Forrester Research Reports 2022 Third-Quarter Financial Results

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Forrester

Nov 02, 2022, 16:05 ET

Year-over-year total contract value increased by 7% to $353 million

Company raises guidance for balance of year

CAMBRIDGE, Mass., Nov. 2, 2022 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced financial results for the third quarter ended September 30, 2022, and raised its guidance for the balance of the year. Results were driven by contract value (CV) growth of 7% and revenue growth of 8%. On a GAAP basis, earnings per share (EPS) was $0.28, and on an adjusted basis, EPS was $0.57.

Commenting on the announcement, CEO and Chairman George Colony stated, "We delivered solid financial results in the third quarter. We are on track to have one-third of our CV in the Forrester Decisions platform by year-end, and we remain focused on creating shareholder value for the long term. With today's announcement, we are raising our guidance for the balance of the year, given the results we have posted today and our ongoing ability to manage costs. With that said, we continue to monitor the evolving macro environment and remain focused on our key metrics, which may continue to show volatility in the coming quarters, given our accelerated approach to convert clients to Forrester Decisions."

Third-Quarter Consolidated Results

Total revenues for the third quarter of 2022 were $127.7 million, compared with $118.1 million for the comparable quarter in 2021.

On a GAAP basis, net income was $5.4 million, or $0.28 per diluted share, for the third quarter of 2022, compared with $4.5 million, or $0.23 per diluted share, for the same period in 2021.

On an adjusted basis, net income was $10.9 million, or $0.57 per diluted share, for the third quarter of 2022, reflecting an adjusted effective tax rate of 30%. Adjusted net income excludes stock-based compensation of $3.9 million and amortization of acquisition-related intangible assets of $3.4 million. This compares with an adjusted net income of $7.9 million, or $0.41 per diluted share, for the same period in 2021, which reflects an adjusted tax rate of 31%. Adjusted net income for the third quarter of 2021 excludes stock-based compensation of $2.5 million and amortization of acquisition-related intangible assets of $3.7 million.

Forrester is providing fourth-quarter and full-year 2022 financial guidance as follows:

Fourth Quarter 2022 (GAAP):

  • Total revenues of approximately $134 million to $144 million
  • Operating margin of approximately 1.0% to 3.0%
  • Interest expense of approximately $0.7 million
  • An effective tax rate of approximately 32%
  • Earnings per share of approximately $0.03 to $0.13

Fourth Quarter 2022 (Adjusted):

Adjusted financial guidance for the fourth quarter of 2022 excludes stock-based compensation expense of $3.5 million to $3.7 million, amortization of acquisition-related intangible assets of approximately $3.1 million, and any investment gains or losses.

  • Adjusted operating margin of approximately 6.0% to 8.0%
  • Adjusted effective tax rate of approximately 30%
  • Adjusted diluted earnings per share of approximately $0.28 to $0.38

Full Year 2022 (GAAP):

  • Total revenues of approximately $535 million to $545 million
  • Operating margin of approximately 7.0% to 8.0%
  • Interest expense of approximately $2.5 million
  • An effective tax rate of approximately 32%
  • Earnings per share of approximately $1.25 to $1.35

Full Year 2022 (Adjusted):

Adjusted financial guidance for full-year 2022 excludes stock-based compensation expense of $14.5 million to $14.7 million, amortization of acquisition-related intangible assets of approximately $13.2 million, and any investment gains or losses.

  • Adjusted operating margin of approximately 12.0% to 13.0%
  • Adjusted effective tax rate of approximately 30%
  • Adjusted diluted earnings per share of approximately $2.30 to $2.40

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, digital, 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 700,000 consumers, business leaders, and technology leaders worldwide; rigorous and objective research methodologies, including Forrester Wave™ evaluations; over 70 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 fourth quarter of and full-year 2022 and statements about the performance of Forrester Decisions, Forrester's ability to manage costs, 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 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.

