EX-99.1 2 d401519dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Forrester Research Reports 2017 Second-Quarter Financial Results

Cambridge, Mass., July 26, 2017 . . . Forrester Research, Inc. (Nasdaq: FORR) today announced its 2017 second-quarter financial results.

Second-Quarter Financial Performance

Total revenues were $89.7 million for the second quarter of 2017, compared with $87.8 million for the second quarter of 2016. Research revenues decreased 1%, and advisory services and events revenues increased 7%, compared with the second quarter of 2016.

On a GAAP basis, net income was $6.1 million, or $0.34 per diluted share, for the second quarter of 2017, compared with a net income of $7.5 million, or $0.41 per diluted share, for the same period in 2016.

On a pro forma basis, net income was $7.6 million, or $0.42 per diluted share, for the second quarter of 2017, which reflects a pro forma effective tax rate of 40%. Pro forma net income excludes stock-based compensation of $2.2 million and amortization of acquisition-related intangible assets of $0.2 million. This compares with pro forma net income of $8.3 million, or $0.46 per diluted share, for the same period in 2016, which reflects a pro forma tax rate of 40%. Pro forma net income for the second quarter of 2016 excludes stock-based compensation of $1.6 million, amortization of acquisition-related intangible assets of $0.2 million, and investment losses of $0.1 million.

“Forrester exceeded revenue, pro forma operating margin, and EPS guidance for the second quarter of 2017,” said George F. Colony, Forrester’s chairman and chief executive officer. “The rollout of our new selling model is progressing on schedule, now under the direction of our new chief sales officer, Kelley Hippler. Our strategy has not changed — the challenges posed by the age of the customer remain front and center for our clients.”

Forrester is providing third-quarter 2017 financial guidance as follows:

Third-Quarter 2017 (GAAP):

 

  •   Total revenues of approximately $77.5 million to $80.5 million.

 

  •   Operating margin of approximately 5.0% to 7.0%.

 

  •   Other income (expense), net of zero.

 

  •   An effective tax rate of 40%.

 

  •   Diluted earnings per share of approximately $0.13 to $0.17.

Third-Quarter 2017 (Pro Forma):

Pro forma financial guidance for the third quarter of 2017 excludes stock-based compensation expense of $2.1 million to $2.3 million, amortization of acquisition-related intangible assets of approximately $0.2 million, and any investment gains or losses.

 

  •   Pro forma operating margin of approximately 8.0% to 10.0%.

 

  •   Pro forma effective tax rate of 40%.

 

  •   Pro forma diluted earnings per share of approximately $0.21 to $0.25.

Our full-year 2017 guidance is as follows:

Full-Year 2017 (GAAP):

 

  •   Total revenues of approximately $324.0 million to $332.0 million.

 

  •   Operating margin of approximately 7.5% to 8.5%.

 

  •   Other income, net of zero.

 

  •   An effective tax rate of 36%.

 

  •   Diluted earnings per share of approximately $0.87 to $0.94.

Full-Year 2017 (Pro Forma):

Pro forma financial guidance for full-year 2017 excludes stock-based compensation expense of $8.6 million to $9.0 million, amortization of acquisition-related intangible assets of approximately $0.8 million, and any investment gains or losses.

 

  •   Pro forma operating margin of approximately 10.5% to 11.5%.

 

  •   Pro forma effective tax rate of 40%.

 

  •   Pro forma diluted earnings per share of approximately $1.13 to $1.20.

Quarterly Dividend

Forrester also announced today that its board of directors has approved a quarterly cash dividend of $0.19 per share, payable September 20, 2017, to shareholders of record on September 6, 2017.

Adoption Of FASB ASU No. 2016-09

Effective January 1, 2017, Forrester adopted Financial Accounting Standards Board Accounting Standards Update 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting (ASU No. 2016-09), which changes the accounting for stock-based compensation awards. Among the changes in ASU No. 2016-09 that impacted Forrester is the requirement to recognize certain tax benefits that arise from the settlement/exercise of stock-based compensation awards in the income statement, whereas previously these benefits were recorded in stockholders’ equity. This change was applied on a prospective basis to settlements/exercises occurring on or after January 1, 2017, and had an insignificant effect on our financial results in the second quarter of 2017.

In addition, ASU No. 2016-09 requires that all income-tax-related cash flows resulting from share-based payments be reported as operating activities and that cash paid by directly withholding shares for tax withholding purposes be classified as a financing activity in the statement of cash flows. These changes were applied retrospectively and resulted in an increase in operating cash flows, with a corresponding decrease in financing cash flows of $0.8 million for the six months ended June 30, 2016.

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 third quarter of and full-year 2017, 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, demand for advisory and consulting services, technology spending, Forrester’s ability to respond to business and economic conditions and market trends, Forrester’s ability to develop and offer new products and services, 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 realize the anticipated benefits from recent internal reorganizations, the possibility of network disruptions and security breaches, Forrester’s ability to enforce and protect its intellectual property, and possible variations in Forrester’s quarterly operating results. Dividend declarations are at the discretion of Forrester’s board of directors, and plans for future dividends may be revised by the board at any time. 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.

