Investor Relations > News & Events > News Release Details

News Release Details

Forrester Research Reports 2018 Third-Quarter Financial Results

October 24, 2018
PDF Version

CAMBRIDGE, Mass., Oct. 24, 2018 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2018 third-quarter financial results.

Third-Quarter Financial Performance

Total revenues were $84.9 million for the third quarter of 2018, compared with $80.4 million for the third quarter of 2017. Research revenues increased 4%, and advisory services and events revenues increased 9%, compared with the third quarter of 2017.

On a GAAP basis, net income was $4.0 million, or $0.21 per diluted share, for the third quarter of 2018, compared with net income of $4.0 million, or $0.22 per diluted share, for the same period in 2017.

On a pro forma basis, net income was $6.0 million, or $0.33 per diluted share, for the third quarter of 2018, which reflects a pro forma effective tax rate of 31%. Pro forma net income excludes stock-based compensation of $2.1 million, amortization of acquisition-related intangible assets of $0.4 million, and acquisition and integration costs of $1.0 million. This compares with pro forma net income of $5.6 million, or $0.31 per diluted share, for the same period in 2017, which reflects a pro forma tax rate of 40%. Pro forma net income for the third quarter of 2017 excludes stock-based compensation of $2.2 million, amortization of acquisition-related intangible assets of $0.2 million, and net investment losses of $0.8 million.

"Forrester met revenue and operating margin guidance while exceeding EPS guidance for the third quarter of 2018," said George F. Colony, Forrester's chairman and chief executive officer. "Our strategy continues to show results. We remain positive about our momentum and growth as we head into the fourth quarter."

Forrester is providing fourth-quarter 2018 financial guidance as follows:

Fourth-Quarter 2018 (GAAP):

  • Total revenues of approximately $95.0 million to $98.0 million.
  • Operating margin of approximately 9.5% to 11.5%.
  • Other income (expense), net of zero.
  • An effective tax rate of 33%.
  • Diluted earnings per share of approximately $0.36 to $0.39.

Fourth-Quarter 2018 (Pro Forma):

Pro forma financial guidance for the fourth quarter of 2018 excludes stock-based compensation expense of $2.1 million to $2.3 million, acquisition and integration costs of $0.5 million to $0.7 million, amortization of acquisition-related intangible assets of $0.4 million to $0.5 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 13.0% to 15.0%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $0.49 to $0.52.

Our full-year 2018 guidance is as follows:

Full-Year 2018 (GAAP):

  • Total revenues of approximately $354.0 million to $357.0 million.
  • Operating margin of approximately 6.5% to 7.5%.
  • Other income (expense), net of $0.5 million.
  • An effective tax rate of 31%.
  • Diluted earnings per share of approximately $0.91 to $0.94.

Full-Year 2018 (Pro Forma):

Pro forma financial guidance for full-year 2018 excludes stock-based compensation expense of $8.3 million to $8.5 million, acquisition and integration costs of $1.8 million to $2.0 million, amortization of acquisition-related intangible assets of $1.2 million to $1.3 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 9.5% to 10.5%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $1.33 to $1.36.

Quarterly Dividend

Forrester also announced today that its board of directors has approved a quarterly cash dividend of $0.20 per share, payable December 26, 2018, to shareholders of record on December 12, 2018.

About Forrester Research

Forrester Research is one of the most influential research and advisory firms in the world. We work with business and technology leaders to develop customer-obsessed strategies that drive growth. Forrester's unique insights are grounded in annual surveys of more than 675,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of our most innovative clients. Through proprietary research, data, custom consulting, exclusive executive peer groups, and events, the Forrester experience is about a singular and powerful purpose: to challenge the thinking of our clients to help them lead change in their organizations. For more information, 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 fourth quarter of and full-year 2018, statements about the success of operational improvements, and statements about 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, demand for advisory and consulting services, technology spending, Forrester's ability to respond to business and economic conditions and market trends, Forrester's ability to develop and offer new products and services, the risks and challenges inherent in international business activities, competition and industry consolidation, the ability to attract and retain professional staff, Forrester's dependence on key personnel, Forrester's ability to realize the anticipated benefits from recent internal reorganizations, the possibility of network disruptions and security breaches, Forrester's ability to enforce and protect its intellectual property, and possible variations in Forrester's quarterly operating results. Dividend declarations are at the discretion of Forrester's board of directors, and plans for future dividends may be revised by the board at any time. 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 income and the table of key financial data are attached.

