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Forrester (Nasdaq: FORR) 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, analytics, custom consulting, exclusive executive peer groups, learning offerings, 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.

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October 24
2019

Forrester Research Reports 2019 Third-Quarter Financial Results

CAMBRIDGE, Mass., Oct. 24, 2019 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2019 third-quarter financial results.

Third-Quarter Financial Performance

Total revenues were $108.6 million for the third quarter of 2019, compared with $84.9 million for the third quarter of 2018. Research revenues increased 32%, and advisory services and events revenues increased 19%, compared with the third quarter of 2018. Pro forma revenues, which exclude the fair value adjustment to deferred revenue from the acquisition of SiriusDecisions, were $110.3 million for the third quarter of 2019, with $76.2 million from research services and $34.1 million from advisory services and events.

On a GAAP basis, net loss was $2.7 million, or $0.15 per diluted share, for the third quarter of 2019, compared with net income of $4.0 million, or $0.21 per diluted share, for the same period in 2018.

On a pro forma basis, net income was $6.5 million, or $0.34 per diluted share, for the third quarter of 2019, which reflects a pro forma effective tax rate of 31%. Pro forma net income excludes stock-based compensation of $3.1 million, amortization of acquisition-related intangible assets of $5.7 million, acquisition-related deferred revenue fair value adjustment of $1.7 million, and acquisition and integration costs of $2.4 million. This compares with a pro forma net income of $6.0 million, or $0.33 per diluted share, for the same period in 2018, which reflects a pro forma tax rate of 31%. Pro forma net income for the third quarter of 2018 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.

"Forrester was at the upper end of revenue guidance and exceeded our pro forma EPS targets for the quarter," said George F. Colony, Forrester's chairman and chief executive officer. "Q3 marked another solid quarter for us with growth across all geographic regions. We are on track to integrate with SiriusDecisions across the business and well-positioned for success as we head into the fourth quarter."

Forrester is providing fourth-quarter 2019 financial guidance as follows:

Fourth-Quarter 2019 (GAAP):

  • Total revenues of approximately $120.0 million to $125.0 million. 
  • Operating margin of approximately 2.0% to 4.0%. 
  • Interest expense of approximately $1.9 million.
  • An effective tax rate of 14% to 58%, driven by an estimated $0.4 million (or 12% to 56%) charge to settle a foreign tax audit.
  • Diluted earnings per share of approximately $0.05 to $0.10. 

Fourth-Quarter 2019 (Pro Forma):

Pro forma financial guidance for the fourth quarter of 2019 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of approximately $0.8 million, stock-based compensation expense of $3.0 million to $3.2 million, amortization of acquisition-related intangible assets of approximately $5.7 million, acquisition and integration costs of $1.2 million to $1.5 million, and any investment gains or losses.

  • Pro forma revenue of approximately $121.0 million to $126.0 million. 
  • Pro forma operating margin of approximately 11.0% to 13.0%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $0.45 to $0.50.

Our full-year 2019 guidance is as follows:

Full-Year 2019 (GAAP):

  • Total revenues of approximately $458.0 million to $463.0 million. 
  • Operating margin of approximately (1.0) % to 0.0%. 
  • Interest expense of approximately $8.2 million.
  • An effective tax rate of 0% to 5%.
  • Diluted loss per share of approximately $0.63 to $0.68. 

Full-Year 2019 (Pro Forma):

Pro forma financial guidance for full-year 2019 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of approximately $11.3 million, stock-based compensation expense of $11.6 million to $11.8 million, amortization of acquisition-related intangible assets of approximately $22.7 million, acquisition and integration costs of $9.0 million to $9.3 million, and any investment gains or losses.

  • Pro forma revenue of approximately $469.0 million to $474.0 million. 
  • Pro forma operating margin of approximately 10.5% to 11.5%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $1.53 to $1.58.

About Forrester Research

Forrester 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, analytics, custom consulting, exclusive executive peer groups, learning offerings, 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 2019, 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, technology spending, Forrester's ability to respond to business and economic conditions and market trends, 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 successfully integrate businesses that it acquires, the impact of Forrester's outstanding debt obligations, the possibility of network disruptions and security breaches, and possible variations in Forrester's quarterly operating results. Financial guidance regarding shares outstanding and per-share amounts is based on certain assumptions that are subject to change, including with respect to an anticipated reduction in share repurchases subsequent to Forrester's acquisition of SiriusDecisions. While currently suspended, dividend declarations are at the discretion of Forrester's board of directors. 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  

Shweta Agarwal  
Public Relations 
Forrester Research, Inc. 
+1 617-613-6805 
sagarwal@forrester.com  

