I think there’s some pricing capabilities that we have on our technology. I also think some of the new products that we’ll be launching as part of our road map with Priority Engine, some extensions of what we’re doing, and having some of these regions that may have been consolidated into a global spend on North America. If the market starts picking up, probably later in the second half, that there’s more budget being allocated to field marketing. We mentioned in the last two earnings calls, whenever we see a pullback, budgets get centralized. They tend to take them out of the region. They want to centralize them typically in the U.S., then they allocate some dollars on that. Well, the reason is they have numbers to hit to, they have sales, they have field marketers down there.
So between yes, increasing customer count, some pricing and new product solutions, that’s the approach that we see for 2024, and more importantly to 2025 and beyond.
Operator: Next question is from the line of Josh Reilly with Needham.
Rob Morelli: This is Rob Morelli on for Josh. Regarding the acquisition of Informa, 2025 pro forma model assumes about 500 basis points of EBITDA year-over-year in the combined company, assuming linear progression [Technical Difficulty] margin. Should we expect the margin progression is linear over the next few years? Can you just touch on some of the key items that will drive the anticipated margin improvement?
Mike Cotoia: Okay. So you were a little broken up on that. I think you were talking about the margin expansion over the years. And what I would say is TechTarget had a really good history of making sure that we manage our margins. And when you have a $500 million, if you look at the numbers, it’s a pro forma $500 million going into 2025. And the ability to take on revenue growth, which we have shown improvement over the history of our time, we have a greater than 50% incremental EBITDA margin. A lot of that revenue ends up all in the bottom line, so we’ll be able to expand the margins on that side. The real key on this is a lot of growth through cross-selling and upselling our platforms into new customers. Also, if you take a look at the two businesses, when they combine, there are over 8,000 customers that we have an opportunity to both cross-sell and upsell the solutions that we have respectively to get a deeper footprint into existing customers.
In terms of the Omdia business, which I can’t really comment on, that’s a new product. But it really does align with our strategy that we’re talking about, getting into our customers earlier to help them with their end-to-end go-to-market strategy. So pure revenue growth, driving 50%-plus incremental EBITDA margins. If you do the math, over the 5 years, you get to the 35% EBITDA margin. That won’t be in year 1. That gets over a period of several years to the growth and the opportunities that we have.
Rob Morelli: Got it. That’s helpful. And then regarding some of the products coming from Informa, Industry Dive bring nice diversification from an industry perspective, while Omdia is solely focused on the tech industry. Does it make sense to bring some of Industry Dive’s 20 verticals into the business model of Omdia given it’s a pure subscription and expand their business coverage beyond tech verticals?
Mike Cotoia: Yes, I cannot comment on the Informa business and each of the divisions on it. What I can comment on is what our strategy has been, and it’s been publicly announced, about getting into adjacent markets, making sure we have our content enablement services, making sure we have an end-to-end solution and having the platform to reach across all the opportunities, including adjacent markets. So that being said, that’s been a vision that we’ve stated pretty clearly around permission-based audience, first-party insights and a comprehensive end-to-end go-to-market strategy. And so when we have the combination, when that’s finalized and signed, we’ll be able to dive into that a little bit more with the public.
Operator: Next question is from the line of Andrew Marok with Raymond James.
Andrew Marok: I wanted to dig in on the customer count a little bit. So that decline, it seems like it accelerated in 4Q. It was down 100 in 3Q, down about 300 in 4Q. What do you think is the floor here? And I guess, to the extent that you know, how much of the decline over the course of ’23 is kind of involuntary, like companies going out of business versus voluntary cutbacks?
Mike Cotoia: So I would say the decline, if you look at the overall decline throughout the year, you had a lot of customers that may have signed annual deals in 2022. And it was the second half of 2022, really in Q3 when we started seeing some of the decline. So you didn’t have a lot of folks, a lot of organizations sign up for annual deals going into Q4 of 2022. That’s when the market started to send signals that it was slowing down. So that’s probably one of the reasons why Q4 was a little bit higher. People that signed annual deals up to May, June, July, that expired. They were dealing with the macro. They pulled back. In terms of voluntary or involuntary, you got to understand, there’s a couple of things. We’re less than 1 year out from the Silicon Valley Bank collapse, and they are 100% focused on technology companies.
So some of those companies went away. A lot of those companies are still in business but they are navigating through the environment, and they have to make sure they are managing their costs very closely. So if the market picks up, as we talked about, and the demand picks up, which it will, it’s not a matter of if, it’s a matter of when, a lot of those companies will come back. Also, during the customer count, and I mentioned this earlier, you might have an organization that’s spanning in North America, EMEA and APAC. And the APAC region may have cut back. And EMEA may have cut back but North America was still going. That would decrease our customer count based on those regionals that we treat as separate businesses because we’re working on separate contracts and agreements.