Contact:

Tyson Seely
Vice President, Investor Relations
Forrester Research, Inc.
+1 617-613-6805
[email protected]

Shweta Agarwal
Senior Director, Public Relations
Forrester Research, Inc.
+1 617-613-6805
[email protected]

© 2022, 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,


2022

2021

2022

2021

Revenues:







Research

$               87,038

$               79,876

$             262,265

$             235,846

Consulting

37,382

37,393

115,075

116,903

Events

3,259

867

23,556

7,838

Total revenues

127,679

118,136

400,896

360,587

Operating expenses:







Cost of services and fulfillment

52,717

49,836

166,959

149,571

Selling and marketing

44,231

41,340

133,249

123,175

General and administrative

16,448

14,383

47,897

41,895

Depreciation

2,374

2,342

6,992

6,887

Amortization of intangible assets

3,352

3,696

10,068

11,567

Integration costs

—

—

—

334

Total operating expenses

119,122

111,597

365,165

333,429

Income from operations

8,557

6,539

35,731

27,158

Interest expense

(584)

(1,056)

(1,732)

(3,251)

Other income (expense), net

346

(195)

192

(866)

Gains on investments

—

—

426

—

Income before income taxes

8,319

5,288

34,617

23,041

Income tax expense

2,905

766

11,181

6,220

Net income

$                 5,414

$                 4,522

$               23,436

$               16,821









Basic income per common share

$                   0.29

$                   0.24

$                   1.24

$                   0.88

Diluted income per common share 

$                   0.28

$                   0.23

$                   1.22

$                   0.87

Basic weighted average shares outstanding

18,958

19,134

18,939

19,107

Diluted weighted average shares outstanding

19,139

19,388

19,192

19,351









Adjusted data (1):







Income from operations - GAAP

$                 8,557

$                 6,539

$               35,731

$               27,158

Amortization of intangible assets

3,352

3,696

10,068

11,567

Integration costs

—

—

—

334

Stock-based compensation included in the 







following expense categories:







Cost of services and fulfillment

2,268

1,554

6,397

4,389

Selling and marketing

743

372

2,128

1,220

General and administrative

894

536

2,511

1,742

Adjusted income from operations

$               15,814

$               12,697

$               56,835

$               46,410


Three Months Ended

Nine Months Ended


September 30,

September 30,


2022

2021

2022

2021


 Amount 

 Per Share 

 Amount 

 Per Share 

 Amount 

 Per Share 

 Amount 

 Per Share 

Net income - GAAP

$                 5,414

$       0.28

$                 4,522

$       0.23

$               23,436

$       1.22

$               16,821

$       0.87

Amortization of intangible assets

3,352

0.18

3,696

0.19

10,068

0.53

11,567

0.59

Integration costs

—

—

—

—

—

—

334

0.02

Stock-based compensation

3,905

0.20

2,462

0.13

11,036

0.58

7,351

0.38

Gains on investments

—

—

—

—

(426)

(0.02)

—

—

Tax effects of items above (2)

(1,980)

(0.10)

(1,861)

(0.09)

(5,487)

(0.29)

(5,276)

(0.27)

Adjustment to tax expense for adjusted tax rate (3)

212

0.01

(921)

(0.05)

79

—

(1,615)

(0.08)

Adjusted net income

$               10,903

0.57

$                 7,898

$       0.41

$               38,706

2.02

$               29,182

$       1.51

Diluted weighted average shares outstanding

19,139


19,388


19,192


19,351



(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, integration costs, and net gains from investments, as well as their related tax effects. We also                                
utilized an assumed tax rate of 30% in 2022 and 31% in 2021, 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 30% in 2022 and 31% in 2021.

Forrester Research, Inc.




Key Financial Data




(Unaudited, dollars in thousands)






September 30,

December 31,


2022

2021

Balance sheet data:




Cash, cash equivalents and marketable investments

$                118,738

$                134,278

Accounts receivable, net

$                  50,602

$                  86,965

Deferred revenue

$                180,758

$                213,696

Debt outstanding

$                  50,000

$                  75,000








September 30,


2022

2021

Cash flow data:




Net cash provided by operating activities

$                  37,803

$                  84,992

Purchases of property and equipment

$                  (4,227)

$                  (9,845)

Repayments of debt

$                (25,000)

$                  (9,375)

Repurchases of common stock

$                (15,112)

$                (10,646)








As of


September 30,


2022

2021

Metrics:




Contract value

$            353,000

$           328,600

(a)

 Client retention

75 %

78 %

Wallet retention

97 %

99 %

Number of clients

2,875

2,964








As of


September 30,


2022

2021

Headcount:




Total headcount

2,004

1,763

Sales force

701

648


(a)

September 30, 2021 contract value has been recast based on 2022 foreign currency rates.

SOURCE Forrester

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