Forrester Research Reports 2023 Third-Quarter Financial Results

CAMBRIDGE, Mass.–(BUSINESS WIRE)–Forrester Research, Inc. (Nasdaq: FORR) today announced financial results for the third quarter ended September 30, 2023, with flat contract value (CV) at $349.4 million, compared with the prior year.


“While our contract value remained flat this quarter due to persistent headwinds, we now have approximately $200 million of CV on the Forrester Decisions platform and remain on track to convert two-thirds of our CV to Forrester Decisions by the end of the year,” said CEO and Chairman George F. Colony. “We continue to improve the Forrester Decisions platform. These enhancements include the development of Izola, our generative AI system, and the expansion of client outcomes. Izola will enable clients to find answers faster, and outcomes will better align Forrester’s value with client challenges. We remain resolute in our pursuit of growing CV and accelerating the ongoing journey to create a high-performance sales culture.”

Third-Quarter Consolidated Results

Total revenues for the third quarter of 2023 were $113.4 million, compared with $127.7 million for the comparable quarter in 2022.

On a GAAP basis, net income was $2.5 million, or $0.13 per diluted share, for the third quarter of 2023, compared with a net income of $5.4 million, or $0.28 per diluted share, for the same period in 2022.

On an adjusted basis, net income was $8.6 million, or $0.44 per diluted share, for the third quarter of 2023, reflecting an adjusted effective tax rate of 29%. Adjusted net income excludes stock-based compensation of $4.1 million and amortization of acquisition-related intangible assets of $3.0 million. This compares with an adjusted net income of $10.9 million, or $0.57 per diluted share, for the same period in 2022, which reflects an adjusted tax rate of 30%. Adjusted net income for the third quarter of 2022 excludes stock-based compensation of $3.9 million and amortization of acquisition-related intangible assets of $3.4 million.

Forrester is providing updated guidance for 2023 as follows:

Full-Year 2023 (GAAP):

Total revenues of approximately $475 million to $485 million

Operating margin of approximately 1.2% to 2.2%

Interest expense of approximately $3.1 million

An effective tax rate of approximately 50%

Earnings per share of approximately $0.10 to $0.30

Full-Year 2023 (Adjusted):

Adjusted financial guidance for the full-year 2023 excludes stock-based compensation expense of $15.0 million to $15.5 million, amortization of acquisition-related intangible assets of approximately $12.0 million, restructuring costs of approximately $12.2 million, a legal settlement of $4.8 million, and any investment gains or losses.

Adjusted operating margin of approximately 10.5% to 11.5%

Adjusted effective tax rate of approximately 29%

Adjusted diluted earnings per share of approximately $1.80 to $2.00

About Forrester

Forrester (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We help leaders across technology, customer experience, digital, marketing, sales, and product 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 sales force, 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, including the migration of its existing clients into its Forrester Decisions portfolio of 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

Nine Months Ended

September 30,

September 30,

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

Research

$

80,606

 

$

87,038

 

$

249,211

 

$

262,265

 

Consulting

 

28,237

 

 

37,382

 

 

89,957

 

 

115,075

 

Events

 

4,588

 

 

3,259

 

 

23,522

 

 

23,556

 

Total revenues

 

113,431

 

 

127,679

 

 

362,690

 

 

400,896

 

Operating expenses:

Cost of services and fulfillment

 

47,978

 

 

52,717

 

 

151,884

 

 

166,959

 

Selling and marketing

 

39,967

 

 

44,231

 

 

123,080

 

 

133,249

 

General and administrative

 

15,108

 

 

16,448

 

 

51,650

 

 

47,897

 

Depreciation

 

2,262

 

 

2,374

 

 

6,557

 

 

6,992

 

Amortization of intangible assets

 

3,041

 

 

3,352

 

 

9,175

 

 

10,068

 

Restructuring costs

 

19

 

 

 

 

12,140

 

 

 

Total operating expenses

 

108,375

 

 

119,122

 

 

354,486

 

 

365,165

 

Income from operations

 

5,056

 

 

8,557

 

 

8,204

 

 

35,731

 

Interest expense

 

(763

)

 

(584

)

 

(2,286

)

 

(1,732

)

Other income, net

 

568

 

 

346

 

 

1,632

 

 

192

 

Gains on investments

 

 

 

 

 

 

 

426

 

Income before income taxes

 

4,861

 

 

8,319

 

 

7,550

 

 

34,617

 

Income tax expense

 

2,377

 

 

2,905

 

 

3,837

 

 

11,181

 

Net income

$

2,484

 

$

5,414

 

$

3,713

 

$

23,436

 

 

Basic income per common share

$

0.13

 

$

0.29

 

$

0.19

 

$

1.24

 

Diluted income per common share

$

0.13

 

$

0.28

 

$

0.19

 

$

1.22

 

Basic weighted average shares outstanding

 

19,191

 

 

18,958

 

 

19,164

 

 

18,939

 

Diluted weighted average shares outstanding

 

19,289

 

 

19,139

 