Contact:

Michael Doyle

Chief Financial Officer

Forrester Research, Inc.

+1 617-613-6000

mdoyle@forrester.com

Meaghan Rhyasen

Public Relations

Forrester Research, Inc.

+ 1 617-613-6070

press@forrester.com

© 2017, 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     Six Months Ended  
     June 30,     June 30,  
     2017     2016     2017     2016  

Revenues:

         

Research services

    $ 54,575     $ 55,023     $ 106,318     $ 108,271  

Advisory services and events

      35,158       32,798       60,609       56,951  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

      89,733       87,821       166,927       165,222  

Operating expenses:

         

Cost of services and fulfillment

      36,910       34,417       68,306       65,540  

Selling and marketing

      30,508       29,335       61,130       59,739  

General and administrative

      10,419       10,300       20,589       20,273  

Depreciation

      1,489       2,076       3,168       4,041  

Amortization of intangible assets

      194       210       385       419  

Reorganization costs

      —         11       —         1,026  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      79,520       76,349       153,578       151,038  

Income from operations

      10,213       11,472       13,349       14,184  

Other income, net

      93       473       102       145  

Losses on investments, net

      (22 )      (54 )      (225 )      (54 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      10,284       11,891       13,226       14,275  

Income tax provision

      4,220       4,431       4,132       5,526  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 6,064     $ 7,460     $ 9,094     $ 8,749  
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted income per common share

    $ 0.34     $ 0.41     $ 0.50     $ 0.49  
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted weighted average shares outstanding

      18,050       18,145       18,293       18,035  
  

 

 

    

 

 

    

 

 

    

 

 

  

Basic income per common share

    $ 0.34     $ 0.42     $ 0.51     $ 0.49  
  

 

 

    

 

 

    

 

 

    

 

 

  

Basic weighted average shares outstanding

      17,715       17,863       17,973       17,812  
  

 

 

    

 

 

    

 

 

    

 

 

  

Pro forma data (1):

         

Income from operations

    $ 10,213     $ 11,472     $ 13,349     $ 14,184  

Amortization of intangible assets

      194       210       385       419  

Reorganization costs

      —         11       —         1,026  

Stock-based compensation included in the following expense categories:

         

Cost of services and fulfillment

      1,103       870       2,299       2,064  

Selling and marketing

      202       109       364       423  

General and administrative

      891       647       1,582       1,274  
  

 

 

    

 

 

    

 

 

    

 

 

  

Pro forma income from operations

      12,603       13,319       17,979       19,390  

Other income, net

      93       473       102       145  
  

 

 

    

 

 

    

 

 

    

 

 

  

Pro forma income before income taxes

      12,696       13,792       18,081       19,535  

Pro forma income tax provision

      5,078       5,517       7,232       7,814  
  

 

 

    

 

 

    

 

 

    

 

 

  

Pro forma net income

    $ 7,618     $ 8,275     $ 10,849     $ 11,721  
  

 

 

    

 

 

    

 

 

    

 

 

  

Pro forma diluted income per share

    $ 0.42     $ 0.46     $ 0.59     $ 0.65  
  

 

 

    

 

 

    

 

 

    

 

 

  

Pro forma diluted weighted average shares outstanding

      18,050       18,145       18,293       18,035  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) Forrester believes that pro forma 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 pro forma presentation excludes amortization of acquisition-related intangible assets, stock-based compensation, reorganization costs and net gains or losses from investments, as well as their related tax effects. The pro forma data does not purport to be prepared in accordance with Accounting Principles Generally Accepted in the United States.

Forrester Research, Inc.

Key Financial Data

(Unaudited, dollars in thousands)

 

     June 30,     December 31,  
     2017     2016  

Balance sheet data:

     

Cash, cash equivalents and marketable investments

    $ 125,235     $ 138,105  

Accounts receivable, net

    $ 50,954     $ 58,812  

Deferred revenue

    $ 145,350     $ 134,265  
     Six Months Ended  
     June 30,  
     2017     2016  

Cash flow data:

     

Net cash provided by operating activities

    $ 26,893     $ 31,455  

Purchases of property and equipment

    $ (3,240 )    $ (2,318 ) 

Repurchases of common stock

    $ (36,426 )    $ —    

Dividends paid

    $ (6,815 )    $ (6,428 ) 
     As of  
     June 30,  
     2017     2016  

Metrics:

     

Agreement value

    $ 236,700     $ 241,800  

Client retention

      75 %      76 % 

Dollar retention

      87 %      88 % 

Enrichment

      94 %      96 % 

Number of clients

      2,417       2,481  
     As of  
     June 30,  
     2017     2016  

Headcount:

     

Total headcount

      1,381       1,336  

Research and consulting staff

      521       494  

Sales force

      538       526