Forrester Research Reports 2022 Fourth-Quarter And Full-Year Financial Results

Transition to the new Forrester Decisions platform on track

CAMBRIDGE, Mass.–(BUSINESS WIRE)–Forrester Research, Inc. (Nasdaq: FORR) today announced its 2022 fourth-quarter and full-year financial results.

Commenting on the results, George F. Colony, Forrester’s CEO and chairman stated, “In 2022, we posted strong growth on both the top and bottom lines, with revenue increasing 9% and adjusted EPS increasing 18%. We are also pleased to report that Forrester Decisions now constitutes approximately one-third of our contract value. Forrester Decisions’ fast growth and strong client and wallet retention established the product as the research power platform that can lead the company’s effort to double CV in the next five years.

“That said, our product transition remains complex, as evidenced in our 2022 results and in our 2023 guidance. Our key metrics, including both overall client and wallet retention, will remain under pressure in the coming quarters given the churn in our legacy business as well as the uncertainty posed by the macroeconomic environment. We finished the year with CV increasing 3% and both client and wallet retention down from the previous quarter. These metrics are likely to remain under pressure in the coming quarters, specifically in the first half of 2023.

“To summarize, while we anticipate continued headwinds in the first half of 2023, we have the right team in place to lead us through this pivotal moment and create a platform from which we can accelerate growth in 2024 and beyond.”

Fourth-Quarter Financial Performance

Total revenues were $136.9 million for the fourth quarter of 2022, compared with $133.7 million for the fourth quarter of 2021.

On a GAAP basis, net loss was $1.6 million, or $0.09 per diluted share, for the fourth quarter of 2022, compared with net income of $8.0 million, or $0.41 per diluted share, for the same period in 2021.

On an adjusted basis, net income was $8.5 million, or $0.45 per diluted share, for the fourth quarter of 2022, which reflects an adjusted effective tax rate of 30%. Adjusted net income excludes stock-based compensation of $3.5 million, amortization of acquisition-related intangible assets of $3.1 million, restructuring costs of $9.3 million, and losses on investments of $0.1 million. This compares with an adjusted net income of $11.3 million, or $0.59 per diluted share, for the same period in 2021, which reflects an adjusted tax rate of 31%. Adjusted net income for the fourth quarter of 2021 excludes stock-based compensation of $2.7 million and amortization of acquisition-related intangible assets of $3.6 million.

Year Ended December 31, 2022, Financial Performance

Total revenues were $537.8 million, compared with $494.3 million for the same period in 2021.

On a GAAP basis, net income was $21.8 million, or $1.14 per diluted share, for 2022, compared with net income of $24.8 million, or $1.28 per diluted share, for 2021.

On an adjusted basis, net income was $47.2 million, or $2.46 per diluted share, for 2022, which reflects an adjusted effective tax rate of 30%. Adjusted net income excludes stock-based compensation of $14.5 million, amortization of acquisition-related intangible assets of $13.2 million, restructuring costs of $9.3 million, and gains on investments of $0.3 million. This compares with an adjusted net income of $40.5 million, or $2.09 per diluted share, for 2021, which reflects an adjusted tax rate of 31%. Adjusted net income for 2021 excludes stock-based compensation of $10.1 million, amortization of acquisition-related intangible assets of $15.1 million, and integration costs of $0.3 million.

Additional details regarding key metrics can be found in the investor presentation on the Company’s Investor website.

A reconciliation of GAAP results to adjusted results may be found in the attached financial tables.

2023 Guidance

Forrester is providing full-year 2023 financial guidance as follows:

Full-Year 2023 (GAAP):

Total revenues of approximately $518.0 million to $538.0 million, or a decline of 4% to flat versus the prior year

Operating margin of approximately 6.0% to 7.0%

Interest expense of approximately $2.5 million

An effective tax rate of 31%

Diluted earnings per share of approximately $1.02 to $1.22

Full-Year 2023 (Adjusted):

Adjusted financial guidance for full-year 2023 excludes stock-based compensation expense of $18.0 million to $19.0 million, amortization of acquisition-related intangible assets of approximately $12.0 million, restructuring costs of $1.5 million to $2.0 million, and any investment gains or losses.

