenants governing the Credit Agreement include the maintenance of certain financial ratios. At September 30, 2010 the Company was in compliance with all covenants under the Credit Agreement.

     At September 30, 2010 and December 31, 2009 there were no amounts outstanding under this revolving loan agreement. There was a $1.5 million standby letter of credit related to the Company’s corporate headquarters lease that was outstanding at September 30, 2010, bringing our available borrowings on the $5.0 million facility to $3.5 million.

9. Commitments and Contingencies

Operating Leases

     The Company conducts its operations in leased office facilities under various non-cancelable operating lease agreements that expire through March 2020. Future minimum lease payments under the Company’s non-cancelable operating leases at September 30, 2010, net of minimum sublease rental payments of $0.1 million, are as follows:

		Minimum Lease
Years Ending December 31:		Payments
		(Unaudited)
2010 (October 1st – December 31st)		$	234
2011			3,050
2012			3,450
2013			2,874
2014			2,890
Thereafter			15,623
		$	28,121

     The Company has an irrevocable standby letter of credit outstanding in the aggregate amount of $1.5 million. This letter of credit supports the lease the Company entered into in 2009 for its corporate headquarters. This letter of credit extends annually through February 28, 2020 unless notification of termination is received.

Net Worth Tax Contingency

     In late March 2010, the Company received a letter from the Department of Revenue of the Commonwealth of Massachusetts (the MA DOR) requesting documentation demonstrating that TechTarget Securities Corporation (TSC), a wholly-owned subsidiary of the Company, has been classified by the MA DOR as a Massachusetts security corporation. Based on recent correspondence with the MA DOR, it is the Company’s current expectation that it is probable that the MA DOR will require an adjustment to correct TSC’s tax filings such that it will be treated as a Massachusetts business corporation for the applicable years. The tax benefits available to a Massachusetts security corporation are comprised of (i) lower income tax rate (1.32% vs. 9.5%) and (ii) exemption from the 0.26% excise tax on net worth. The Company believes that if this matter is not settled, it has meritorious defenses which it intends to vigorously assert. See note 13 for further discussion.

Litigation

     From time to time and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. At September 30, 2010 and December 31, 2009, 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. Comprehensive Income (Loss)

     Comprehensive loss includes all changes in equity during a period, except those resulting from investments by stockholders and distributions to stockholders. For the three and nine months ended September 30, 2010 and 2009 the Company’s comprehensive income (loss) is as follows:

		For the								For the
		Three Months								Nine Months
		Ended								Ended
		September 30,								September 30,
		2010				2009				2010				2009
						(Unaudited)
Net loss		$	(612	)		$	(1,438	)		$	(2,506	)		$	(4,289	)
Other comprehensive loss:
Change in fair value of cash flow hedge (net of tax effect of $0 for all periods)			—				16				—				70
Unrealized gain (loss) on investments (net of tax effect of $(13), $(26), $(44) and $19, respectively)			(27	)			(40	)			(72	)			31
Unrealized gain (loss) on foreign currency exchange (net of tax effect of $0 for all periods)			3				(6	)			(3	)			12
Total other comprehensive loss		$	(636	)		$	(1,468	)		$	(2,581	)		$	(4,176	)

11. Stock-Based Compensation

Stock Option Plans

     In September 1999, the Company approved a stock option plan (the 1999 Plan) that provides for the issuance of up to 12,384,646 shares of common stock incentives. The 1999 Plan provides for the granting of incentive stock options (ISOs), nonqualified stock options (NSOs), and stock grants. These incentives may be offered to the Company’s employees, officers, directors, consultants, and advisors, as defined. ISOs may not be granted at less than fair market value on the date of grant, as determined by the Company’s Board of Directors (the Board). Each option shall be exercisable at such times and subject to such terms as determined by the Board; grants generally vest over a four year period, and expire no later than ten years after the grant date.

     In April 2007, the Board approved the 2007 Stock Option and Incentive Plan (the 2007 Plan), which was approved by the stockholders and became effective upon the consummation of the Company’s IPO in May 2007. Effective upon the consummation of the IPO, no further awards were made pursuant to the 1999 Plan, but any outstanding awards under the 1999 Plan will remain in effect and will continue to be subject to the terms of the 1999 Plan. The 2007 Plan allows the Company to grant ISOs, NSOs, stock appreciation rights, deferred stock awards, restricted stock and other awards. Under the 2007 Plan, stock options may not be granted at less than fair market value on the date of grant, and grants generally vest over a four year period. Stock options granted under the 2007 Plan expire no later than ten years after the grant date. The Company has reserved for issuance an aggregate of 2,911,667 shares of common stock under the 2007 Plan plus an additional annual increase to be added automatically on January 1 of each year, beginning on January 1, 2008, equal to the lesser of (a) 2% of the outstanding number of shares of common stock (on a fully-diluted basis) on the immediately preceding December 31 and (b) such lower number of shares as may be determined by the Company’s compensation committee. The number of shares available for issuance under the 2007 Plan is subject to adjustment in the event of a stock split, stock dividend or other change in capitalization. Generally, shares that are forfeited or canceled from awards under the 2007 Plan also will be available for future awards. In addition, shares subject to stock options returned to the 1999 Plan, as a result of their expiration, cancellation or termination, are automatically made available for issuance under the 2007 Plan. As of September 30, 2010 a total of 1,272,068 shares were available for grant under the 2007 Plan.

