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News Release Details

Forrester Research Reports 2016 Second-Quarter Financial Results

July 27, 2016
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CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jul. 27, 2016-- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2016 second-quarter financial results.

Second-Quarter Financial Performance

Total revenues were $87.8 million for the second quarter of 2016, compared with $82.8 million for the second quarter of 2015. Research revenues increased 5%, and advisory services and events revenues increased 9%, compared with the second quarter of 2015.

On a GAAP basis, net income was $7.5 million, or $0.41 per diluted share, for the second quarter of 2016, compared with net income of $5.8 million, or $0.31 per diluted share, for the same period in 2015.

On a pro forma basis, net income was $8.3 million, or $0.46 per diluted share, for the second quarter of 2016, which reflects a pro forma effective tax rate of 40%. Pro forma net income excludes stock-based compensation of $1.6 million, amortization of acquisition-related intangible assets of $0.2 million, and investment losses of $0.1 million. This compares with pro forma net income of $7.3 million, or $0.40 per diluted share, for the same period in 2015, which reflects a pro forma tax rate of 38%. Pro forma net income for the second quarter of 2015 excludes stock-based compensation of $1.5 million, amortization of acquisition-related intangible assets of $0.2 million, and reorganization costs of $0.1 million.

"I am pleased to report that Forrester exceeded revenue, operating income, and EPS guidance for the second quarter,” said George F. Colony, Forrester’s chairman and chief executive officer. “Our strategy is resonating with clients and prospects who must transform to win in the emerging customer-led market.”

Forrester is providing third-quarter 2016 financial guidance as follows:

Third-Quarter 2016 (GAAP):

  • Total revenues of approximately $78.5 million to $81.5 million.
  • Operating margin of approximately 7.0% to 9.0%.
  • Other income (expense), net of zero.
  • An effective tax rate of 40%.
  • Diluted earnings per share of approximately $0.19 to $0.24.

Third-Quarter 2016 (Pro Forma):

Pro forma financial guidance for the third quarter of 2016 excludes stock-based compensation expense of $2.0 million to $2.2 million, amortization of acquisition-related intangible assets of approximately $0.2 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 10.0% to 12.0%.
  • Pro forma effective tax rate of 40%.
  • Pro forma diluted earnings per share of approximately $0.26 to $0.31.

Our full-year 2016 guidance is as follows:

Full-Year 2016 (GAAP):

  • Total revenues of approximately $324.0 million to $330.0 million.
  • Operating margin of approximately 7.5% to 8.5%.
  • Other income (expense), net of zero.
  • An effective tax rate of 40%.
  • Diluted earnings per share of approximately $0.83 to $0.89.

Full-Year 2016 (Pro Forma):

Pro forma financial guidance for full-year 2016 excludes stock-based compensation expense of $8.1 million to $8.6 million, reorganization costs of approximately $1.0 million, amortization of acquisition-related intangible assets of approximately $0.8 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 10.5% to 11.5%.
  • Pro forma effective tax rate of 40%.
  • Pro forma diluted earnings per share of approximately $1.16 to $1.22.

Quarterly Dividend

Forrester also announced today that its board of directors has approved a quarterly cash dividend of $0.18 per share, payable September 21, 2016, to shareholders of record on September 7, 2016.

About Forrester Research

Forrester Research 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 500,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of our most innovative clients. Through proprietary research, data, custom consulting, exclusive executive peer groups, 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 third quarter of and full-year 2016, 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, demand for advisory and consulting services, technology spending, Forrester’s ability to respond to business and economic conditions and market trends, Forrester’s ability to develop and offer new products and services, 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 realize the anticipated benefits from recent internal reorganizations, the possibility of network disruptions and security breaches, Forrester’s ability to enforce and protect its intellectual property, and possible variations in Forrester’s quarterly operating results. Dividend declarations are at the discretion of Forrester’s board of directors, and plans for future dividends may be revised by the board at any time. 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.

