KnowledgeStorm deal caps active year for TechTarget

By Published on .

TechTarget's $58 million acquisition of KnowledgeStorm last month culminated a busy year for the IT media company.

In the last several months Needham, Mass.-based TechTarget has moved aggressively on several fronts:

  • The company went public in May, with an initial share price of $13. The stock, which reached a 52-week high of $18.69, was trading around $14 at press time.

  • It continued to expand its vertical offerings, increasing its number of technology-specific Web sites to 46. Recent additions include, and In April TechTarget added retail and construction categories to its, a Web site that provides small and midsize businesses with purchasing information and access to trial software.

  • In June TechTarget acquired, a portfolio of Internet content sites that provide product reviews, price comparisons and user forums for mobile technology products, and Ajaxian, a Web site and conference aimed at developers of Ajax applications.

The acquisition of KnowledgeStorm, a search resource for IT professionals designed to generate qualified leads, is the biggest in TechTarget's nine-year history. The deal joined two of the biggest players in IT lead generation.

"It's a peanut butter-and-jelly combination," said Tolman Geffs, a managing director at media investment bank Jordan, Edmiston Group, which represented KnowledgeStorm in the transaction. "TechTarget is the largest company in what you call `push' lead generation, and KnowledgeStorm is the best in `pull' lead generation."

Geffs added that TechTarget's scale will make KnowledgeStorm "even more effective in delivering ROI needs" to buyers of IT products.

The deal for KnowledgeStorm is similar in scope to TechTarget's $40 million acquisition of Bitpipe, an online distributor of white papers, Webcasts and other services, in 2004.

The KnowledgeStorm deal should add some marketing clout to TechTarget's offerings. According to TechTarget, KnowledgeStorm generates about 3.5 million visits per month from IT professionals searching for information and has about 700 active advertisers, the majority of which are new to TechTarget.

The deal "gives scale to our audience and a larger number of leads we can deliver to advertisers," said Greg Strakosch, CEO of TechTarget, adding that the company continues to be "opportunistic" regarding additional acquisitions. "We have $50 million in cash and a market capitalization of $600 million."

Strakosch said preliminary internal projections show that KnowledgeStorm will contribute revenue of $12 million to $14 million and adjusted EBITDA of $4.5 million to $5.5 million during the first 12 months post-integration.

Market research firm Outsell estimates that KnowledgeStorm's overall revenue was $17.7 million in 2006.

TechTarget's third quarter revenue rose 15% to $23.3 million, from $20.3 million in the year-earlier period. Online revenue, which represented 63% of total revenue, increased 17% to $14.7 million, from $12.6 million a year earlier.

Net income for the quarter fell 3% to $1.54 million, from $1.59 million in the year-earlier period. The decrease was primarily due to an increase in stock-based compensation expenses, which rose to $1.65 million from $91,000 a year earlier.

Chuck Richard, VP-lead analyst at Outsell, said the latest revenue figures suggest TechTarget's growth rates are coming down from their extreme highs in the last few years. He pointed to a 44% growth rate in 2004 and 43% in 2005. The growth rate was 18% in 2006 and 18% as well through the first nine months of this year, he said.

"It's obviously slowing down, and the KnowledgeStorm acquisition provides new sources of revenue," he said. "TechTarget is in effect buying new revenue."

Most Popular
In this article: