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Forrester Research Reports 2023 Second-Quarter Financial Results

Forrester Research, Inc. (Nasdaq: FORR) today announced financial results for the second quarter ended June 30, 2023, with flat contract value (CV), at $344.0 million, compared with the prior year.

“While the tech recession and uncertain macroeconomic environment continued to have the most significant impact on our non-CV business, we crossed a meaningful milestone this quarter with 51% of CV now on our Forrester Decisions research platform,” said George F. Colony, Forrester’s chairman and chief executive officer. “Given our laser focus on driving CV growth, we remain on track to migrate two-thirds of total CV to Forrester Decisions by the end of the year. Our ongoing enhancements to Forrester Decisions, combined with continued upskilling of our sales force to drive new business growth and sell higher into organizations, positions us well for long-term success.”

Second-Quarter Consolidated Results

Total revenues for the second quarter of 2023 were $135.6 million, compared with $148.2 million for the comparable quarter in 2022.

On a GAAP basis, net income was $5.3 million, or $0.28 per diluted share, for the second quarter of 2023, compared with net income of $13.9 million, or $0.72 per diluted share, for the same period in 2022.

On an adjusted basis, net income was $18.1 million, or $0.94 per diluted share, for the second quarter of 2023, reflecting an adjusted effective tax rate of 29%. Adjusted net income excludes stock-based compensation of $3.9 million, amortization of acquisition-related intangible assets of $3.1 million, and restructuring costs of $10.5 million. This compares with an adjusted net income of $19.2 million, or $1.00 per diluted share, for the same period in 2022, which reflects an adjusted tax rate of 30%. Adjusted net income for the second quarter of 2022 excludes stock-based compensation of $3.8 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 $3.0 million
  • An effective tax rate of approximately 43%
  • Earnings per share of approximately $0.10 to $0.30

Full Year 2023 (Adjusted):

Adjusted financial guidance for full-year 2023 excludes stock-based compensation expense of $15.0 million to $16.0 million, amortization of acquisition-related intangible assets of approximately $12.0 million, restructuring costs of approximately $12.5 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 Operations
(Unaudited, in thousands, except per share data)

Three Months Ended

 

Six Months Ended

June 30,

 

June 30,

2023

 

2022

 

2023

 

2022

Revenues:
Research

$

87,699

 

$

89,447

 

$

168,605

 

$

175,227

 

Consulting

 

29,970

 

 

39,262

 

 

61,720

 

 

77,693

 

Events

 

17,920

 

 

19,537

 

 

18,934

 

 

20,297

 

Total revenues

 

135,589

 

 

148,246

 

 

249,259

 

 

273,217

 

Operating expenses:
Cost of services and fulfillment

 

54,614

 

 

60,991

 

 

103,906

 

 

114,242

 

Selling and marketing

 

41,581

 

 

44,974

 

 

83,113

 

 

89,018

 

General and administrative

 

15,315

 

 

15,925

 

 

36,542

 

 

31,449

 

Depreciation

 

2,191

 

 

2,299

 

 

4,295

 

 

4,618

 

Amortization of intangible assets

 

3,068

 

 

3,354

 

 

6,134

 

 

6,716

 

Restructuring costs

 

10,532

 

 

 

 

12,121

 

 

 

Total operating expenses

 

127,301

 

 

127,543

 

 

246,111

 

 

246,043

 

Income from operations

 

8,288

 

 

20,703

 

 

3,148

 

 

27,174

 

Interest expense

 

(730

)

 

(535

)

 

(1,523

)

 

(1,148

)

Other income (expense), net

 

514

 

 

103

 

 

1,064

 

 

(154

)

Gains on investments

 

 

 

 

 

 

 

426

 

Income before income taxes

 

8,072

 

 

20,271

 

 

2,689

 

 

26,298

 

Income tax expense

 

2,768

 

 

6,397

 

 

1,460

 

 

8,276

 

Net income

$

5,304

 

$

13,874

 

$

1,229

 

$

18,022

 

 
Basic income per common share

$

0.28

 

$

0.74

 

$

0.06

 

$

0.95

 

Diluted income per common share

$

0.28

 