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 Company calculated the fair values of the options granted using the following estimated weighted-average assumptions:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2010		2009		2010		2009
				(Unaudited)
Expected volatility		*		79%		78%		75%—79%
Expected term		*		6.25 years		6.25 years		6.25 years
Risk-free interest rate		*		2.89%		2.85%		2.21—2.89%
Expected dividend yield		*		0.00%		0.00%		0.00%
Weighted-average grant date fair value per share		*		$4.49		$3.89		$2.23

     As there was no public market for the Company’s common stock prior to the Company’s IPO in May 2007, and limited historical information on the volatility of its common stock since the date of the Company’s IPO, the Company determined the volatility for options granted in the nine months ended September 30, 2010 and 2009 based on an analysis of the historical volatility of the Company’s stock and reported data for a peer group of companies that issued options with substantially similar terms. The expected volatility of options granted has been determined using a weighted average of the historical volatility of the Company’s stock and the peer group of companies 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 United States 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 its historical forfeiture experience of 2.00% in determining the expense recorded in the nine months ended September 30, 2010 and 2009.

     A summary of the stock option activity under the Company’s stock option plan for the nine months ended September 30, 2010 is presented below:

						Weighted-				Weighted-
						Average				Average
		Options				Exercise Price				Remaining Contractual
Year-to-Date Activity		Outstanding				Per Share				Term in Years				Aggregate Intrinsic Value
						(Unaudited)
Options outstanding at December 31, 2009			7,916,879			$	6.40
Granted			20,000				5.57
Exercised			(233,143	)			2.84
Forfeited			(181,731	)			6.79
Cancelled			(427,887	)			7.78
Options outstanding at September 30, 2010			7,094,118			$	6.42				5.7			$	4,460
Options exercisable at September 30, 2010			5,720,545			$	6.40				5.0			$	4,251
Options vested or expected to vest at September 30, 2010 (1)			7,023,419			$	6.43				5.8			$	4,451

     During the nine months ended September 30, 2010 and 2009, 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 $631 and $1.5 million, respectively, and the total amount of cash received from exercise of these options was $663 and $125, respectively. The total grant date fair value of stock options granted after January 1, 2006 that vested during the nine months ended September 30, 2010 and 2009 was $4.2 million and $4.0 million, respectively.

     Unrecognized stock-based compensation expense of non-vested stock options of $5.8 million is expected to be recognized using the straight-line method over a weighted-average period of 1.3 years.

Restricted Stock Awards

     Restricted stock awards are valued at the market price of a share of the Company’s common stock on the date of grant. A summary of the restricted stock award activity under the 2007 Stock Plan for the nine months ended September 30, 2010 is presented below:

						Weighted-
						Average
						Grant Date
						Fair Value				Aggregate Intrinsic
Year-to-Date Activity		Shares				Per Share				Value
						(Unaudited)
Nonvested outstanding at December 31, 2009			2,216,900			$	5.37
Granted			706,783				5.82
Vested			(824,283	)			4.22
Forfeited			(22,499	)			14.16
Nonvested outstanding at September 30, 2010			2,076,901			$	5.89			$	10,904

     The total grant-date fair value of restricted stock awards that vested during the nine months ended September 30, 2010 and 2009 was $3.5 million and $25, respectively.

     Unrecognized stock-based compensation expense of non-vested restricted stock awards of $6.9 million is expected to be recognized over a weighted-average period of 1.2 years.

12. Stockholders’ Equity

Warrants

     In connection with an acquisition in May 2000, the Company issued to the seller a warrant to purchase 40,625 shares of common stock at a price of $2.36 per share. The balance of the unexercised portion of the warrant expired in the second quarter of 2010.

Reserved Common Stock

     As of September 30, 2010, the Company has reserved 11,098,087 shares of common stock for options outstanding and available for grant under stock option plans.