© 2019, 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,



2019


2018


2019


2018










Revenues:









Research services


$                    74,548


$                    56,332


$                  219,436


$                  166,332

Advisory services and events


34,048


28,558


117,992


92,660

Total revenues


108,596


84,890


337,428


258,992

Operating expenses:









Cost of services and fulfillment


44,929


34,361


146,610


107,537

Selling and marketing


41,605


31,051


127,655


96,771

General and administrative


13,533


11,192


39,944


32,871

Depreciation


2,121


1,965


6,310


6,056

Amortization of intangible assets


5,654


402


16,963


770

Acquisition and integration costs


2,394


977


7,848


1,306

Total operating expenses


110,236


79,948


345,330


245,311

Income (loss) from operations


(1,640)


4,942


(7,902)


13,681

Interest expense


(1,904)



(6,341)


Other income (expense), net


127


319


(229)


472

Losses on investments


(17)


(17)


(61)


(62)

Income (loss) before income taxes


(3,434)


5,244


(14,533)


14,091

Income tax expense (benefit)


(735)


1,294


(73)


4,086

Net income (loss)


$                    (2,699)


$                      3,950


$                  (14,460)


$                    10,005










Basic income (loss) per common share


$                      (0.15)


$                        0.22


$                      (0.78)


$                        0.55

Diluted income (loss) per common share 


$                      (0.15)


$                        0.21


$                      (0.78)


$                        0.55

Basic weighted average shares outstanding


18,546


18,088


18,448


18,030

Diluted weighted average shares outstanding


18,546


18,433


18,448


18,353










Pro forma data (1):









GAAP total revenues


$                  108,596


$                    84,890


$                  337,428


$                  258,992

Deferred revenue fair value adjustment


1,657



10,467


Pro forma revenues


$                  110,253


$                    84,890


$                  347,895


$                  258,992










Income (loss) from operations


$                    (1,640)


$                      4,942


$                    (7,902)


$                    13,681

Amortization of intangible assets


5,654


402


16,963


770

Deferred revenue fair value adjustment


1,657



10,467


Acquisition and integration costs


2,394


977


7,848


1,306

Stock-based compensation included in the 









following expense categories:









Cost of services and fulfillment


1,782


1,001


4,812


3,128

Selling and marketing


441


261


1,366


752

General and administrative


849


858


2,427


2,311










Pro forma income from operations


11,137


8,441


35,981


21,948

Interest expense


(1,904)



(6,341)


Other income (expense), net


127


319


(229)


472

Pro forma income before income taxes


9,360


8,760


29,411


22,420










Income tax expense (benefit) GAAP


(735)


1,294


(73)


4,086

Tax effects of pro forma items (2)


3,128


1,292


10,896


2,423

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


509


130


(1,706)


441










Pro forma net income


$                      6,458


$                      6,044


$                    20,294


$                    15,470










Pro forma diluted income (loss) per share 


$                        0.34


$                        0.33


$                        1.08


$                        0.84

Pro forma diluted weighted average shares outstanding


18,727


18,433


18,732


18,353










(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, acquisition-related deferred revenue fair value





adjustments, 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 both 2019 and 2018, 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%.





 

 

Forrester Research, Inc.

Key Financial Data

(Unaudited, dollars in thousands)








September 30,


December 31,



2019


2018

Balance sheet data:





Cash and cash equivalents


$                  67,629


$                140,296

Accounts receivable, net


$                  54,612


$                  67,318

Deferred revenue


$                168,008


$                135,332

Debt outstanding


$                134,313


$                         —








Nine Months Ended



September 30,



2019


2018

Cash flow data:





Net cash provided by operating activities


$                  45,863


$                  37,432

Purchases of property and equipment


$                  (8,362)


$                  (3,161)

Cash paid for acquisitions


$              (237,684)


$                  (9,250)

Repayments of debt


$                (40,688)


$                         —

Repurchases of common stock


$                         —


$                  (9,946)

Dividends paid


$                         —


$                (10,839)













As of



September 30,



2019


2018

Metrics:





Agreement value


$                355,200


$                257,500

Client retention


73%


71%

Dollar retention


90%


90%

Enrichment


111%


109%

Number of clients


2,867


2,357








As of



September 30,



2019


2018

Headcount:





Total headcount


1,785


1,418

Products and advisory services staff


673


542

Sales force


699


519

 

Cision View original content:http://www.prnewswire.com/news-releases/forrester-research-reports-2019-third-quarter-financial-results-300945149.html

SOURCE Forrester Research, Inc.