Good day, ladies and gentlemen, and welcome to the TechTarget Fourth Quarter and 2011 Conference Call and Webcast. My name is Chantelley, and I will be your coordinator for today. [Operator Instructions] Following introductory remarks by Greg Strakosch, TechTarget's CEO, Chairman and Co-Founder, we will be facilitating a question-and-answer session for today's conference call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I will now turn the call over to Rick Olin, Vice President and General Counsel.

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

Thank you, Rick. 2011 was an excellent year for TechTarget. For the year, we grew online revenue by 12%, adjusted EBITDA by 28%, and increased our EBITDA margin to 24% from 21%. Our Activity Intelligence Dashboard is a game-changing innovation that has been well received by our customers, and our International business grew to 14% of overall revenues, up from 5% just 2 years ago when we started implementing our direct strategy. While this progress was made in the midst of a very challenging year for the IT industry, which makes these accomplishments especially gratifying. On another note, we announced today that our CFO, Jeff Wakely, is resigning to pursue an opportunity at a private company. He's going to stay through March 15 to assist in preparation for our annual 10-K report. I'd like to thank Jeff for his contributions to TechTarget and wish him well in his future endeavors. I will now open up the call for questions.

[Operator Instructions] Your first question comes from the line of Sameet Sinha of B. Riley.

I just want to get a sense of what are you seeing as some of the key drivers. Might be splitting hairs but it seemed like your online revenues, you're expecting a slight acceleration from Q1. Is that primarily because of the Nurture & Notify pricing? And how much are you incorporating into that? And I have a couple of follow-up questions.

Yes, so there's -- Sameet, there's multiple drivers. One clearly is the Activity Intelligence Platform, the further adoption of the dashboard, the new Nurture & Notify product that does -- that we are charging for, so we expect contribution from that. That's a brand new product. So that's more -- a little bit back-weighted. And then we just continue to expect to see growing share from our international expansion, and we expect that -- we definitely saw some weakness from smaller customers through Q3 and Q4, and we expect that to be temporary. So we think that we can see some growth from those folks as well.

Okay. And trying to get to your 20%, 27% EBITDA margin guidance for 2012, what line items do you expect to see leverage in? And is that in OpEx side or the cost of goods?

Could you -- I didn't catch the first part of that, Sameet, what is that you say?

The 27% EBITDA margin guidance for full year 2012?

Yes.

Where do you expect to see leverage in your P&L?

Well, it hits in really all areas but it's mostly on the OpEx side, right? So as the -- as our top line grows, right? As you know, our cost base is fairly fixed around people, right? So as our top line grows, that incremental revenue falls to the bottom line at a fairly quick pace, and it hits an inflection point as we get higher. So you see a lot of leverage in the OpEx side of the business, specifically around the product development and G&A lines that add a lot of leverage in.

Okay. Final question for me. What's happening in the events schedule, which is causing the drop in Q1?

Yes, so the events schedule, that's why we guide on an annual basis. On an events basis, the timing is different each year, each quarter. So it's just that simply just number of events that we're running this Q1 versus last Q1. But over the course of 2012, we expect events to be relatively flat with 2011.

Okay. And do you see a similar demand for -- I mean, considering the weakness in the SMB, that type of business, are you seeing a similar demand for events?

Yes, one of the places where we're doing well with events is with our custom event group, which tends to -- the customers tend to be the larger customers. What we're seeing from larger customers, although there -- the largest IT vendors aren't seeing much revenue growth. If you look at IBM, HP, Dell, Microsoft, Symantec, Oracle, Cisco, those types of companies are all reporting single-digit revenue growth. But they tend to maintain their marketing budgets through all economic periods. So the biggest benefit we got from that is as they continued to shift their budgets from off-line to online, we continued to benefit from that, and we grew with that group of customers double digits in Q4. But there are also customers that purchase our custom products, and a lot of our custom programs have custom live events coupled with online programs.

Your next question comes from the line of James Dobson of Benchmark.

I have 2 questions. First, it says that you sort of project no improvement in the macro economy in 2012. It seems like to me there's some slight improvement in the macro economy. Is there something specific impacting IT spending? That's my first question.

Yes, well I think that the -- there's a couple of different drivers going on. So there's the overall economy, then there's CapEx spending. And what we're seeing -- I think customers, I think the IT end users are being very cautious with their CapEx spending, and that's where you see kind of single-digit revenue growth from a lot of the largest IT vendors. And then there's another place where you need to go, and what really affects us is ad budgets, not necessarily IT spending. So IT spending could be up a little bit, but if the IT vendors don't have the confidence to increase their ad budgets, that's the environment that we're talking about that affects us most directly. And what we're hearing from -- and we have a lot of -- obviously, lots of -- this time of year, lots of conversations with our customers. And what we're hearing from most of our customers that ad budgets they're expecting to be relatively flat in 2012.

Okay. And is there any line item in particular based on sort of first quarter guidance that expenses will increase? It looks like there might be a decent jump in?

Any specific line item?

Yes, in regards to either G&A, sales and marketing, tax. I mean, where is the significant increase in the first quarter?

When you say increase, compared to what, compared to Q1 last year?

Yes, compared to Q1 last year, and even sort of just compared to how you've been doing as sort of a percent of total revenue base.

Yes, so the increases are happening mainly in the sales and marketing side around -- as we -- from last year to Q1 of this year, right, we've grown headcount. And most of that headcount has been focused in the sales and marketing area and around the international operations. So that's where the expenses are growing. It's -- we're investing as we expand internationally in additional people and investing in additional sales headcount.

And the other increase, of course, as we flip calendar years, we -- over 70% of our cost is labor, and we went through a normal salary review cycle effective January 1. So that is probably the biggest chunk of dollars that you're seeing, and that would be spread out through multiple different line items in the P&L.

Your next question comes from the line of Colin Sebastian of R.W. Baird.

This is Gregor Schauer. I'm asking on behalf of Colin. I was hoping maybe we could get a little more insight into some of the revenue mix in the quarter. So you guys reported that online revenue was up 7%, and international also had a nice increase that grew from 6% of revenue to 14%, which is roughly 75% growth. And by that math, it looks like almost all the growth year-over-year came from international. And then within the U.S., good growth or strong growth from your top 12 IT vendors, you had growth in the mid-teens, and you mentioned that you had some weakness in the small to the medium-sized. So I mean backing into that, it looks like there was a decline in the small and the medium-sized segment. Are you expecting that? But I think you also mentioned you think that's temporary. Are you seeing any signs now that there's a resumption in spending by those -- for those segments? Or what else gives you confidence that that -- are going to turn around for that segment?

Yes. So first of all we didn't see a decline by any of those customer segments in Q4. So from the medium-sized customers and the smaller customers, we saw a single-digit growth. So we didn't see a decline there because we also have, of course, some medium-sized customers and smaller customers outside the U.S., right? So that's where we're seeing extremely rapid growth outside the U.S. In terms of the question about why we believe it's temporary, is that what we've seen over the past 4 years with the economy, there's been a lot of fits and starts depending on what's going on with the macro and what news reports there are and whatever different crisis there is. That tends to affect people's confidence on their ad spend, and ad spend is one of the few discretionary levers that companies have, and so we've seen a lot of stops and starts with it. And so we haven't seen anything fundamental where there's been a pullback that we think that this is a new trend of an ongoing spending level. We just think that we're -- witnessed a blip that was -- that we saw in the fall where there was a lot of bad news out there and customers were very cautious. So that's kind of just a continuation of the very cautious environment with lots of fits and starts that we've been experiencing for the past 4 years.

At this time, there are no further questions in queue. Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a wonderful day.