13. Income Taxes

     In late March 2010, the Company received a letter from the Department of Revenue of the Commonwealth of Massachusetts (the MA DOR) requesting documentation demonstrating that TechTarget Securities Corporation (TSC), a wholly-owned subsidiary of the Company, has been classified by the MA DOR as a Massachusetts security corporation. Based on recent correspondence with the MA DOR, it is the Company’s current expectation that it is more likely than not that the MA DOR will require an adjustment to correct TSC’s tax filings such that it will be treated as a Massachusetts business corporation for the applicable years. The tax benefits available to a Massachusetts security corporation are comprised of (i) lower income tax rate (1.32% vs. 9.5%) and (ii) exemption from the 0.26% excise tax on net worth. In the quarters ended March 31, 2010 and September 30, 2010, the Company recorded tax reserves for approximately $0.3 million and $0.1 million, respectively, for the potential state income tax liability arising from the difference between the tax rates applicable to security corporations and business corporations in Massachusetts. Based on recent discussions with representatives of the MA DOR, management has concluded that it is now probable that the Company has a liability for some portion of the net worth tax due if the Company were to be taxed as a business corporation. As such, in the quarter ended September 30, 2010, the Company recorded a liability of approximately $0.2 million representing their best estimate of the potential net worth tax exposure. The Company believes that if this matter is not settled, it has meritorious defenses which it intends to vigorously assert.

     The Company may from time to time be assessed interest or penalties by major tax jurisdictions. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company recognized interest and penalties totaling $19 and $5 in the nine months ended September 30, 2010 and September 30, 2009, respectively.

     Tax years 2006 through 2009 are subject to examination by the federal and state taxing authorities. The Internal Revenue Service completed an audit of the Company’s 2006 tax return without identifying any material adjustments.

There are no other income tax examinations currently in process with the exception of the matter noted above related to the MA DOR.

     The Company’s effective tax rate was (81)% and 6% for the nine months ended September 30, 2010 and 2009, respectively. The Company’s effective tax rate excluding the $0.4 million adjustment related to the uncertain income tax position was (54)% and 6% for the nine months ended September 30, 2010 and 2009, respectively. The change in the Company’s effective tax rate excluding the adjustment for the uncertain tax positions is primarily due to nondeductible stock-based compensation of $3.3 million and $3.2 million for the nine months ended September 30, 2010 and 2009, respectively.

14. 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 to unaffiliated customers by geographic area were as follows:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
						(Unaudited)
North America		$	20,913			$	22,202			$	64,675			$	60,890
International			1,088				854				3,442				2,375
Total		$	22,001			$	23,056			$	68,117			$	63,265

15. Subsequent Event

     Definitive Agreement to Obtain Operating Control of Keji Wangtuo Information Technology Co., Ltd.

     Pursuant to a definitive agreement dated October 1, 2010 the Company completed a transaction as a result of which it obtained operating control of Beijing-based Keji Wangtuo Information Technology Co. Ltd., an existing TechTarget partner that runs Chinese-language versions of some of the Company’s websites. The Company does not believe that this transaction will have a material impact on the Company’s consolidated financial statements.

     Tender Offer to Purchase Shares

     On November 9, 2010, the Company commenced a tender offer to purchase up to 10 million shares of its common stock at a price of $6.00 per share. The number of shares proposed to be purchased in the tender offer represents approximately 23.5% of the approximately 42.6 million shares of TechTarget’s common stock currently issued and outstanding. On November 5, 2010, the last full trading day prior to the announcement of the Company’s intention to make the tender offer, the last reported sale price of the Company’s common stock was $5.13 per share.

     The Company will pay for the shares tendered in the tender offer from cash and cash equivalents on hand. If the Company purchases more than approximately 6.7 million shares in the tender offer, then, following the closing of the tender offer and payment for the shares tendered in the offer, the Company expects to evaluate a possible debt financing. The Company believes that, if it pursues such a debt financing, it would be able to obtain up to $20 million of debt on commercially reasonable terms, though there can be no guarantee that the Company will be able to consummate a debt financing.

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 and the other financial information included elsewhere in this Quarterly Report on Form 10-Q. In this discussion and analysis, dollar, share and per share amounts are not rounded to thousands unless otherwise indicated. 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 and elsewhere in this Quarterly Report on Form 10-Q, particularly under the heading “Risk Factors.”

Overview

Background

     We are a leading provider of specialized online content that brings together buyers and sellers of corporate information technology (IT) products. We sell customized marketing programs that enable IT vendors to reach corporate IT decision makers who are actively researching specific IT purchases.

     Our integrated content platform consists of a network of more than 80 websites that we complement with targeted in-person events. During the critical stages of the purchase decision process, these content offerings meet IT professionals’ needs for expert, peer and IT vendor information, and provide a platform on which IT vendors can launch targeted marketing campaigns that generate measurable, high ROI. As IT professionals have become increasingly specialized, they have come to rely on our sector-specific websites for purchasing decision support. Our content enables IT professionals to navigate the complex and rapidly changing IT landscape where purchasing decisions can have significant financial and operational consequences. Based upon the logical clustering of our users’ respective job responsibilities and the marketing focus of the products that our customers are advertising, we currently categorize our content offerings across ten distinct media groups: Application Development; Channel; CIO/IT Strategy; Data Center and Virtualization Technologies; Enterprise Applications; Networking; Security; Storage; TechnologyGuide.com; and Vertical Software.

