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News Release Details

Forrester Research Reports 2017 Third-Quarter Financial Results

October 25, 2017
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CAMBRIDGE, Mass., Oct. 25, 2017 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2017 third-quarter financial results.

Third-Quarter Financial Performance

Total revenues were $80.4 million for the third quarter of 2017, compared with $77.4 million for the third quarter of 2016. Research revenues increased 3%, and advisory services and events revenues increased 6%, compared with the third quarter of 2016.

On a GAAP basis, net income was $4.0 million, or $0.22 per diluted share, for the third quarter of 2017, compared with net income of $3.1 million, or $0.17 per diluted share, for the same period in 2016.

On a pro forma basis, net income was $5.6 million, or $0.31 per diluted share, for the third quarter of 2017, which reflects a pro forma effective tax rate of 40%. Pro forma net income excludes stock-based compensation of $2.2 million, amortization of acquisition-related intangible assets of $0.2 million, and net investment losses of $0.8 million. This compares with pro forma net income of $6.0 million, or $0.32 per diluted share, for the same period in 2016, which reflects a pro forma tax rate of 40%. Pro forma net income for the third quarter of 2016 excludes stock-based compensation of $2.0 million, amortization of acquisition-related intangible assets of $0.2 million, and net investment losses of $1.1 million.

"Forrester was at the upper end of revenue guidance while exceeding pro forma operating margin and EPS guidance for the third quarter of 2017," said George F. Colony, Forrester's chairman and chief executive officer. "We remain positive about our strategy and growth." 

Forrester is providing fourth-quarter 2017 financial guidance as follows:

Fourth-Quarter 2017 (GAAP):

  • Total revenues of approximately $83.0 million to $86.0 million.
  • Operating margin of approximately 6.8% to 8.8%.
  • Other income (expense), net of zero.
  • An effective tax rate of 40%.
  • Diluted earnings per share of approximately $0.20 to $0.24.

Fourth-Quarter 2017 (Pro Forma):

Pro forma financial guidance for the fourth quarter of 2017 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 9.5% to 11.5%.
  • Pro forma effective tax rate of 40%.
  • Pro forma diluted earnings per share of approximately $0.27 to $0.31.

Our full-year 2017 guidance is as follows:

Full-Year 2017 (GAAP):

  • Total revenues of approximately $330.0 million to $333.0 million.
  • Operating margin of approximately 7.7% to 8.7%.
  • Other income, net of $0.2 million.
  • An effective tax rate of 35%.
  • Diluted earnings per share of approximately $0.90 to $0.94.

Full-Year 2017 (Pro Forma):

Pro forma financial guidance for full-year 2017 excludes stock-based compensation expense of $8.4 million to $8.6 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 $1.17 to $1.21.

Quarterly Dividend

Forrester also announced today that its board of directors has approved a quarterly cash dividend of $0.19 per share, payable December 20, 2017, to shareholders of record on December 6, 2017.

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 675,000 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 fourth quarter of and full-year 2017, 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.

Contacts:

Michael Doyle 
Chief Financial Officer
Forrester Research, Inc.
+1 617-613-6000
mdoyle@forrester.com

Meaghan Rhyasen
Public Relations
Forrester Research, Inc.
+ 1 617-613-6070
press@forrester.com

© 2017, 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,


2017

2016

2017

2016









Revenues:







Research services

$                    54,235

$                    52,727

$                  160,553

$                  160,998

Advisory services and events

26,134

24,700

86,743

81,651

Total revenues

80,369

77,427

247,296

242,649









Operating expenses:







Cost of services and fulfillment

32,508

29,889

100,814

95,429

Selling and marketing

29,225

27,751

90,355

87,490

General and administrative

10,083

10,086

30,672

30,359

Depreciation

1,607

1,941

4,775

5,982

Amortization of intangible assets

197

208

582

627

Reorganization costs

-

-

-

1,026

Total operating expenses

73,620

69,875

227,198

220,913









Income from operations

6,749

7,552

20,098

21,736









Other income, net

146

229

248

374

Losses on investments, net

(772)

(1,085)

(997)

(1,139)

Income before income taxes

6,123

6,696

19,349

20,971









Income tax provision

2,170

3,584

6,302

9,110

Net income

$                      3,953

$                      3,112

$                    13,047

$                    11,861









Diluted income per common share 

$                        0.22

$                        0.17

$                        0.72

$                        0.65









Diluted weighted average shares outstanding

18,051

18,435

18,212

18,168









Basic income per common share

$                        0.22

$                        0.17

$                        0.73

$                        0.66









Basic weighted average shares outstanding

17,747

18,062

17,897

17,896









Pro forma data (1):
















Income from operations

$                      6,749

$                      7,552

$                    20,098

$                    21,736

Amortization of intangible assets

197

208

582

627

Reorganization costs

-

-

-

1,026

Stock-based compensation included in the 







following expense categories:







Cost of services and fulfillment

1,088

1,077

3,387

3,141

Selling and marketing

170

272

535

695

General and administrative

920

622

2,501

1,895









Pro forma income from operations

9,124

9,731

27,103

29,120









Other income, net

146

229

248

374

Pro forma income before income taxes

9,270

9,960

27,351

29,494









Pro forma income tax provision

3,708

3,984

10,940

11,798









Pro forma net income

$                      5,562

$                      5,976

$                    16,411

$                    17,696









Pro forma diluted income per share 

$                        0.31

$                        0.32

$                        0.90

$                        0.97

Pro forma diluted weighted average shares outstanding

18,051

18,435

18,212

18,168









(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)










September 30,

December 31,


2017

2016

Balance sheet data:



Cash, cash equivalents and marketable investments

$                133,979

$                138,105

Accounts receivable, net

$                  39,481

$                  58,812

Deferred revenue

$                132,929

$                134,265












Nine Months Ended


September 30,


2017

2016

Cash flow data:



Net cash provided by operating activities

$                  36,863

$                  38,305

Purchases of property and equipment

$                  (5,806)

$                  (3,334)

Repurchases of common stock

$                (39,967)

$                            -

Dividends paid

$                (10,205)

$                  (9,696)












As of


September 30,


2017

2016

Metrics:



Agreement value

$                237,800

$              241,100

Client retention

76%

76%

Dollar retention

88%

88%

Enrichment

94%

95%

Number of clients

2,393

2,482







As of


September 30,


2017

2016

Headcount:



Total headcount

1,374

1,332

Research and consulting staff

510

488

Sales force

530

514

 

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SOURCE Forrester