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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 drive customer-obsessed vision, strategy, and execution that accelerate growth. Forrester’s unique insights are grounded in annual surveys of more than 690,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of our most innovative clients.

Through proprietary research, data and analytics, custom consulting, exclusive peer groups, certifications, and events, we are revolutionizing how businesses grow in the age of the customer.

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October 29
2020

Forrester Research Reports 2020 Third-Quarter Financial Results

CAMBRIDGE, Mass., Oct. 29, 2020 /PRNewswire/ -- Forrester Research, Inc. (NASDAQ: FORR) today announced its 2020 third-quarter financial results.

Third-Quarter Financial Performance

Total revenues were $108.6 million for the third quarter of 2020, consistent with the third quarter of 2019. Adjusted revenues, which exclude the fair value adjustment to deferred revenue from the acquisition of SiriusDecisions, were $108.7 million for the third quarter of 2020, compared with $110.3 million for the third quarter of 2019.

"Businesses are relying on Forrester for guidance on how to deal with the pandemic and ramp up their own critical digital offerings," said George F. Colony, Forrester's chairman and chief executive officer. "As a result, demand for our research and consulting services increased in the third quarter; we exceeded the upper end of revenue guidance by $4.7 million and exceeded adjusted EPS by $0.12."

"Propelled by strong Q3 results and a healthy Q4 pipeline, we are increasing our full-year 2020 guidance for both revenue and EPS," continued Colony. "We are honored by the trust and confidence our clients have placed in Forrester to help them navigate challenging times and build customer-obsessed growth strategies."

On a GAAP basis, net loss was $3.8 million, or $0.20 per diluted share, for the third quarter of 2020, compared with a net loss of $2.7 million, or $0.15 per diluted share, for the same period in 2019.

On an adjusted basis, net income was $4.6 million, or $0.24 per diluted share, for the third quarter of 2020, which reflects an adjusted effective tax rate of 31%. Adjusted net income excludes stock-based compensation of $2.7 million, amortization of acquisition-related intangible assets of $4.7 million, acquisition-related deferred revenue fair value adjustment of $0.1 million, acquisition and integration costs of $0.3 million, and lease incentive costs of $0.2 million. This compares with an adjusted net income of $6.5 million, or $0.34 per diluted share, for the same period in 2019, which reflects an adjusted tax rate of 31%. Adjusted net income for the third quarter of 2019 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.

Forrester is providing fourth-quarter 2020 financial guidance as follows:

Fourth-Quarter 2020 (GAAP):

  • Total revenues of approximately $108.0 million to $116.0 million.
  • Operating margin of approximately 3.5% to 5.5%.
  • Interest expense of approximately $1.2 million.
  • An effective tax rate of approximately 25%.
  • Income per share of approximately $0.11 to $0.18.

Fourth-Quarter 2020 (Adjusted):

Adjusted financial guidance for the fourth quarter of 2020 excludes stock-based compensation expense of $2.4 million to $2.6 million, amortization of acquisition-related intangible assets of approximately $4.7 million, integration costs of $0.7 million to $1.2 million, lease incentive credit of approximately $3.4 million, and any investment gains or losses.

  • Adjusted operating margin of approximately 8.0% to 10.0%.
  • Adjusted effective tax rate of 31%.
  • Adjusted diluted earnings per share of approximately $0.27 to $0.34.

Our full-year 2020 guidance is as follows:

Full-Year 2020 (GAAP):

  • Total revenues of approximately $436.6 million to $444.6 million.
  • Operating margin of approximately 3.5% to 4.5%.
  • Interest expense of approximately $5.3 million.
  • An effective tax rate of approximately 26%.
  • Income per share of approximately $0.51 to $0.58.

Full-Year 2020 (Adjusted):

Adjusted financial guidance for full-year 2020 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of approximately $0.4 million, stock-based compensation expense of $10.4 million to $10.6 million, amortization of acquisition-related intangible assets of approximately $18.8 million, integration costs of $4.5 million to $5.0 million, lease incentive credit of approximately $3.2 million, and any investment gains or losses.

  • Adjusted revenues of approximately $437.0 million to $445.0 million.
  • Adjusted operating margin of approximately 10.5% to 11.5%.
  • Adjusted effective tax rate of 31%.
  • Adjusted diluted earnings per share of approximately $1.53 to $1.60.

About Forrester Research

Forrester (NASDAQ: FORR) is one of the most influential research and advisory firms in the world. We help organizations grow through customer obsession. Forrester's unique insights are grounded in annual surveys of more than 690,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of our most innovative clients. Through proprietary research, data and analytics, custom consulting, exclusive peer groups, certifications, and events, we are revolutionizing how businesses grow in the age of the customer; learn more at 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, the anticipated impact of COVID-19 on Forrester's operating results, Forrester's financial guidance for the fourth quarter of and full-year 2020, 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, the impact of health epidemics, including COVID-19, on Forrester's business; 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; the exit of the United Kingdom from the European Union; 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 anticipate and respond to market trends; 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; competition and industry consolidation; any failure to enforce and protect Forrester's intellectual property rights; privacy laws; possible variations in Forrester's quarterly operating results; taxation risks; concentration of ownership of Forrester; and any weakness in Forrester's system of internal controls. 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.