     On March 1, 2010, we acquired ebizQ.net and certain other assets from IT Quadrant, Inc. for $0.5 million in cash plus a potential future earnout valued at $0.6 million. ebizQ.net is a leading website for business and IT decision makers focused on Business Process Management (BPM) and Service-Oriented Architecture (SOA). ebizQ.net maintains an online community with more than 100,000 members that provides original editorial and independent content from leading industry analysts and experts via blogs, webinars, podcasts, white papers, and virtual events.

     On April 12, 2010, we acquired certain assets of Powell Media LLC for $1.3 million in cash plus a potential future earnout valued at $0.9 million. Powell Media LLC operated the BeyeNETWORK, a group of online technology sites that provide news, expert information and exclusive resources on the business information management lifecycle, including business intelligence (BI) best practices, business analytics, data integration, and data governance. All of the sites’ content is written by industry experts who share their experiences and research in a collection of articles, podcasts, and blogs focused on specific vertical industries.

     On November 9, 2009, we filed a Form 8-K disclosing that we were delaying the filing of our Quarterly Report on Form 10-Q for the third quarter of 2009. We further disclosed that we had identified an improper accounting practice relating to certain customer credits that were improperly eliminated as liabilities on our balance sheet. As a result, the Audit Committee conducted an investigation and concluded that there were certain errors in our previously reported financial statements.

     To correct the customer credit errors, we recorded a net adjustment which increased accounts payable by $1.0 million and decreased income before provision for income taxes by $1.0 million during the quarter ended September 30, 2009. The aggregate net adjustment accumulated over several years and included $57,000 from 2004 to 2006, $0.4 million from 2007, $0.6 million from 2008 and ($13,000) from the nine months ended September 30, 2009.

     We also corrected an error totaling $1.1 million during the third quarter of 2009 related to stock-based compensation expense that should have been recorded in the first and second quarters of 2009. The additional stock-based compensation expense related to 1,925,000 restricted stock awards granted during the first quarter of 2009. The vesting for the restricted stock awards was contingent upon us achieving an annual financial performance goal. The stock-based compensation expense related to the restricted stock awards was initially recognized on a straight-line basis over the vesting period but should have been recognized using the accelerated attribution method.

     We assessed the materiality of these errors, both quantitatively and qualitatively, and concluded that the adjustments were not material to the prior annual financial statements or to the interim financial statements for 2009. As a result, we recorded the correction of the errors in the quarter ended September 30, 2009.

Sources of Revenues

     We sell advertising programs to IT vendors targeting a specific audience within a particular IT sector or sub-sector. We maintain multiple points of contact with our customers to provide support throughout their organizations and the sales cycle. As a result, our customers often run multiple advertising programs with us in order to reach discrete portions of our targeted audience. There are multiple factors that can impact our customers’ advertising objectives and spending with us, including but not limited to, 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 services are generally delivered under short-term contracts that run for the length of a given advertising program, typically less than 6 months in length.

     We generate substantially all of our revenues from the sale of targeted advertising campaigns that we deliver via our network of websites and in-person events.

     Online. The majority of our revenue is derived from the delivery of our online offerings. Online revenue represented approximately 86% and 79% of total revenues for the three months ended September 30, 2010 and 2009, respectively, and approximately 85% and 83% of total revenues for the nine months ended September 30, 2010 and 2009, respectively. We expect the majority of our revenues to be derived through the delivery of online offerings for the foreseeable future. As a result of our customers’ advertising objectives and preferences, the specific allocation of online advertising offerings sold and delivered by us, on a period by period basis, can fluctuate.

     Through our websites we sell a variety of online media offerings to connect IT vendors to IT professionals. Our lead generation offerings allow IT vendors to capture qualified sales leads from the distribution and promotion of content to our audience of IT professionals. Our branding offerings provide IT vendors exposure to targeted audiences of IT professionals actively researching information related to their products and services.

     Our branding offerings include banners and e-newsletters. Banner advertising can be purchased on specific websites within our network. We also offer the ability to advertise in e-newsletters focused on key site sub-topics across our portfolio of websites. These offerings give IT vendors the ability to increase their brand awareness to highly specialized IT sectors.