Adjusted operating margin of approximately 12.0% to 13.0%

Adjusted effective tax rate of 29%

Adjusted diluted earnings per share of approximately $2.25 to $2.45

About Forrester

Forrester (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We help leaders across technology, marketing, customer experience, digital, product, and sales functions use customer obsession to accelerate growth. Through Forrester’s proprietary research, consulting, and events, leaders from around the globe are empowered to be bold at work — to navigate change and put their customers at the center of their leadership, strategy, and operations. Our unique insights are grounded in annual surveys of more than 700,000 consumers, business leaders, and technology leaders worldwide; rigorous and objective research methodologies, including Forrester Wave™ evaluations; over 100 million real-time feedback votes; and the shared wisdom of our clients. To learn more, visit Forrester.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, Forrester’s financial guidance for the full-year 2023 and statements about the performance of Forrester Decisions, Forrester’s ability to double contract value, and Forrester’s future financial performance and financial condition. These statements are based on Forrester’s current plans and expectations and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual future activities and results to differ include, among others, Forrester’s ability to retain and enrich memberships for its research products and services; Forrester’s ability to fulfill existing or generate new consulting engagements and advisory services; technology spending; the risks and challenges inherent in international business activities; the impact of health epidemics, including COVID-19, on Forrester’s business; Forrester’s ability to offer new products and services; Forrester’s dependence on key personnel; Forrester’s ability to attract and retain professional staff; Forrester’s ability to respond to business and economic conditions and market trends; the impact of Forrester’s outstanding debt obligations; competition and industry consolidation; possible variations in Forrester’s quarterly operating results; concentration of ownership of Forrester; the possibility of network disruptions and security breaches; any failure to enforce and protect Forrester’s intellectual property rights; compliance with privacy laws; taxation risks; any weakness in Forrester’s system of internal controls; and the amount and timing of the repurchase of Forrester stock. Forrester undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information, please refer to Forrester’s reports and filings with the Securities and Exchange Commission.

The consolidated statements of operations and the table of key financial data are attached.

© 2023, Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc.

Forrester Research, Inc.

Consolidated Statements of Income

(Unaudited, in thousands, except per-share data)

Three Months Ended

 

Year Ended

December 31,

 

December 31,

2022

 

2021

 

2022

 

2021

 

Revenues:

Research

$

92,188

 

$

89,494

 

$

354,453

 

$

325,340

 

Consulting

 

37,512

 

 

39,211

 

 

152,587

 

 

156,114

 

Events

 

7,191

 

 

5,023

 

 

30,747

 

 

12,861

 

Total revenues

 

136,891

 

 

133,728

 

 

537,787

 

 

494,315

 

Operating expenses:

Cost of services and fulfillment

 

56,814

 

 

52,244

 

 

223,773

 

 

201,815

 

Selling and marketing

 

48,691

 

 

47,774

 

 

181,940

 

 

170,949

 

General and administrative

 

19,758

 

 

16,161

 

 

67,655

 

 

58,056

 

Depreciation

 

2,277

 

 

2,503

 

 

9,269

 

 

9,390

 

Amortization of intangible assets

 

3,093

 

 

3,562

 

 

13,161

 

 

15,129

 

Integration costs

 

 

 

 

 

 

 

334

 

Restructuring costs

 

9,335

 

 

 

 

9,335

 

 

 

Total operating expenses

 

139,968

 

 

122,244

 

 

505,133

 

 

455,673

 

Income (loss) from operations

 

(3,077

)

 

11,484

 

 

32,654

 

 

38,642

 

Interest expense

 

(729

)

 

(971

)

 

(2,461

)

 

(4,222

)

Other income (expense), net

 

30

 

 

(363

)

 

222

 

 

(1,229

)

Gains (losses) on investments, net

 

(117

)

 

 

 

309

 

 

 

Income (loss) before income taxes

 

(3,893

)

 

10,150

 

 

30,724

 

 

33,191

 

Income tax expense (benefit)

 

(2,263

)

 

2,127

 

 

8,918

 

 

8,347

 

Net income (loss)

$

(1,630

)

$

8,023

 

$

21,806

 

$

24,844

 

 

Basic income (loss) per common share

$

(0.09

)

$

0.42

 

$

1.15

 

$

1.30

 

Diluted income (loss) per common share

$

(0.09

)

$

0.41

 

$

1.14

 

$

1.28

 

Basic weighted average common shares outstanding

 

19,051

 

 

19,118

 

 

18,967

 

 

19,110

 

Diluted weighted average common shares outstanding

 

19,051

 

 

19,376

 

 

19,172

 

 

19,357

 

 

Adjusted data (1):

Income (loss) from operations – GAAP

$

(3,077

)

$

11,484

 

$

32,654

 

$

38,642

 

Amortization of intangible assets

 

3,093

 

 

3,562

 

 

13,161

 

 

15,129

 

Integration costs

 

 

 

 

 

 

 

334

 

Restructuring costs

 

9,335

 

 

