Cambridge, Mass., February 13, 2020 . . . Forrester Research, Inc. (Nasdaq: FORR) today announced its 2019 fourth-quarter and full-year financial results.

Fourth-Quarter Financial Performance

Total revenues were $124.3 million for the fourth quarter of 2019, compared with $98.6 million for the fourth quarter of 2018. Research revenues increased 28%, and advisory services and events revenues increased 23%, compared with the fourth quarter of 2018. Pro forma revenues, which exclude the fair value adjustment to deferred revenue from the acquisition of SiriusDecisions, were $125.1 million for the fourth quarter of 2019, with $80.1 million from research services and $45.0 million from advisory services and events.

On a GAAP basis, net income was $4.9 million, or $0.26 per diluted share, for the fourth quarter of 2019, compared with net income of $5.4 million, or $0.29 per diluted share, for the same period in 2018.

On a pro forma basis, net income was $10.7 million, or $0.57 per diluted share, for the fourth quarter of 2019, which reflects a pro forma effective tax rate of 31%. Pro forma net income excludes stock-based compensation of $3.1 million, amortization of acquisition-related intangible assets of $5.7 million, acquisition-related deferred revenue fair value adjustment of $0.8 million, acquisition and integration costs of $1.1 million, and net investment gains of $0.1 million. This compares with pro forma net income of $9.6 million, or $0.52 per diluted share, for the same period in 2018, which reflects a pro forma tax rate of 31%. Pro forma net income for the fourth quarter of 2018 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.

“Forrester was at the upper end of revenue guidance and exceeded EPS guidance for the quarter and the full year,” said George F. Colony, Forrester’s chairman and chief executive officer. “This marks two consecutive years of double-digit EPS growth while we were integrating three acquisitions. We expect to grow EPS at double digits again in 2020. Now a full year into the acquisition of SiriusDecisions, we are set up well to deliver on our combined strategy in 2020 and beyond.”

Year Ended December 31, 2019, Financial Performance

Total revenues were $461.7 million, compared with $357.6 million for the same period in 2018. Research revenues increased 31%, and advisory services and events revenues increased 26%, compared with 2018. Pro forma revenues, which exclude the fair value adjustment to deferred revenue from the acquisition of SiriusDecisions, were $473.0 million, with $307.4 million from research services and $165.6 million from advisory services and events.

On a GAAP basis, net loss was $9.6 million, or $0.52 per diluted share, for 2019, compared with net income of $15.4 million, or $0.84 per diluted share, for 2018.

On a pro forma basis, net income was $31.0 million, or $1.65 per diluted share, for 2019, which reflects a pro forma effective tax rate of 31%. Pro forma net income excludes stock-based compensation of $11.7 million, amortization of acquisition-related intangible assets of $22.6 million, acquisition-related deferred revenue fair value adjustment of $11.3 million, and acquisition and integration costs of $8.9 million. This compares with pro forma net income of $25.1 million, or $1.36 per diluted share, for 2018, which reflects a pro forma tax rate of 31%. Pro forma net income for 2018 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.

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

2020 Guidance

Forrester is providing first-quarter 2020 financial guidance as follows:

First-Quarter 2020 (GAAP):

  • Total revenues of approximately $107.8 million to $111.8 million.
  • Operating margin of approximately (4.0)% to (2.0)%.
  • Interest expense of approximately $1.6 million.
  • An effective tax rate of 35%.
  • Loss per share of approximately $0.13 to $0.19.

First-Quarter 2020 (Pro Forma):

Pro forma financial guidance for the first quarter of 2020 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of approximately $0.2 million, stock-based compensation expense of $2.7 million to $2.9 million, amortization of acquisition-related intangible assets of approximately $4.7 million, integration costs of $0.9 million to $1.2 million, and any investment gains or losses.

  • Pro forma revenue of approximately $108.0 million to $112.0 million.
  • Pro forma operating margin of approximately 4.0% to 6.0%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $0.12 to $0.18.

Our full-year 2020 guidance is as follows:

Full-Year 2020 (GAAP):

  • Total revenues of approximately $494.6 million to $506.6 million.
  • Operating margin of approximately 4.5% to 5.5%.
  • Interest expense of approximately $6.0 million.
  • An effective tax rate of 35%.
  • Diluted earnings per share of approximately $0.62 to $0.74.

Full-Year 2020 (Pro Forma):

Pro forma financial guidance for full-year 2020 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of approximately $0.4 million, stock-based compensation expense of $10.5 million to $11.5 million, amortization of acquisition-related intangible assets of approximately $19.0 million, integration costs of $1.8 million to $2.2 million, and any investment gains or losses.

  • Pro forma revenue of approximately $495.0 million to $507.0 million.
  • Pro forma operating margin of approximately 11.0% to 12.0%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $1.82 to $1.94.

About Forrester Research

Forrester is one of the most influential research and advisory firms in the world. We work with business and technology leaders to drive customer-obsessed vision, strategy, and execution that accelerate growth. Forrester’s unique insights are grounded in annual surveys of more than 690,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of our most innovative clients. Through proprietary research, data and analytics, custom consulting, exclusive peer groups, certifications, and events, we are revolutionizing how businesses grow in the age of the customer. Learn more at www.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 2020, 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. 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.