Forrester Research Reports Third-Quarter Financial Results
Third-Quarter Financial Performance
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Total revenues were
$68.5 million for the third quarter of 2012, compared with$69.8 million for the third quarter of last year. Research revenues increased 2%, and advisory services and other revenue decreased 11% compared to the third quarter of last year. The decline in advisory services and other revenue during the third quarter 2012 is due to both a planned shift of a number ofForrester Events from being held during the current quarter to being held during the fourth quarter and a decrease in advisory services revenue. -
On a GAAP basis, net income was
$10.4 million , or$0.45 per diluted share, for the third quarter of 2012, compared with net income of$5.7 million , or$0.25 per diluted share, for the same period last year. Net income in 2012 includes a$5.5 million deferred tax benefit resulting from the settlement of a foreign tax audit. -
On a pro forma basis, net income was
$5.8 million , or$0.26 per diluted share, for the third quarter of 2012, which reflects a pro forma effective tax rate of 39%. Pro forma net income excludes stock-based compensation of$1.4 million , amortization of$0.6 million of acquisition-related intangible assets, and net investment gains of$0.1 million . This compares with pro forma net income of$7.9 million , or$0.34 per diluted share, for the same period in 2011, which reflects a pro forma tax rate of 40%. Pro forma net income for the third quarter of 2011 excludes stock-based compensation of$1.4 million , amortization of$0.7 million of acquisition-related intangible assets,$0.9 million of duplicate lease costs, and$0.1 million of acquisition and integration costs.
“Forrester met our revenue guidance and exceeded operating margin and
earnings per share for the third quarter,” said
“We continue to see lingering dislocation from the ambitious research
initiatives and aggressive changes to the sales organization put in
place earlier in the year — productivity gains are taking longer than
expected to materialize, and attrition is hindering the delivery of
consulting services,” said
“In order to streamline our operations, I will be assuming day-to-day
oversight of the company,” said Colony. “And in Q4, the arrival of a new
chief sales officer will put an experienced industry hand at the helm of
our sales organization as we plan for 2013.
Nine-Month Period Ended
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Total revenues were
$217.9 million , compared with$209.0 million for the same period last year. -
On a GAAP basis, net income was
$21.3 million , or$0.93 per diluted share, for the nine months endedSeptember 30, 2012 , compared with net income of$14.1 million , or$0.61 per diluted share, for the same period last year. -
On a pro forma basis, net income was
$19.1 million , or$0.83 per diluted share, for the nine months endedSeptember 30, 2012 , which reflects a pro forma effective tax rate of 39%. Pro forma net income excludes stock-based compensation of$3.9 million , amortization of$1.8 million of acquisition-related intangible assets,$1.4 million of reorganization costs, and net investment gains of$0.3 million . This compares with pro forma net income of$20.2 million , or$0.87 per diluted share, for the same period in 2011, which reflects a pro forma tax rate of 40%. Pro forma net income for the nine months endedSeptember 30, 2011 , excludes stock-based compensation of$3.1 million , amortization of$1.9 million of acquisition-related intangible assets,$3.9 million of duplicate lease costs,$1.0 million of acquisition and integration costs, and net investment gains of$0.6 million .
A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.
Fourth-Quarter 2012 (GAAP):
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Total revenues of approximately
$72.0 million to $76.0 million . - Operating margin of approximately 9.5% to 11.5%.
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Other income, net of approximately
$0.1 million . - An effective tax rate of 40%.
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Diluted earnings per share of approximately
$0.18 to $0.23 .
Fourth-Quarter 2012 (Pro Forma):
Pro forma financial guidance for the fourth quarter of 2012 excludes
stock-based compensation expense of
- Pro forma operating margin of approximately 12.5% to 14.5%.
- Pro forma effective tax rate of 39%.
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Pro forma diluted earnings per share of approximately
$0.24 to $0.29 .
Our full-year 2012 guidance is as follows:
Full-Year 2012 (GAAP):
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Total revenues of approximately
$290.0 million to $294.0 million . - Operating margin of approximately 10.5% to 11.5%.
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Other income, net of approximately
$1.0 million . - An effective tax rate of 20%.
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Diluted earnings per share of approximately
$1.10 to $1.15 .
Full-Year 2012 (Pro Forma):
Pro forma financial guidance for full-year 2012 excludes stock-based
compensation expense of
- Pro forma operating margin of approximately 13.5% to 14.5%.
- Pro forma effective tax rate of 39%.
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Pro forma diluted earnings per share of approximately
$1.07 to $1.12 .
Quarterly Dividend
About
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 2012. 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, the
possibility of network disruptions and security breaches, the amount and
timing of the repurchase of
The consolidated statements of income and table of key financial data are attached.
© 2012,
Forrester Research, Inc. | |||||||||||||||
Consolidated Statements of Income | |||||||||||||||
(Unaudited, in thousands, except per share data) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Research services | $ | 50,300 | $ | 49,242 | $ | 151,132 | $ | 141,130 | |||||||
Advisory services and other | 18,211 | 20,532 | 66,732 | 67,836 | |||||||||||
Total revenues | 68,511 | 69,774 | 217,864 | 208,966 | |||||||||||
Operating expenses: | |||||||||||||||
Cost of services and fulfillment | 25,736 | 25,071 | 82,502 | 78,593 | |||||||||||
Selling and marketing | 24,309 | 24,927 | 75,709 | 76,401 | |||||||||||
General and administrative | 8,411 | 7,928 | 26,667 | 25,176 | |||||||||||
Depreciation | 2,262 | 1,420 | 6,510 | 3,335 | |||||||||||
Amortization of intangible assets | 579 | 679 | 1,779 | 1,898 | |||||||||||
Reorganization costs | 37 | - | 1,431 | - | |||||||||||
Total operating expenses | 61,334 | 60,025 | 194,598 | 185,403 | |||||||||||
Income from operations | 7,177 | 9,749 | 23,266 | 23,563 | |||||||||||
Other income, net | 357 | 378 | 896 | 273 | |||||||||||
Gains on investments, net | 147 | 8 | 290 | 648 | |||||||||||
Income before income taxes | 7,681 | 10,135 | 24,452 | 24,484 | |||||||||||
Income tax provision (benefit) | (2,692 | ) | 4,403 | 3,129 | 10,371 | ||||||||||
Net Income | $ | 10,373 | $ | 5,732 | $ | 21,323 | $ | 14,113 | |||||||
Diluted income per share | $ | 0.45 | $ | 0.25 | $ | 0.93 | $ | 0.61 | |||||||
Diluted weighted average shares outstanding | 22,858 | 23,082 | 23,018 | 23,179 | |||||||||||
Basic income per share | $ | 0.46 | $ | 0.25 | $ | 0.94 | $ | 0.62 | |||||||
Basic weighted average shares outstanding | 22,398 | 22,620 | 22,573 | 22,672 | |||||||||||
Pro forma data (1): | |||||||||||||||
Income from operations | $ | 7,177 | $ | 9,749 | $ | 23,266 | $ | 23,563 | |||||||
Amortization of intangible assets | 579 | 679 | 1,779 | 1,898 | |||||||||||
Duplicate lease costs | - | 864 | - | 3,850 | |||||||||||
Reorganization costs | 37 | - | 1,431 | - | |||||||||||
Acquisition and integration costs | - | 87 | - | 986 | |||||||||||
Stock-based compensation included in the following expense categories: |
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Cost of services and fulfillment | 835 | 678 | 2,213 | 1,325 | |||||||||||
Selling and marketing | 207 | 294 | 638 | 686 | |||||||||||
General and administrative | 367 | 440 | 1,070 | 1,082 | |||||||||||
Pro forma income from operations | 9,202 | 12,791 | 30,397 | 33,390 | |||||||||||
Other income, net | 357 | 378 | 896 | 273 | |||||||||||
Pro forma income before income taxes | 9,559 | 13,169 | 31,293 | 33,663 | |||||||||||
Pro forma income tax provision | 3,728 | 5,268 | 12,204 | 13,466 | |||||||||||
Pro forma net income | $ | 5,831 | $ | 7,901 | $ | 19,089 | $ | 20,197 | |||||||
Pro forma diluted income per share | $ | 0.26 | $ | 0.34 | $ | 0.83 | $ | 0.87 | |||||||
Diluted weighted average shares outstanding | 22,858 | 23,082 | 23,018 | 23,179 |
(1)
Forrester Research, Inc. | |||||||||
Key Financial Data | |||||||||
(Unaudited, dollars in thousands) | |||||||||
September 30, | December 31, | ||||||||
2012 | 2011 | ||||||||
Balance sheet data: | |||||||||
Cash, cash equivalents and marketable investments | $ | 238,446 | $ | 227,603 | |||||
Accounts receivable, net | $ | 44,149 | $ | 81,378 | |||||
Deferred revenue | $ | 124,857 | $ | 147,887 | |||||
Nine Months Ended | |||||||||
September 30, | |||||||||
2012 | 2011 | ||||||||
Cash flow data: | |||||||||
Net cash provided by operating activities | $ | 43,223 | $ | 46,507 | |||||
Cash used for acquisitions | $ | - | $ | (7,164 | ) | ||||
Purchases of property and equipment | $ | (4,845 | ) | $ | (33,194 | ) | |||
Repurchases of common stock | $ | (26,187 | ) | $ | (18,405 | ) | |||
Dividends paid | $ | (9,481 | ) | $ | - | ||||
As of | |||||||||
September 30, | |||||||||
2012 | 2011 | ||||||||
Metrics: | |||||||||
Agreement value | $ | 221,576 | $ | 211,240 | |||||
Client retention | 78 | % | 81 | % | |||||
Dollar retention | 91 | % | 91 | % | |||||
Enrichment | 96 | % | 104 | % | |||||
Number of clients | 2,498 | 2,508 | |||||||
As of | |||||||||
September 30, | |||||||||
2012 | 2011 | ||||||||
Headcount: | |||||||||
Total headcount | 1,218 | 1,222 | |||||||
Research staff | 440 | 458 | |||||||
Sales staff | 446 | 440 |
Source:
Forrester Research, Inc.
Michael Doyle, +1 617-613-6000
Chief
Financial Officer
mdoyle@forrester.com
or
Jon
Symons, +1 617-613-6104
Vice President, Corporate Communications
press@forrester.com