Contact:

Michael Doyle
Chief Financial Officer
Forrester Research, Inc.
+1 617-613-6000
mdoyle@forrester.com

Meaghan Rhyasen
Public Relations
Forrester Research, Inc.
+ 1 617-613-6070
press@forrester.com

 © 2018, 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,

2018

2017

2018

2017








Revenues:






Research services

$    56,332

$    54,235

$  166,332

$  160,553

Advisory services and events

28,558

26,134

92,660

86,743

Total revenues

84,890

80,369

258,992

247,296

Operating expenses:






Cost of services and fulfillment

34,361

32,508

107,537

100,814

Selling and marketing

31,051

29,225

96,771

90,355

General and administrative

11,192

10,083

32,871

30,672

Depreciation

1,965

1,607

6,056

4,775

Amortization of intangible assets

402

197

770

582

Acquisition and integration costs

977

—

1,306

—

Total operating expenses

79,948

73,620

245,311

227,198

Income from operations

4,942

6,749

13,681

20,098

Other income, net

319

146

472

248

Losses on investments

(17)

(772)

(62)

(997)

Income before income taxes

5,244

6,123

14,091

19,349

Income tax expense

1,294

2,170

4,086

6,302

Net income

$      3,950

$      3,953

$    10,005

$    13,047








Diluted income per common share

$        0.21

$        0.22

$        0.55

$        0.72








Diluted weighted average shares outstanding

18,433

18,051

18,353

18,212








Basic income per common share

$        0.22

$        0.22

$        0.55

$        0.73








Basic weighted average shares outstanding

18,088

17,747

18,030

17,897








Pro forma data (1):














Income from operations

$      4,942

$      6,749

$    13,681

$    20,098

Amortization of intangible assets

402

197

770

582

Acquisition and integration costs

977

—

1,306

—

Stock-based compensation included in the








following expense categories:






Cost of services and fulfillment

1,001

1,088

3,128

3,387

Selling and marketing

261

170

752

535

General and administrative

858

920

2,311

2,501








Pro forma income from operations

8,441

9,124

21,948

27,103








Other income, net

319

146

472

248

Pro forma income before income taxes

8,760

9,270

22,420

27,351








Income tax expense GAAP

1,294

2,170

4,086

6,302

Tax effects of pro forma items (2)

1,292

1,407

2,423

3,222

Adjustment to tax expense to reflect pro forma tax rate (3)

130

131

441

1,416








Pro forma net income

$      6,044

$       5,562

$    15,470

$    16,411








Pro forma diluted income per share

$        0.33

$         0.31

$        0.84

$        0.90

Pro forma diluted weighted average shares outstanding

18,433

18,051

18,353

18,212









(1) Forrester believes that pro forma 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 pro forma presentation excludes

amortization of acquisition-related intangible assets, stock-based compensation, acquisition and integration costs, net gains or losses from

investments, as well as their related tax effects. We also utilized an assumed tax rate of 31% in 2018 and 40% in 2017, which excludes

items such as  any release of reserves for uncertain tax positions established in prior years and the effect of any adjustments related to the

filing of prior year tax returns. The pro forma 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 pro forma net income, we apply a pro forma effective tax rate of 31% in 2018 and 40% in 2017.

 

 

Forrester Research, Inc.


Key Financial Data


(Unaudited, dollars in thousands)







September 30,

December 31,

2018

2017

Balance sheet data:


Cash, cash equivalents and marketable investments

$                144,452

$                134,123

Accounts receivable, net

$                  38,552

$                  70,023

Deferred revenue

$                128,435

$                145,207





Nine Months Ended

September 30,

2018

2017

Cash flow data:


Net cash provided by operating activities

$                  37,432

$                  36,863

Purchases of property and equipment

$                  (3,161)

$                  (5,806)

Cash paid for acquisitions

$                  (9,250)

$                        —

Repurchases of common stock

$                  (9,946)

$                (39,967)

Dividends paid

$                (10,839)

$                (10,205)





As of

September 30,

2018

2017

Metrics:


Agreement value

$                257,500

$                237,800

Client retention

74%

76%

Dollar retention

88%

88%

Enrichment

100%

94%

Number of clients

2,357

2,393





As of

September 30,

2018

2017

Headcount:


Total headcount

1,418

1,374

Products and advisory services staff

542

510

Sales force

519

530




 

Cision View original content:http://www.prnewswire.com/news-releases/forrester-research-reports-2018-third-quarter-financial-results-300737323.html

SOURCE Forrester