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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026167458/en/
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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