Cambridge, Mass., February 13, 2019 . . . Forrester Research, Inc. (Nasdaq: FORR) today announced its 2018 fourth-quarter and full-year financial results.

Fourth-Quarter Financial Performance

Total revenues were $98.6 million for the fourth quarter of 2018, compared with $90.4 million for the fourth quarter of 2017. Research revenues increased 11%, and advisory services and events revenues increased 6%, compared with the fourth quarter of 2017. On a constant-currency basis, research revenues increased 12%, and advisory services and events revenues increased 7%, compared with the fourth quarter of 2017.

On a GAAP basis, net income was $5.4 million, or $0.29 per diluted share, for the fourth quarter of 2018, compared with net income of $2.1 million, or $0.11 per diluted share, for the same period in 2017.

On a pro forma basis, net income was $9.6 million, or $0.52 per diluted share, for the fourth quarter of 2018, which reflects a pro forma effective tax rate of 31%. Pro forma net income excludes stock-based compensation of $2.1 million, amortization of acquisition-related intangible assets of $0.4 million, acquisition and integration costs of $2.5 million, and net investment gains of $0.5 million. This compares with pro forma net income of $5.9 million, or $0.32 per diluted share, for the same period in 2017, which reflects a pro forma tax rate of 40%. Pro forma net income for the fourth quarter of 2017 excludes stock-based compensation of $2.1 million, amortization of acquisition-related intangible assets of $0.2 million, and net investment gains of $0.5 million.

“Forrester met pro forma operating margin and EPS guidance for the fourth quarter and full year of 2018,” said George F. Colony, Forrester’s chairman and chief executive officer. “We set an ambitious agenda for ourselves in 2018, and we succeeded. We completed the rollout of our customer engagement model across North America, Europe, and Asia, and we acquired three companies: SiriusDecisions, FeedbackNow, and GlimpzIt. As we move into 2019, we are confident that we can successfully capitalize on these acquisitions and continue to drive growth.”

Year Ended December 31, 2018, Financial Performance

Total revenues were $357.6 million, compared with $337.7 million for the same period in 2017. Research revenues increased 6%, and advisory services and events revenues increased 7%, compared with 2017. On a constant-currency basis, research revenues increased 5%, advisory services and events revenues increased 6%, and overall revenue increased 6%, compared with 2017.

On a GAAP basis, net income was $15.4 million, or $0.84 per diluted share, for 2018, compared with net income of $15.1 million, or $0.83 per diluted share, for 2017.

On a pro forma basis, net income was $25.1 million, or $1.36 per diluted share, for 2018, which reflects a pro forma effective tax rate of 31%. Pro forma net income excludes stock-based compensation of $8.3 million, amortization of acquisition-related intangible assets of $1.2 million, acquisition and integration costs of $3.8 million, and net investment gains of $0.4 million. This compares with pro forma net income of $22.3 million, or $1.22 per diluted share, for 2017, which reflects a pro forma tax rate of 40%. Pro forma net income for 2017 excludes stock-based compensation of $8.5 million, amortization of acquisition-related intangible assets of $0.8 million, and net investment losses of $0.5 million.

A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.

2019 Guidance

Forrester is providing first-quarter 2019 financial guidance as follows:

First-Quarter 2019 (GAAP):

  • Total revenues of approximately $95.0 million to $100.0 million.
  • Operating margin of approximately (14.5)% to (12.5)%.
  • Interest expense of approximately $2.4 million.
  • Other income, net of zero.
  • An effective tax rate of 5% to 10%.
  • Loss per share of approximately $0.74 to $0.80.

First-Quarter 2019 (Pro Forma):

Pro forma financial guidance for the first quarter of 2019 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of $4.0 million to $5.0 million, stock-based compensation expense of $2.6 million to $2.8 million, amortization of acquisition-related intangible assets of $3.0 million to $4.0 million, acquisition and integration costs of $3.5 million to $4.0 million, and any investment gains or losses.

  • Adjusted revenues of approximately $100.0 million to $105.0 million.
  • Pro forma operating margin of approximately 0.5% to 2.5%.
  • Pro forma effective tax rate of 31%.
  • Pro forma loss per share of approximately zero to $0.06.

Our full-year 2019 guidance is as follows:

Full-Year 2019 (GAAP):

  • Total revenues of approximately $457.0 million to $469.0 million.
  • Operating margin of approximately (1.5)% to 0.5%.
  • Interest expense of approximately $9.5 million to $10.0 million.
  • Other income, net of zero.
  • An effective tax rate of 5% to 10%.
  • Diluted loss per share of approximately $0.41 to $0.53.

Full-Year 2019 (Pro Forma):

Pro forma financial guidance for full-year 2019 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of $17.0 million to $19.0 million, stock-based compensation expense of $11.0 million to $12.0 million, amortization of acquisition-related intangible assets of $15.0 million to $17.0 million, acquisition and integration costs of $7.0 million to $8.0 million, and any investment gains or losses.

  • Adjusted revenues of $475.0 million to $487.0 million.
  • Pro forma operating margin of approximately 10.0% to 12.0%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $1.55 to $1.67.

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 first quarter of and full-year 2019, 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, 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, Forrester’s ability to successfully integrate businesses that it acquires, the impact of Forrester’s outstanding debt obligations, the possibility of network disruptions and security breaches, and possible variations in Forrester’s quarterly operating results. Financial guidance regarding shares outstanding and per-share amounts is based on certain assumptions that are subject to change, including with respect to an anticipated reduction in share repurchases subsequent to Forrester’s acquisition of SiriusDecisions. While currently suspended, dividend declarations are at the discretion of Forrester’s board of directors. 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.