     Our lead generation offerings include the following:

	•		White Papers. White papers are technical documents created by IT vendors to describe business or technical problems that are addressed by the vendors’ products or services. IT vendors pay us to have their white papers distributed to our users and receive targeted promotions on our relevant websites. Prior to viewing white papers, our registered members and visitors supply their corporate contact and qualification 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 real time through our proprietary lead management software.
	•		Webcasts, Podcasts, Videocasts and Virtual Trade Shows. IT vendors pay us to sponsor and host webcasts, podcasts, videocasts and virtual trade shows that bring informational sessions directly to attendees’ desktops and, in the case of podcasts, directly to their mobile devices. As is the case with white papers, our users 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.
	•		Software Package Comparisons. Through our 2020software.com website, IT vendors pay us to post information and specifications about their software packages, typically organized by application category. Users can request further information, which may include downloadable trial software from multiple software providers in sectors such as Customer Relationship Management (CRM) accounting and business analytics. IT vendors, in turn, receive qualified leads based upon the users who request their information.
	•		Promotional E-mails. IT vendors pay us to further target the promotion of their white papers, webcasts, videocasts, podcasts or downloadable trial software by including their content in our periodic e-mail updates to registered users of our websites. Users who have voluntarily registered on our websites receive an e-mail update from us when vendor content directly related to their interests is listed on our sites.

	•		List Rentals. We also offer IT vendors the ability to message relevant registered members on topics related to their interests. IT vendors can rent our e-mail and postal lists of registered members using specific criteria such as company size, geography or job title.
	•		Contextual Advertising. Our contextual advertising programs associate IT vendor white papers, webcasts, podcasts or other content on a particular topic with our related sector-specific content. IT vendors have the option to purchase exclusive sponsorship of content related to their product or category.
	•		Third Party Revenue Sharing Arrangements. We have arrangements with certain third parties, including for the licensing of our online content, for the renting of our database of opted-in e-mail subscribers and for which advertising from customers of certain third parties is made available to our website visitors. In each of these arrangements we are paid a share of the resulting revenue.

     Events. Events revenue represented approximately 14% and 21% of total revenues for the three months ended September 30, 2010 and 2009, respectively, and approximately 15% and 17% of total revenues for the nine months ended September 30, 2010 and 2009, respectively. Most of our media groups operate revenue generating events. The majority of our events are free to IT professionals and are sponsored by IT vendors. Attendees are pre-screened based on event-specific criteria such as sector-specific budget size, company size, or job title. We offer three types of events: multi-day conferences, single-day seminars and custom events. Multi-day conferences provide independent expert content for our attendees and allow vendors to purchase exhibit space and other sponsorship offerings that enable interaction with the attendees. We also hold single-day seminars on various topics in major cities. These seminars provide independent content on key sub-topics in the sectors we serve, are free to qualified attendees, and offer multiple vendors the ability to interact with specific, targeted audiences actively focused on buying decisions. Our custom events differ from our conferences and seminars in that they are exclusively sponsored by a single IT vendor, and the content is driven primarily by the sole sponsor.

Cost of Revenues, Operating Expenses and Other

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

     Cost of Online Revenue. Cost of online revenue 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, virtual trade show and list rental offerings; stock-based compensation expenses; and related overhead.

     Cost of Events Revenue. Cost of events revenue consists primarily of: facility expenses, including food and beverages for the event attendees; salaries and related personnel costs; event speaker expenses; stock-based compensation expenses; and related overhead.

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

     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; and related overhead.

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

     Depreciation. Depreciation expense consists of the depreciation of our property and equipment. Depreciation of property and equipment is calculated using the straight-line method over their estimated useful lives ranging from three to five years.

     Amortization of Intangible Assets. 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 one to nine years, using methods that are expected to reflect the estimated pattern of economic use.

     Interest Income (Expense), Net. Interest income (expense), net consists primarily of interest income earned on cash, cash equivalents and short and long term investments less interest expense incurred on bank term loan balances. We paid off the remaining balance of the term loan in December 2009. We historically have invested our cash in money market accounts, municipal bonds and government agency bonds.

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. 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 revenue, long-lived assets, the allowance for doubtful accounts, stock-based compensation, and income taxes. We based our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. In many cases, we could reasonably have used different accounting policies and estimates. 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.

     We believe the following critical accounting policies affect our more significant judgments used in the preparation of our consolidated financial statements. See the notes to our consolidated financial statements for information about these critical accounting policies as well as a description of our other accounting policies.

Revenue Recognition

     We generate substantially all of our revenue from the sale of targeted advertising campaigns that we deliver via our network of websites and events. In all cases, we recognize revenue only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

     Although each of our online media offerings can be sold separately, most of our online media sales involve multiple online offerings. Because objective evidence of fair value does not exist for all elements in our bundled advertising campaigns, no allocation can be made, and we recognize revenue on all services over the term of the arrangement.

     Event Sponsorships. We sell our events separately from our other service offerings, and recognize sponsorship revenue from events in the period in which the event occurs. The majority of our events are free to qualified attendees; however, certain events are based on a paid attendee model. We recognize revenue for paid attendee events upon completion of the event and receipt of payment from the attendee. Amounts collected or billed prior to satisfying the above revenue recognition criteria are recorded as deferred revenue.

     Online Media. We recognize revenue from our specific online media offerings as follows when these items are sold separately:

	•		White Papers. We recognize white paper revenue ratably over the period in which the white paper is available on our websites.
	•		Webcasts, Podcasts, Videocasts and Virtual Trade Shows. We recognize webcast, podcast, videocast and virtual trade show revenue ratably over the period in which the webcast, podcast, videocast or virtual trade show is available on our websites.
	•		Software Package Comparisons. We recognize software package comparison revenue ratably over the period in which the software information is available on our websites or in the period in which leads are delivered, depending on the pricing model used.
	•		Promotional E-mails and E-newsletters. We recognize promotional e-mail revenue ratably over the period in which the related content asset is available on our websites because promotional e-mails do not have standalone value from the related content asset. We recognize e-newsletter revenue in the period in which the e-newsletter is sent.

	•		List Rentals. List rental revenue is recognized in the period in which the e-mail is sent to the list of registered members.
	•		Banners. Banner revenue is recognized in the period in which the banner impressions occur.
	•		Third Party Revenue Sharing Arrangements. Revenue from third party revenue sharing arrangements is recognized on a net basis in the period in which the services are performed.

     We offer customers the ability to purchase integrated ROI program offerings, which can include any of our online media offerings packaged together to address the particular customer’s specific advertising requirements. As part of these offerings, we will guarantee a minimum number of qualified sales leads to be delivered over the course of the advertising campaign. We sometimes extend the scheduled end date of advertising campaigns to satisfy lead guarantees or to fulfill all elements of the campaign based on various factors, including delayed receipt of advertising media collateral from the customer. We estimate the revenue reserve necessary to properly defer revenue recognition for extended advertising campaigns. These estimates are based on our experience in managing and fulfilling these integrated ROI program offerings. Historically, shortfalls in fulfilling lead guarantees before the scheduled completion date of an advertising campaign are satisfied within an average of 35 days of such scheduled completion date. These integrated ROI program offerings represented approximately 46% and 51% of online revenues, and 40% of total revenues for each of the three month periods ended September 30, 2010 and 2009, respectively, and approximately 46% and 47% of online revenues and 39% of total revenues for each of the nine month periods ended September 30, 2010 and 2009, respectively.

     Amounts collected or billed prior to satisfying the above revenue recognition criteria are recorded as deferred revenue.

Long-Lived Assets

     Our long-lived assets consist primarily of property and equipment, goodwill and other intangible assets. Goodwill and other intangible assets have arisen principally from our acquisitions. The amount assigned to intangible assets is subjective and based on our estimates of the future benefit of the intangible assets using accepted valuation techniques, such as discounted cash flow and replacement cost models. Our long-lived assets, other than goodwill, are amortized over their estimated useful lives, which we determined based on the consideration of several factors including the period of time the asset is expected to remain in service. Intangible assets are amortized over their estimated useful lives, which range from one to nine years, using methods of amortization that are expected to reflect the estimated pattern of economic use. We evaluate the carrying value and remaining useful lives of long-lived assets, other than goodwill, whenever indicators of impairment are present. We evaluate the carrying value of goodwill annually, and whenever indicators of impairment are present. We use a discounted cash flow approach to determine the fair value of goodwill.

Fair Value of Financial Instruments

     Financial instruments consist of cash and cash equivalents, short-term and long-term investments, accounts receivable and accounts payable. The carrying value of these instruments approximates their estimated fair values.

Allowance for Doubtful Accounts

     We offset gross trade accounts receivable with an allowance for doubtful accounts. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We review our allowance for doubtful accounts on a regular basis, and all past due balances are reviewed individually for collectability. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Provisions for allowance for doubtful accounts are recorded in general and administrative expense. If our historical collection experience does not reflect our future ability to collect outstanding accounts receivable, our future provision for doubtful accounts could be materially affected. To date, we have not incurred any write-offs of accounts receivable significantly different than the amounts reserved. The allowance for doubtful accounts was $0.5 million at September 30, 2010 and December 31, 2009.