$

0.72

 

$

0.06

 

$

0.94

 

Basic weighted average shares outstanding

 

19,193

 

 

18,871

 

 

19,151

 

 

18,929

 

Diluted weighted average shares outstanding

 

19,258

 

 

19,173

 

 

19,214

 

 

19,218

 

 
Adjusted data (1):
Income from operations - GAAP

$

8,288

 

$

20,703

 

$

3,148

 

$

27,174

 

Amortization of intangible assets

 

3,068

 

 

3,354

 

 

6,134

 

 

6,716

 

Restructuring costs

 

10,532

 

 

 

 

12,121

 

 

 

Legal settlement

 

 

 

 

 

4,800

 

 

 

Stock-based compensation included in the
following expense categories:
Cost of services and fulfillment

 

2,209

 

 

2,203

 

 

4,056

 

 

4,129

 

Selling and marketing

 

807

 

 

752

 

 

1,304

 

 

1,385

 

General and administrative

 

844

 

 

882

 

 

1,665

 

 

1,617

 

Adjusted income from operations

$

25,748

 

$

27,894

 

$

33,228

 

$

41,021

 

Three Months Ended

 

Six Months Ended

June 30,

 

June 30,

2023

 

2022

 

2023

 

2022

Amount

 

Per Share

 

Amount

 

Per Share

 

Amount

 

Per Share

 

Amount

 

Per Share

Net income - GAAP

$

5,304

 

$

0.28

 

$

13,874

 

$

0.72

 

$

1,229

 

$

0.06

 

$

18,022

 

$

0.94

 

Amortization of intangible assets

 

3,068

 

 

0.16

 

 

3,354

 

 

0.17

 

 

6,134

 

 

0.32

 

 

6,716

 

 

0.35

 

Restructuring costs

 

10,532

 

 

0.54

 

 

 

 

 

 

12,121

 

 

0.63

 

 

 

 

 

Legal settlement

 

 

 

 

 

 

 

 

 

4,800

 

 

0.25

 

 

 

 

 

Stock-based compensation

 

3,860

 

 

0.20

 

 

3,837

 

 

0.20

 

 

7,025

 

 

0.37

 

 

7,131

 

 

0.37

 

Gains on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

(426

)

 

(0.02

)

Tax effects of items above (2)

 

(4,597

)

 

(0.24

)

 

(1,935

)

 

(0.10

)

 

(7,575

)

 

(0.40

)

 

(3,507

)

 

(0.18

)

Adjustment to tax expense for adjusted tax rate (3)

 

(39

)

 

 

 

93

 

 

0.01

 

 

(468

)

 

(0.02

)

 

(133

)

 

(0.01

)

Adjusted net income

$

18,128

 

 

0.94

 

$

19,223

 

$

1.00

 

$

23,266

 

 

1.21

 

$

27,803

 

$

1.45

 

Diluted weighted average shares outstanding

 

19,258

 

 

19,173

 

 

19,214

 

 

19,218

 

(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)

June 30,

 

December 31,

2023

 

2022

Balance sheet data:
Cash, cash equivalents, and marketable investments

$

123,615

 

$

123,317

 

Accounts receivable, net

$

46,277

 

$

73,345

 

Deferred revenue

$

179,613

 

$

178,021

 

Debt outstanding

$

35,000

 

$

50,000

 

 

June 30,

2023

 

2022

Cash flow data:
Net cash provided by operating activities

$

15,393

 

$

34,755

 

Purchases of property and equipment

$

(2,269

)

$

(2,698

)

Repayments of debt

$

(15,000

)

$

(25,000

)

Repurchases of common stock

$

(820

)

$

(15,112

)

 

As of

June 30,

2023

 

2022

Metrics:
Contract value

$

344,000

 

$

345,300

 

(a)
Client retention

 

74

%

 

76

%

Wallet retention

 

92

%

 

99

%

Number of clients

 

2,604

 

 

2,928

 

 

As of

June 30,

2023

 

2022

Headcount:
Total headcount

 

1,793

 

 

1,945

 

Sales force

 

616

 

 

684

 

 
(a) June 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

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