Forrester Research Reports 2021 First-Quarter Financial Results
CAMBRIDGE, Mass., May 5, 2021 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2021 first-quarter financial results.
First-Quarter Financial Performance
Total revenues were $113.8 million for the first quarter of 2021, compared with $106.3 million for the first quarter of 2020.
On a GAAP basis, net income was $4.0 million, or $0.21 per diluted share, for the first quarter of 2021, compared with a net loss of $0.5 million, or $0.03 per diluted share, for the same period in 2020.
On an adjusted basis, net income was $8.6 million, or $0.45 per diluted share, for the first quarter of 2021, which reflects an adjusted effective tax rate of 31%. Adjusted net income excludes stock-based compensation of $2.5 million, amortization of acquisition-related intangible assets of $3.9 million, and integration costs of $0.1 million. This compares with adjusted net income of $6.9 million, or $0.37 per diluted share, for the same period in 2020, which reflects an adjusted tax rate of 31%. Adjusted net income for the first quarter of 2020 excludes stock-based compensation of $2.8 million, amortization of acquisition-related intangible assets of $4.7 million, acquisition-related deferred revenue fair value adjustment of $0.2 million, and integration costs of $2.9 million.
"We significantly beat our Q1 expectations for revenue, operating margin, and earnings per share and generated record quarterly cash flow," said George F. Colony, Forrester's chairman and chief executive officer. "We grew contract value bookings by 4% year over year. We have seen three quarters of sequential CV growth since the second quarter of 2020. As a result of this strong performance, we will be raising guidance for 2021."
"We played offense in 2020, investing and preparing the company for recovery and positioning it to grow contract value bookings by double-digit rates. To that end, I am excited to announce the launch of Forrester Decisions, a premium portfolio of 15 new research services designed to help our clients shorten the distance between a bold vision of the future and superior business impact. The pandemic has driven customer behavior changes, and companies must now be all-in on digital. The Forrester Decisions product portfolio will help businesses navigate these changes. I expect the new product to drive Forrester's contract value growth."
As part of the company's pivot to contract value (CV) in 2021, Forrester is classifying all components of its CV subscription research products as research revenues. In prior periods, advisory sessions included in Forrester's research subscription products were classified as consulting revenues. This has resulted in approximately $1.4 million of revenue being reclassified from consulting revenues to research revenues in the three months ended March 31, 2020.
Forrester is providing second-quarter and full-year 2021 financial guidance as follows:
Second-Quarter 2021 (GAAP):
- Total revenues of approximately $120.0 million to $124.0 million.
- Operating margin of approximately 8.0% to 10.0%.
- Interest expense of approximately $1.1 million.
- An effective tax rate of 32%.
- Earnings per share of approximately $0.28 to $0.34.
Second-Quarter 2021 (Adjusted):
Adjusted financial guidance for the second quarter of 2021 excludes stock-based compensation expense of $2.3 million to $2.5 million, amortization of acquisition-related intangible assets of approximately $4.0 million, integration costs of approximately $0.1 million, and any investment gains or losses.
- Adjusted operating margin of approximately 13.0% to 15.0%.
- Adjusted effective tax rate of 31%.
- Adjusted diluted earnings per share of approximately $0.52 to $0.58.
Full-Year 2021 (GAAP):
- Total revenues of approximately $473.0 million to $483.0 million.
- Operating margin of approximately 4.5% to 5.5%.
- Interest expense of approximately $4.3 million.
- An effective tax rate of 32%.
- Earnings per share of approximately $0.66 to $0.76.
Full-Year 2021 (Adjusted):
Adjusted financial guidance for full-year 2021 excludes stock-based compensation expense of $9.8 million to $10.3 million, amortization of acquisition-related intangible assets of approximately $15.2 million, integration costs of $0.3 million to $0.5 million, and any investment gains or losses.
- Adjusted operating margin of approximately 10.0% to 11.0%.
- Adjusted effective tax rate of 31%.
- Adjusted diluted earnings per share of approximately $1.58 to $1.68.
About Forrester
Forrester (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We help leaders across technology, marketing, customer experience, product, and sales 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 675,000 consumers, business leaders, and technology leaders worldwide; rigorous and objective research methodologies, including Forrester Wave™ evaluations; over 52 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 second quarter of and full-year 2021 and statements about the launch of Forrester Decisions 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; Forrester's ability to fulfill existing or generate new consulting engagements and advisory services; technology spending; the impact of health epidemics, including COVID-19, on Forrester's business; Forrester's ability to respond to business and economic conditions and market trends; the risks and challenges inherent in international business activities, including the exit of the United Kingdom from the European Union; Forrester's ability to offer new products and services; Forrester's dependence on key personnel; Forrester's ability to attract and retain professional staff; 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; and any weakness in Forrester's system of internal controls. 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.
Contact:
Scott Chouinard
Interim Chief Financial Officer and Treasurer
Forrester Research, Inc.
+1 617-613-6060
[email protected]
Shweta Agarwal
Public Relations
Forrester Research, Inc.