Stock-Based Compensation

     We measure stock-based compensation at the grant date based on the fair value of the award and recognize stock-based compensation expense in the Statement of Operations using the straight-line method over the vesting period of the award or using the accelerated method if the award is contingent upon performance goals. We use the Black-Scholes option-pricing model to determine the fair-value of stock option awards. We calculated the fair values of the options granted using the following estimated weighted-average assumptions:

		Three Months Ended September 30,				Nine Months Ended September 30,
		2010		2009		2010		2009
				(Unaudited)
Expected volatility		*		79%		78%		75%—79%
Expected term		*		6.25 years		6.25 years		6.25 years
Risk-free interest rate		*		2.89%		2.85%		2.21%—2.89%
Expected dividend yield		*		0.00%		0.00%		0.00%
Weighted-average grant date fair value per share		*		$4.49		$3.89		$2.23

     As there was no public market for our common stock prior to our initial public offering in May 2007, and there has been limited historical information on the volatility of our common stock since the date of our initial public offering, we determined the volatility for options granted in the nine months ended September 30, 2010 and 2009 based on an analysis of the historical volatility of our stock and reported data for a peer group of companies that issued options with substantially similar terms. The expected volatility of options granted has been determined using a weighted average of the historical volatility of our stock and the peer group of companies for a period equal to the expected life of the option. The risk-free interest rate is based on a zero coupon United States treasury instrument whose term is consistent with the expected life of the stock options. We have not paid and do not anticipate paying cash dividends on our shares of common stock; therefore, the expected dividend yield is assumed to be zero. We applied an estimated annual forfeiture rate based on our historical forfeiture experience of 2.0% in determining the expense recorded in the nine months ended September 30, 2010 and 2009.

Internal-Use Software and Website Development Costs

     We capitalize costs of materials, consultants and compensation and related expenses of employees who devote time to the development of internal-use software and website applications and infrastructure involving developing software to operate our websites. However, we expense as incurred website development costs for new features and functionalities since it is not probable that they will result in additional functionality until they are both developed and tested with confirmation that they are more effective than the current set of features and functionalities on our websites. Our judgment is required in determining the point at which various projects enter the states at which costs may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized, which is generally three years. To the extent that we change the manner in which we develop and test new features and functionalities related to our websites, assess the ongoing value of capitalized assets or determine the estimated useful lives over which the costs are amortized, the amount of website development costs we capitalize and amortize in future periods would be impacted. We review capitalized internal use software and website development costs for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We would recognize an impairment loss only if the carrying amount of the asset is not recoverable and exceeds its fair value. We capitalized internal-use software and website development costs of $0.6 million and $0.5 million for the three months ended September 30, 2010 and 2009, respectively, and $1.6 million and $0.8 million for the nine months ended September 30, 2010 and 2009, respectively.

Deferred Rent

     Certain of our operating leases provide for an initial period of free rent as an inducement to enter into the lease agreement (rent holidays). We recognize rent expense for rent holidays on a straight-line basis over the terms of the underlying leases, without regard to when rent payments are made. The difference between the rent paid and the amounts expensed for operating leases is recorded as “deferred rent”.

Income Taxes

     We are subject to income taxes in both the United States 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 Net Operating Loss (NOL) carryforwards. As of December 31, 2009, we had U.S. federal and state NOL carryforwards of approximately $7.0 million and $17.3 million, respectively, which may be used to offset future taxable income. The NOL carryforwards expire through 2027, and are subject to review and possible adjustment by the Internal Revenue Service. The Internal Revenue Code contains provisions that limit the NOL and tax credit carryforwards available to be used in any given year in the event of certain

changes in the ownership interests of significant stockholders. The federal NOL carryforwards of $7.0 million available at December 31, 2009 were acquired from KnowledgeStorm and are subject to limitations on their use in future years.

Net Income (Loss) Per Share

     We calculate basic earnings per share, or EPS, by dividing earnings available to common shareholders for the period by the weighted average number of common shares and vested restricted stock awards outstanding. Because the holders of unvested restricted stock awards do not have nonforfeitable rights to dividends or dividend equivalents, we do not consider these awards to be participating securities that should be included in our computation of earnings per share under the two-class method. Diluted EPS is computed using the weighted-average number of common shares and vested restricted stock awards outstanding during the period, plus the dilutive effect of potential future issuances of common stock relating to stock option programs and other potentially dilutive securities using the treasury stock method. In calculating diluted EPS, the dilutive effect of stock options is computed using the average market price for the respective period. In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense and assumed tax benefit of stock options that are in-the-money. This results in the “assumed” buyback of additional shares, thereby reducing the dilutive impact of stock options.