© 2016, 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 Six Months Ended
June 30, June 30,
2016 2015 2016 2015
 
Revenues:
Research services $ 55,023 $ 52,604 $ 108,271 $ 104,462
Advisory services and events   32,798     30,207     56,951     53,536  
Total revenues 87,821 82,811 165,222 157,998
 
Operating expenses:
Cost of services and fulfillment 34,417 32,560 65,540 63,321
Selling and marketing 29,335 28,481 59,739 58,112
General and administrative 10,300 9,276 20,273 19,034
Depreciation 2,076 2,096 4,041 4,203
Amortization of intangible assets 210 224 419 445
Reorganization costs   11     81     1,026     3,505  
Total operating expenses 76,349 72,718 151,038 148,620
 
Income from operations 11,472 10,093 14,184 9,378
 
Other income (expense), net 473 (99 ) 145 183
Gains (losses) on investments, net   (54 )   10     (54 )   (9 )
Income before income taxes 11,891 10,004 14,275 9,552
 
Income tax provision   4,431     4,254     5,526     4,026  
Net income $ 7,460   $ 5,750   $ 8,749   $ 5,526  
 
Diluted income per common share $ 0.41   $ 0.31   $ 0.49   $ 0.30  
 
Diluted weighted average shares outstanding   18,145     18,268     18,035     18,314  
 
Basic income per common share $ 0.42   $ 0.32   $ 0.49   $ 0.31  
 
Basic weighted average shares outstanding   17,863     18,007     17,812     18,033  
 
Pro forma data (1):
 
Income from operations $ 11,472 $ 10,093 $ 14,184 $ 9,378
Amortization of intangible assets 210 224 419 445
Reorganization costs 11 81 1,026 3,505
Stock-based compensation included in the
following expense categories:
Cost of services and fulfillment 870 798 2,064 2,035
Selling and marketing 109 89 423 423
General and administrative   647     588     1,274     1,203  
 
Pro forma income from operations 13,319 11,873 19,390 16,989
 
Other income (expense), net   473     (99 )   145     183  
Pro forma income before income taxes 13,792 11,774 19,535 17,172
 
Pro forma income tax provision   5,517     4,474     7,814     6,525  
 
Pro forma net income $ 8,275   $ 7,300   $ 11,721   $ 10,647  
 
Pro forma diluted income per share $ 0.46   $ 0.40   $ 0.65   $ 0.58  
Pro forma diluted weighted average shares outstanding   18,145     18,268     18,035     18,314  
 

(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, stock-based compensation, reorganization costs and net gains or losses from investments, as well as their related tax effects. The pro forma data does not purport to be prepared in accordance with Accounting Principles Generally Accepted in the United States.

       
Forrester Research, Inc.
Key Financial Data        
(Unaudited, dollars in thousands)
 
June 30, December 31,
2016 2015
Balance sheet data:
Cash, cash equivalents and marketable investments $ 126,529 $ 101,106
Accounts receivable, net $ 42,714 $ 67,355
Deferred revenue $ 138,597 $ 140,676
 
 
Six Months Ended
June 30,
2016 2015
Cash flow data:
Net cash provided by operating activities $ 30,622 $ 24,761
Purchases of property and equipment $ (2,318 ) $ (1,678 )
Repurchases of common stock $ - $ (11,786 )
Dividends paid $ (6,428 ) $ (6,126 )
 
 
As of
June 30,
2016 2015
Metrics:
Agreement value $ 241,800 $ 233,400
Client retention 76 % 80 %
Dollar retention 88 % 90 %
Enrichment 96 % 97 %
Number of clients 2,481 2,482
 
As of
June 30,
2016 2015
Headcount:
Total headcount 1,336 1,305
Research and consulting staff 494 487
Sales staff 514 519

Source: Forrester Research, Inc.

Forrester Research, Inc.
Michael Doyle, +1 617-613-6000
Chief Financial Officer
mdoyle@forrester.com
or
Meaghan Madges, + 1 617-613-6070
Public Relations
press@forrester.com