Joshua Reilly: The Q1 guidance implies below normal seasonal trends that typically include a sequential decline in revenue of roughly 10%. What does this imply for the normal seasonal pattern for the business in 2023, where Q2 and Q4 are typically your strongest quarters? Do you still expect that dynamic to play out in 2023 just off of an overall lower revenue base, implying that revenue should improve sequentially in Q2?
Michael Cotoia: Yes. Good question, Joshua. So based on what we see right now, the pattern should stay pretty consistent on that. In Q1, as you see, it’s lower than our normal seasonality. And that’s because what we talked about earlier, the end of December and out of the gates in Jan, we’re just seeing a lot of customers really trying to navigate their budgets and their cost cutting. And obviously, that’s account of some of massive layoffs that we’ve seen. But we expect Q2 to grow. Q3 would be relatively consistent with Q2, maybe up slightly. And then Q4 would be our biggest quarter. And when you take a look at that and you compare it even to last year’s comps, we still believe that pattern will shake out for 2023.
Joshua Reilly: Got it. That’s super helpful. And then if you look at the customer additions of 539 in 2022, that’s a really pretty strong impressive number. Given the lower outlook here for 2023, is the slower spending include these new customers that you just brought on in the last year, spending less as well? Or can you give us any color on either the profile of the customers that you added in terms of technology vertical or size? And how are they going to spend in terms of your expectations this year?
Michael Cotoia: Yes. I think in terms of the new customers that we added, it spreads across all of our customer segmentations. So a lot of small customers and some midsized customers and then add on too a few of the larger customers as well. And we’ve added those customers throughout 2022, but they’re also going to be going through — we’re baking into everything of our guidance today of what we know and what we’re seeing in the behavior in the market. So those customers will also have decisions to make in terms of budget coming out of the gate, managing expenses and then identifying where they’re wide on pipeline. And we believe that the — a lot of those customers will stay with us. Some will grow, some may reduce their spend, some may delay their spend.
But I think the one common theme that we’ve seen even in past downturns is when you identify the current pipeline within customers not progressing and trying to do it with their own data or leverage what they currently have, there is a fight back to quality. When that happens, we’re not sure. I mean this market has changed so much in the last 45 days, and we continue to see announcements every day in terms of massive layoffs. But that’s what we expect to see going into 2023.
Operator: Our next question is from Bryan Bergin from Cowen.
Zack Ajzenman: Zack Ajzenman on for Bryan. First question on guidance and visibility. Just curious on the macro considerations that you’re embedding here for the calendar ’23 outlook. And what’s the underlying Priority Engine growth assumption?
Michael Cotoia: I think the macro considerations that we’re taking is today’s reality. Like we’re taking a look at what we know right now, what we’ve seen in the last 30 days or 45 days, and that’s what we’ve baked into our guidance. As I mentioned, it’s moved so fast in the last 45 days. I mean you can see the announcements, you can see the depth of cuts, and you can see the breadth of cuts. So we can only predict based on what we know and what we’re experiencing today. And in terms of Priority Engine, I expect that to slow down this year because that’s a commitment to long-term contracts. We’ve seen that in the past where people might slow it down. We might see a deceleration in revenue for the first couple of quarters on that.
And when things turn around, again, what we’re doing not only on the business side, on the product development side, we expect to see on the booking side a pickup after we navigate through that. So I think you’re going to see it decline a little bit during the year. We’ve seen that with the behavior of our customers at the end of December and the beginning of January. And that’s really what was all based on what we are dealing with right now and today’s customer behavior.
Zack Ajzenman: Understood. And then a follow-up on the same customer sales metric. It stood at 100% in 2022. So it was about flattish. Can you give us a sense of where this metric stood after the first 9 months of the year? Just trying to get a sense of what changed in 4Q as it relates to the same customer sales metric. And what’s the assumption embedded for same customer sales in the 2023 outlook?
Michael Cotoia: So we only disclose that on an annual basis. And that’s when we started providing these numbers 2 years ago or 3 years ago, it was on the annual basis. So we don’t want to disclose on the quarterly basis. But I would say that there’ll be some pressure on that number in 2023. We monitor it. We don’t disclose it each quarter, but I would just say there’ll be a little bit of pressure just based on today’s current customer behavior and their pullback on short-term budgets.
Operator: Our next question is from Bhavin Shah from Deutsche Bank.
Bhavin Shah: Just one quick one in terms of the different products that you guys have. And completely understanding that brand marketing can shift pretty quickly depending on the macro. But maybe what are some of the trends that you’re seeing in solutions such as Priority Engine? Are customers being proactive here and maybe reducing spend as they’re reducing head count? Or is that something that they might look to do upon renewal?
Michael Cotoia: Bhavin, I think you cut out for a little bit. But in terms of — you talked about the brand piece and that just turning it on the Priority Engine. We’re seeing some people delay their renewals because they don’t want to commit to the annual or multiyear deals. We’re seeing a shift on some of those, on the product shift from Priority Engine to some of our qualified sales opportunities and HQL products because, again, customers will look at it. They have a lot of pressure to land the current pipeline that they have in place. They want as much information to help land those deals, identify new deals and close them over the next 30 to 45 days. So we’ll continue to see some of those shifts. I mentioned earlier, we’re actually speaking to a couple of customers and they said, listen, we’re putting a lot of stuff on hold right now.
We’ll be back in a quarter or we’ll back in 2 quarters, and we’re looking at appointment setting because we need to see some short-term numbers. You can turn on that and in terms of the — that approach is, you really negatively impact your pipeline, and you have to be looking at this more than over a 30-day or a 90-day period. So customers might reallocate their budget. We have a lot of customers that want to stay with us in terms of buying the content marketing, content syndication, QSOs. But you will see a shift over the next quarter, possibly 2 in terms of where budgets get tight or reduced, they may reallocate to more of this short-term gratification, I need to be in front of a customer or a prospect ASAP. But that — we’ve seen this before, and the pendulum swings back to flight back to quality.
I need to get in front of the customers. Where are my customers when they’re not with me? The research on the TechTarget sites and communities that our editorial team produces and our analyst team produces, and that will come back in our prediction.
Bhavin Shah: Got it. Super helpful. Just one quick follow-up. In terms of — just some of what you just mentioned in terms of your content on your websites, what are you seeing in terms of traffic trends or change in registered users more real time? Have you seen a decline as maybe enterprises are less apt to kind of make IT purchases? Or are you seeing that remain stable?
Michael Cotoia: Actually — it’s actually the opposite. It’s been very positive. So our organic traffic increased 50% year-over-year. So that tells me that our customers, their prospects and their customers are going to our sites to get information. Now these deals might get extended. It may get elongated as well, just like we were seeing with our customers. But they’re actively researching because they know they have to make the right technology decision at the right time, and they’re leveraging our sites. And that’s also been shown in our Google Search rankings. We have 1.2 million search terms that rank 1 on Page 1 of Google. So we’re seeing the activity there. And what we’ve really said to our customers are, your prospects and your existing customers research with TechTarget. And that is proven based on the organic growth in traffic of 50% and 1.2 million key terms that are ranked on Page 1 of Google organically.