 

 

9,335

 

 

 

Stock-based compensation included in the

following expense categories:

Cost of services and fulfillment

 

2,038

 

 

1,668

 

 

8,435

 

 

6,057

 

Selling and marketing

 

646

 

 

478

 

 

2,774

 

 

1,698

 

General and administrative

 

823

 

 

573

 

 

3,334

 

 

2,315

 

Adjusted income from operations

$

12,858

 

$

17,765

 

$

69,693

 

$

64,175

 

Three Months Ended

 

Year Ended

December 31,

 

December 31,

2022

 

2021

 

2022

 

2021

Amount

 

Per Share

 

Amount

 

Per Share

 

Amount

 

Per Share

 

Amount

 

Per Share

Net income (loss) – GAAP

$

(1,630

)

$

(0.09

)

$

8,023

 

$

0.41

 

$

21,806

 

$

1.14

 

$

24,844

 

$

1.28

 

Amortization of intangible assets

 

3,093

 

 

0.16

 

 

3,562

 

 

0.19

 

 

13,161

 

 

0.68

 

 

15,129

 

 

0.78

 

Integration costs

 

 

 

 

 

 

 

 

 

 

 

 

 

334

 

 

0.02

 

Restructuring costs

 

9,335

 

 

0.49

 

 

 

 

 

 

9,335

 

 

0.49

 

 

 

 

 

Stock-based compensation

 

3,507

 

 

0.18

 

 

2,719

 

 

0.14

 

 

14,543

 

 

0.76

 

 

10,070

 

 

0.52

 

(Gains) losses on investments

 

117

 

 

0.01

 

 

 

 

 

 

(309

)

 

(0.02

)

 

 

 

 

Tax effects of items above (2)

 

(4,261

)

 

(0.22

)

 

(1,831

)

 

(0.09

)

 

(9,748

)

 

(0.51

)

 

(7,107

)

 

(0.37

)

Adjustment to tax expense for adjusted tax rate (3)

 

(1,649

)

 

(0.08

)

 

(1,135

)

 

(0.06

)

 

(1,570

)

 

(0.08

)

 

(2,750

)

 

(0.14

)

Adjusted net income

$

8,512

 

 

0.45

 

$

11,338

 

$

0.59

 

$

47,218

 

 

2.46

 

$

40,520

 

$

2.09

 

Diluted weighted average shares outstanding

 

19,110

 

 

19,376

 

 

19,172

 

 

19,357

 

(1) Forrester believes that adjusted financial results provide investors with consistent and comparable information to aid in the understanding of Forrester’s ongoing business and are also used by Forrester in making compensation decisions. Our adjusted presentation excludes amortization of acquisition-related intangible assets, stock-based compensation, integration costs, restructuring costs, and net gains or losses from investments, as well as their related tax effects. We also utilized an assumed tax rate of 30% in 2022 and 31% in 2021, which excludes items such as any release of reserves for uncertain tax positions established in prior years, the settlement of prior-year tax audits, and the effect of any adjustments related to the filing of prior-year tax returns. The adjusted data does not purport to be prepared in accordance with Accounting Principles Generally Accepted in the United States.

(2) The tax effect of adjusting items is based on the accounting treatment and rate for the jurisdiction of each item.

(3) To compute adjusted net income, we apply an adjusted effective tax rate of 30% in 2022 and 31% in 2021.

Forrester Research, Inc.

Key Financial Data

(Unaudited, dollars in thousands)

December 31,

 

December 31,

2022

 

2021

Balance sheet data:

Cash, cash equivalents, and marketable investments

$

123,317

 

$

134,278

 

Accounts receivable, net

$

73,345

 

$

86,965

 

Deferred revenue

$

178,021

 

$

213,696

 

Debt outstanding

$

50,000

 

$

75,000

 

 

Year Ended

December 31,

2022

 

2021

Cash flow data:

Net cash provided by operating activities

$

39,425

 

$

107,067

 

Purchases of property and equipment

$

(5,663

)

$

(10,745

)

Repayments of debt

$

(25,000

)

$

(34,375

)

Repurchases of common stock

$

(15,112

)

$

(20,066

)

 

As of

December 31,

2022

 

2021

Headcount:

Total headcount

 

2,033

 

 

1,781

 

Sales force

 

709

 

 

637

 

 

Contacts

Tyson Seely

Vice President, Investor Relations

Forrester Research, Inc.

+1 617-613-6805

tseely@forrester.com

Shweta Agarwal

Senior Director, Public Relations

Forrester Research, Inc.

+1 617-613-6805

sagarwal@forrester.com