 

19,239

 

 

19,192

 

 

Adjusted data (1):

Income from operations – GAAP

$

5,056

 

$

8,557

 

$

8,204

 

$

35,731

 

Amortization of intangible assets

 

3,041

 

 

3,352

 

 

9,175

 

 

10,068

 

Restructuring costs

 

19

 

 

 

 

12,140

 

 

 

Legal settlement

 

 

 

 

 

4,800

 

 

 

Stock-based compensation included in the

following expense categories:

Cost of services and fulfillment

 

2,449

 

 

2,268

 

 

6,505

 

 

6,397

 

Selling and marketing

 

790

 

 

743

 

 

2,094

 

 

2,128

 

General and administrative

 

905

 

 

894

 

 

2,570

 

 

2,511

 

Adjusted income from operations

$

12,260

 

$

15,814

 

$

45,488

 

$

56,835

 

 

 

 

 

 

Three Months Ended
 

Nine Months Ended

 

September 30,
 

September 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Amount

 

 

Per Share

 

 

Amount

 

 

Per Share

 

 

Amount

 

 

Per Share

 

 

Amount

 

 

Per Share

Net income – GAAP
 

$

2,484

 

 

$

0.13

 

 

$

5,414

 

 

$

0.28

 

 

$

3,713

 

 

$

0.19

 

 

$

23,436

 

 

$

1.22

 

Amortization of intangible assets
 

 

3,041

 

 

 

0.16

 

 

 

3,352

 

 

 

0.18

 

 

 

9,175

 

 

 

0.47

 

 

 

10,068

 

 

 

0.53

 

Restructuring costs
 

 

19

 

 

 

 

 

 

 

 

 

 

 

 

12,140

 

 

 

0.63

 

 

 

 

 

 

 

Legal settlement
 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,800

 

 

 

0.25

 

 

 

 

 

 

 

Stock-based compensation
 

 

4,144

 

 

 

0.21

 

 

 

3,905

 

 

 

0.20

 

 

 

11,169

 

 

 

0.58

 

 

 

11,036

 

 

 

0.58

 

Gains on investments
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(426

)

 

 

(0.02

)

Tax effects of items above (2)
 

 

(1,542

)

 

 

(0.08

)

 

 

(1,980

)

 

 

(0.10

)

 

 

(9,117

)

 

 

(0.47

)

 

 

(5,487

)

 

 

(0.29

)

Adjustment to tax expense for adjusted tax rate (3)
 

 

420

 

 

 

0.02

 

 

 

212

 

 

 

0.01

 

 

 

(48

)

 

 

 

 

 

79

 

 

 

 

Adjusted net income
 

$

8,566

 

 

 

0.44

 

 

$

10,903

 

 

$

0.57

 

 

$

31,832

 

 

 

1.65

 

 

$

38,706

 

 

$

2.02

 

Diluted weighted average shares outstanding
 

 

19,289

 

 

 

 

19,139

 

 

 

 

19,239

 

 

 

 

19,192

 

 

 

 

 

 

 

 

 

 

 

(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,

restructuring costs, a legal settlement, and net gains from investments, as well as their related tax effects. We also utilized an assumed tax rate of 29% in 2023 and 30% in 2022,

which excludes items such as 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 Generally Accepted Accounting Principles 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 29% in 2023 and 30% in 2022.

 

 

Forrester Research, Inc.

Key Financial Data

(Unaudited, dollars in thousands)

September 30,

December 31,

 

2023

 

 

 

2022

 

Balance sheet data:

Cash, cash equivalents and marketable investments

$

111,456

 

$

123,317

 

Accounts receivable, net

$

41,016

 

$

73,345

 

Deferred revenue

$

158,349

 

$

178,021

 

Debt outstanding

$

35,000

 

$

50,000

 

 

September 30,

 

2023

 

 

2022

 

Cash flow data:

Net cash provided by operating activities

$

9,791

 

$

37,803

 

Purchases of property and equipment

$

(3,903

)

$

(4,227

)

Repayments of debt

$

(15,000

)

$

(25,000

)

Repurchases of common stock

$

(4,082

)

$

(15,112

)

 

As of

September 30,

 

2023

 

 

2022

 

Metrics:

Contract value

$

349,400

 

$

348,900

 

(a)

Client retention

 

73

%

 

75

%

Wallet retention

 

91

%

 

98

%

Number of clients

 

2,538

 

 

2,875

 

 

As of

September 30,

 

2023

 

 

2022

 

Headcount:

Total headcount

 

1,750

 

 

2,004

 

Sales force

 

599

 

 

701

 

 

(a) September 30, 2022, contract value has been recast based on 2023 foreign currency rates.

 

Contacts

Ed Bryce Morris

Vice President, Corporate Development & Investor Relations

Forrester Research, Inc.

+1 617-613-6565

ebrycemorris@forrester.com

Shweta Agarwal

Senior Director, Public Relations

Forrester Research, Inc.

+1 617-613-6805

sagarwal@forrester.com