+1 617-613-6805
[email protected]
© 2021, 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 |
||||
March 31, |
||||
2021 |
2020 |
|||
Revenues: |
||||
Research |
$ 74,968 |
$ 74,267 |
||
Consulting |
38,550 |
31,988 |
||
Events |
263 |
90 |
||
Total revenues |
113,781 |
106,345 |
||
Operating expenses: |
||||
Cost of services and fulfillment |
47,477 |
43,353 |
||
Selling and marketing |
39,279 |
40,273 |
||
General and administrative |
13,178 |
12,005 |
||
Depreciation |
2,290 |
2,406 |
||
Amortization of intangible assets |
3,903 |
4,712 |
||
Integration costs |
118 |
2,875 |
||
Total operating expenses |
106,245 |
105,624 |
||
Income from operations |
7,536 |
721 |
||
Interest expense |
(1,129) |
(1,538) |
||
Other income (expense), net |
(470) |
310 |
||
Gains on investments |
— |
13 |
||
Income (loss) before income taxes |
5,937 |
(494) |
||
Income tax expense |
1,981 |
19 |
||
Net income (loss) |
$ 3,956 |
$ (513) |
||
Basic income (loss) per common share |
$ 0.21 |
$ (0.03) |
||
Diluted income (loss) per common share |
$ 0.21 |
$ (0.03) |
||
Basic weighted average shares outstanding |
19,061 |
18,705 |
||
Diluted weighted average shares outstanding |
19,288 |
18,705 |
||
Adjusted data (1): |
||||
Total revenues - GAAP |
$ 113,781 |
$ 106,345 |
||
Deferred revenue fair value adjustment |
— |
185 |
||
Adjusted revenues |
$ 113,781 |
$ 106,530 |
||
Income from operations - GAAP |
$ 7,536 |
$ 721 |
||
Deferred revenue fair value adjustment |
— |
185 |
||
Amortization of intangible assets |
3,903 |
4,712 |
||
Integration costs |
118 |
2,875 |
||
Stock-based compensation included in the |
||||
following expense categories: |
||||
Cost of services and fulfillment |
1,435 |
1,593 |
||
Selling and marketing |
449 |
362 |
||
General and administrative |
608 |
847 |
||
Adjusted income from operations |
$ 14,049 |
$ 11,295 |
||
Three Months Ended |
||||||||
March 31, |
||||||||
2021 |
2020 |
|||||||
Amount |
Per Share |
Amount |
Per Share |
|||||
Net income (loss) - GAAP |
$ 3,956 |
$ 0.21 |
$ (513) |
$ (0.03) |
||||
Effect on GAAP net loss of diluted shares |
— |
— |
||||||
Deferred revenue fair value adjustment |
— |
— |
185 |
0.01 |
||||
Amortization of intangible assets |
3,903 |
0.20 |
4,712 |
0.25 |
||||
Integration costs |
118 |
0.01 |
2,875 |
0.15 |
||||
Stock-based compensation |
2,492 |
0.13 |
2,802 |
0.15 |
||||
Gains on investments |
— |
— |
(13) |
— |
||||
Tax effects of items above (2) |
(1,647) |
(0.09) |
(2,712) |
(0.14) |
||||
Adjustment to tax expense for adjusted tax rate (3) |
(231) |
(0.01) |
(390) |
(0.02) |
||||
Adjusted net income |
$ 8,591 |
$ 0.45 |
$ 6,946 |
$ 0.37 |
||||
Diluted weighted average shares outstanding |
19,288 |
18,826 |
||||||
(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, acquisition-related deferred revenue fair value adjustments, stock-based compensation, integration costs, and net gains or losses from investments, as well as their related tax effects. We also utilized an assumed tax rate of 31% in both 2021 and 2020, which excludes items such as any release of reserves for uncertain tax positions established in prior years, 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 Accounting Principles Generally Accepted 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 31%. |
Forrester Research, Inc. |
||||
Key Financial Data |
||||
(Unaudited, dollars in thousands) |
||||
March 31, |
December 31, |
|||
2021 |
2020 |
|||
Balance sheet data: |
||||
Cash and cash equivalents |
$ 125,600 |
$ 90,257 |
||
Accounts receivable, net |
$ 68,822 |
$ 84,695 |
||
Deferred revenue |
$ 216,522 |
$ 179,968 |
||
Debt outstanding |
$ 106,250 |
$ 109,375 |
||
March 31, |
||||
2021 |
2020 |
|||
Cash flow data: |
||||
Net cash provided by operating activities |
$ 40,551 |
$ 21,823 |
||
Purchases of property and equipment |
$ (1,468) |
$ (2,401) |
||
Repayments of debt |
$ (3,125) |
$ (16,344) |
||
As of |
||||
March 31, |
||||
2021 |
2020 |
|||
Metrics: |
||||
Contract value |
$ 307,300 |
$ 308,000 |
||
Client retention |
75% |
74% |
||
Wallet retention |
89% |
90% |
||
Number of clients |
2,907 |
2,835 |
||
As of |
||||
March 31, |
||||
2021 |
2020 |
|||
Headcount: |
||||
Total headcount |
1,749 |
1,794 |
||
Sales force |
662 |
684 |
||
SOURCE Forrester
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