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

© 2020, 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,



2020


2019


2020


2019

Revenues:









Research


$    72,813


$    74,548


$  219,230


$  219,436

Consulting


34,633


32,619


102,980


98,422

Events


1,131


1,429


6,253


19,570

Total revenues


108,577


108,596


328,463


337,428

Operating expenses:









Cost of services and fulfillment


46,125


44,929


133,442


146,610

Selling and marketing


42,209


41,605


121,599


127,655

General and administrative


12,475


13,533


35,936


39,944

Depreciation


2,544


2,121


7,398


6,310

Amortization of intangible assets


4,722


5,654


14,147


16,963

Acquisition and integration costs


328


2,394


3,815


7,848

Total operating expenses


108,403


110,236


316,337


345,330

Income (loss) from operations


174


(1,640)


12,126


(7,902)

Interest expense


(1,259)


(1,904)


(4,104)


(6,341)

Other income (expense), net


(274)


127


(165)


(229)

Gains (losses) on investments



(17)


2,365


(61)

Income (loss) before income taxes


(1,359)


(3,434)


10,222


(14,533)

Income tax expense (benefit)


2,401


(735)


2,658


(73)

Net income (loss)


$    (3,760)


$    (2,699)


$      7,564


$  (14,460)










Basic income (loss) per common share


$      (0.20)


$      (0.15)


$        0.40


$      (0.78)

Diluted income (loss) per common share 


$      (0.20)


$      (0.15)


$        0.40


$      (0.78)

Basic weighted average shares outstanding


18,872


18,546


18,779


18,448

Diluted weighted average shares outstanding


18,872


18,546


18,873


18,448










Adjusted data (1):









Total revenues - GAAP


$  108,577


$  108,596


$  328,463


$  337,428

Deferred revenue fair value adjustment


80


1,657


402


10,467

Adjusted revenues


$  108,657


$  110,253


$  328,865


$  347,895










Income (loss) from operations - GAAP


$         174


$    (1,640)


$    12,126


$    (7,902)

Deferred revenue fair value adjustment


80


1,657


402


10,467

Amortization of intangible assets


4,722


5,654


14,147


16,963

Acquisition and integration costs


328


2,394


3,815


7,848

Lease incentive


219



219


Stock-based compensation included in the 









following expense categories:









Cost of services and fulfillment


1,638


1,782


4,463


4,812

Selling and marketing


446


441


1,231


1,366

General and administrative


614


849


2,270


2,427

Adjusted income from operations


$      8,221


$    11,137


$    38,673


$    35,981

 



Three Months Ended


Nine Months Ended



September 30,


September 30,



2020


2019


2020


2019



 Amount 


 Per Share 


 Amount 


 Per Share 


 Amount 


 Per Share 


 Amount 


 Per Share 

Net income (loss) - GAAP


$  (3,760)


$     (0.20)


$  (2,699)


$     (0.15)


$    7,564


$       0.40


$  (14,460)


$     (0.78)

Effect on GAAP net loss of diluted shares







0.01







0.01

Deferred revenue fair value adjustment


80



1,657


0.09


402


0.02


10,467


0.56

Amortization of intangible assets


4,722


0.26


5,654


0.30


14,147


0.76


16,963


0.90

Acquisition and integration costs


328


0.02


2,394


0.13


3,815


0.20


7,848


0.42

Lease incentive


219


0.01




219


0.01



Stock-based compensation


2,698


0.14


3,072


0.16


7,964


0.42


8,605


0.46

(Gains) losses on investments




17



(2,365)


(0.13)


61


Tax effects of items above (2)


(1,828)


(0.10)


(3,128)


(0.17)


(6,980)


(0.37)


(10,896)


(0.58)

Adjustment to tax expense for adjusted tax rate (3)


2,156


0.11


(509)


(0.03)


(1,027)


(0.05)


1,706


0.09

Adjusted net income


$   4,615


0.24


$   6,458


$       0.34


$  23,739


1.26


$   20,294


$       1.08

Diluted weighted average shares outstanding


18,963




18,727




18,873




18,732




(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, acquisition-related deferred revenue fair value adjustments, stock-based compensation, acquisition and integration costs, net gains or losses from investments, lease incentive cost and credits, as well as their related tax effects. We also utilized an assumed tax rate of 31% in both 2020 and 2019, 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 31%.

 

Forrester Research, Inc.

Key Financial Data





(Unaudited, dollars in thousands)












September 30,


December 31,



2020


2019

Balance sheet data:





Cash and cash equivalents


$          73,027


$         67,904

Accounts receivable, net


$          54,141


$         84,605

Deferred revenue


$        155,418


$       179,194

Debt outstanding


$        111,719


$       132,750








Nine Months Ended



September 30,



2020


2019

Cash flow data:





Net cash provided by operating activities


$          29,199


$         45,622

Purchases of property and equipment


$          (7,279)


$         (8,362)

Cash paid for acquisitions


$                 —


$     (237,684)

Repayments of debt


$        (21,031)


$       (40,688)








As of



September 30,



2020


2019

Metrics:





Agreement value


$        337,900


$       355,200

Client retention


65%


73%

Dollar retention


88%


90%

Enrichment


98%


111%

Number of clients


2,660


2,867








As of



September 30,



2020


2019

Headcount:





Total headcount


1,823


1,785

Products and advisory services staff


716


673

Sales force


716


699

 

Cision View original content:http://www.prnewswire.com/news-releases/forrester-research-reports-2020-third-quarter-financial-results-301163336.html

SOURCE Forrester