Results of Operations

     The following table sets forth our results of operations for the periods indicated:

		Three Months Ended																Nine Months Ended
		September 30,																September 30,
		2010							2009									2010								2009
		(Unaudited)
		($ in thousands)
Revenues:
Online		$	18,878				86	%		$	18,191				79	%		$	58,065				85	%		$	52,274				83	%
Events			3,123				14				4,865				21				10,052				15				10,991				17
Total revenues			22,001				100				23,056				100				68,117				100				63,265				100
Cost of revenues:
Online			4,574				21				4,789				21				13,902				20				14,445				23
Events			1,084				5				1,741				7				3,250				5				4,277				7
Total cost of revenues			5,658				26				6,530				28				17,152				25				18,722				30
Gross profit			16,343				74				16,526				72				50,965				75				44,543				70
Operating expenses:
Selling and marketing			8,568				39				9,157				40				26,472				39				24,696				39
Product development			1,947				9				2,276				10				6,153				9				6,551				10
General and administrative			4,535				21				4,973				22				14,834				22				12,956				20
Depreciation			592				3				510				2				1,759				2				1,544				3
Amortization of intangible assets			1,126				5				1,166				5				3,401				5				3,562				6
Total operating expenses			16,768				77				18,082				78				52,619				77				49,309				78
Operating loss			(425	)			(2	)			(1,556	)			(7	)			(1,654	)			(2	)			(4,766	)			(8	)
Interest income, net			79				*				130				1				270				*				194				1
Loss before provision for (benefit from) income taxes			(346	)			(2	)			(1,426	)			(6	)			(1,384	)			(2	)			(4,572	)			(7	)
Provision for (benefit from) income taxes			266				1				12				—				1,122				2				(283	)			—
Net loss		$	(612	)			(3	)%		$	(1,438	)			(6	)%		$	(2,506	)			(4	)%		$	(4,289	)			(7	)%

Comparison of Three Months Ended September 30, 2010 and 2009

     Revenues

		Three Months Ended September 30,
										Increase				Percent
		2010				2009				(Decrease)				Change
						(Unaudited)
						($ in thousands)
Revenues:
Online		$	18,878			$	18,191			$	687				4	%
Events			3,123				4,865				(1,742	)			(36	)
Total revenues		$	22,001			$	23,056			$	(1,055	)			(5	)%

     Online. The increase in online revenue was primarily attributable to a $0.5 million increase in branding revenue due primarily to an increase in banner sales volume. Lead generation offerings increased by $0.2 million, primarily due to sponsorship and white paper sales volumes, offset in part by a decrease in webcast revenues. These increases were partially offset by a $0.4 million decrease in third party revenue. The change in online revenues also includes an increase of $0.2 million related to a 2009 adjustment to correct accounts payable related to customer credit errors by reducing revenue in the third quarter of 2009.

     Events. The decrease in events revenue was primarily attributable to a $1.2 million decrease in conference and attendee revenues, caused in part by the timing of the BriForum event, which was held in the third quarter of 2009 and the second quarter of 2010. Seminar series events revenue is also down by $0.4 million. These decreases are offset in part by an increase in our custom events due to the formation of our custom events group, which has increased our custom events volume.

     Cost of Revenues and Gross Profit

		Three Months Ended September 30,
										Increase				Percent
		2010				2009				(Decrease)				Change
						(Unaudited)
						($ in thousands)
Cost of revenues:
Online		$	4,574			$	4,789			$	(215	)			(4	)%
Events			1,084				1,741				(657	)			(38	)
Total cost of revenues		$	5,658			$	6,530			$	(872	)			(13	)%
Gross profit		$	16,343			$	16,526			$	(183	)			(1	)%
Gross profit percentage			74	%			72	%

     Cost of Online Revenues. The decrease in cost of online revenues was primarily attributable to a $0.4 million decrease in member acquisition expenses, primarily related to keyword purchases, and $0.1 million decreases in both payroll-related and stock-based compensation expense, partially offset by a $0.4 million increase in hosting and production costs.

     Cost of Events Revenues. The decrease in cost of events revenues was primarily attributable to the decreased conference and seminar revenues and a $0.2 million decrease in payroll-related costs.

     Gross Profit. Our gross profit is equal to the difference between our revenues and our cost of revenues for the period. Gross margin for the third quarter of 2010 was 74% as compared to 72% for the same period of 2009. The increase in online gross profit was $0.9 million, primarily attributable to the increase in online revenue as well as a decrease in member acquisition expenses as compared to the third quarter of 2009. Events gross profit decreased by $1.1 million, primarily as a result of the lower events revenues. 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 as well as the relative contribution of online and events revenues to our total revenues.

Operating Expenses and Other

		Three Months Ended September 30,
										Increase				Percent
		2010				2009				(Decrease)				Change
						(Unaudited)
						($ in thousands)
Operating expenses:
Selling and marketing		$	8,568			$	9,157			$	(589	)			(6	)%
Product development			1,947				2,276				(329	)			(14	)
General and administrative			4,535				4,973				(438	)			(9	)
Depreciation			592				510				82				16
Amortization of intangible assets			1,126				1,166				(40	)			(3	)
Total operating expenses		$	16,768			$	18,082			$	(1,314	)			(7	)%
Interest income, net		$	79			$	130			$	(51	)			(39	)%
Provision for income taxes		$	266			$	12			$	254				2117	%