Cambridge, Mass., May 7, 2020 . . . Forrester Research, Inc. (Nasdaq: FORR) today announced its 2020 first-quarter financial results and updated its financial outlook for the full year 2020.

First-Quarter Financial Performance

Total revenues were $106.3 million for the first quarter of 2020, compared with $100.6 million for the first quarter of 2019. Research revenues increased 6%, and advisory services and events revenues increased 5%, compared with the first quarter of 2019. Pro forma revenues, which exclude the fair value adjustment to deferred revenue from the acquisition of SiriusDecisions, were $106.5 million for the first quarter of 2020, compared with $104.6 million for the first quarter of 2019.

“Forrester, like many businesses, experienced a slowdown in revenues in Q1,” said George F. Colony, Forester’s chairman and chief executive officer. “Despite growing year on year, we expect the near-term macroeconomic pressures of the global pandemic will reduce revenue and operating profit throughout 2020. As a result, we have implemented cost-reduction measures and adjusted our full-year guidance.”

“Looking ahead to 2021 and beyond, we believe Forrester is well positioned for long-term success,” continued Colony. “Given the unprecedented nature of the pandemic, clients are increasingly relying on Forrester’s fact-based research for guidance; interactions are at an all-time high. We have doubled down on our customer-obsessed research and are pioneering new products, including virtual events, to help our clients navigate uncertainty.”

On a GAAP basis, net loss was $0.5 million, or $0.03 per diluted share, for the first quarter of 2020, compared with a net loss of $13.3 million, or $0.73 per diluted share, for the same period in 2019.

On a pro forma basis, net income was $6.9 million, or $0.37 per diluted share, for the first quarter of 2020, which reflects a pro forma effective tax rate of 31%. Pro forma net income 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 acquisition and integration costs of $2.9 million. This compares with a pro forma net income of $1.6 million, or $0.08 per diluted share, for the same period in 2019, which reflects a pro forma tax rate of 31%. Pro forma net income for the first quarter of 2019 excludes stock-based compensation of $2.7 million, amortization of acquisition-related intangible assets of $6.2 million, acquisition-related deferred revenue fair value adjustment of $3.9 million, and acquisition and integration costs of $3.0 million.

“We ended Q1 with nearly $70 million in cash on the balance sheet after paying down the final $14 million on our line of credit during this quarter,” said Michael Doyle, Forrester’s chief financial officer. “Our strong balance sheet and business model that generates positive cash flow each year position us well to manage through the pandemic.”

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

Second-Quarter 2020 (GAAP):

  • Total revenues of approximately $103.0 million to $108.0 million.
  • Operating margin of approximately 1.0% to 3.0%.
  • Interest expense of approximately $1.3 million.
  • An effective tax rate of 10% to 15%.
  • Income (loss) per share of approximately $(0.01)to $0.07.

Second-Quarter 2020 (Pro Forma):

Pro forma financial guidance for the second quarter of 2020 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of approximately $0.1 million, stock-based compensation expense of $2.2 million to $2.4 million, amortization of acquisition-related intangible assets of approximately $4.7 million, integration costs of $0.4 million to $0.6 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 8.0% to 10.0%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $0.26 to $0.34.

Our full-year 2020 guidance is as follows:

Full-Year 2020 (GAAP):

  • Total revenues of approximately $410.0 million to $430.0 million.
  • Operating margin of approximately (1.0) % to 1.0%.
  • Interest expense of approximately $5.6 million.
  • An effective tax rate of 10% to 15%.
  • Loss per share of approximately $(0.37) to $(0.07).

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 $10.0 million to $11.0 million, amortization of acquisition-related intangible assets of approximately $18.8 million, integration costs of $3.5 million to $4.0 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 7.0% to 9.0%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $0.90 to $1.20.

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, the anticipated impact of COVID-19 on Forrester’s operating results, Forrester’s financial guidance for the second quarter of and full-year 2020, 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, the impact of health epidemics, including COVID-19, on Forrester’s business; 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; 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; Forrester’s ability to anticipate and respond to market trends; 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; competition and industry consolidation; any failure to enforce and protect Forrester’s intellectual property rights; privacy laws; possible variations in Forrester’s quarterly operating results; taxation risks; concentration of ownership of Forrester; 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.