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Edited Transcript of FORR.OQ earnings conference call or presentation 11-Feb-21 9:30pm GMT

·33 min read

Q4 2020 Forrester Research Inc Earnings Call CAMBRIDGE Feb 15, 2021 (Thomson StreetEvents) -- Edited Transcript of Forrester Research Inc earnings conference call or presentation Thursday, February 11, 2021 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * George F. Colony Forrester Research, Inc. - Founder, Chairman, CEO & President * Kelley Hippler Forrester Research, Inc. - Chief Sales Officer * Michael A. Doyle Forrester Research, Inc. - CFO * Scott R. Chouinard Forrester Research, Inc. - CAO & Treasurer ================================================================================ Conference Call Participants ================================================================================ * Andrew Owen Nicholas William Blair & Company L.L.C., Research Division - Analyst * Anja Marie Theresa Soderstrom Sidoti & Company, LLC - Senior Equity Research Analyst * Vincent Alexander Colicchio Barrington Research Associates, Inc., Research Division - MD ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good afternoon. Thank you for joining today's call. With me today are George Colony, Forrester's Chairman of the Board and CEO; Kelley Hippler, Forrester's Chief Sales Officer; Mike Doyle, Forrester's Chief Financial Officer; and Scott Chouinard, Forrester's Chief Accounting Officer. George will open the call, Kelley will follow George to discuss sales, then Mike and Scott will discuss our financials. We'll then open the call to Q&A. A replay of this call will be available until March 17, 2021, and can be accessed by dialing (855)859-2056 or (404)537-3406. Please reference the conference ID 9079797. Before we begin, I'd like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expects, believes, anticipates, intends, plans, estimates or similar expressions are intended to identify these forward-looking statements. These statements are based on the company's current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Some of the important factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. I will now hand the call over to George Colony. -------------------------------------------------------------------------------- George F. Colony, Forrester Research, Inc. - Founder, Chairman, CEO & President [2] -------------------------------------------------------------------------------- Thank you for joining the call. After my overview, Kelley Hippler, Forrester's CSO, will summarize sales results and progress. Mike Doyle, our CFO, will give an in-depth financial review of Q4 and the full year. Scott Chouinard, Forrester's Chief Accounting Officer, will conclude with guidance for Q1 and for full year 2021. We will then take questions. Our remarks are in two sections. Number one, I will summarize 2020. And two, I will look ahead to our plan for 2021; in particular, the expansion of contract value. Turning first to 2020. In the fourth quarter, we beat revenue guidance by $4.6 million and EPS by $0.01. Our bookings velocity increased sequentially in Q3 and Q4, with a very strong finish in December. Client count increased in the fourth quarter. Enrichment was up from the third quarter and agreement value increased quarter-over-quarter. Now it was not the year that we had planned for, but if you had told me on March 20 that we would end with these results I would have been quite happy, given the uncertainties of the early pandemic. Fortunately for the company and its investors, Forrester is a business that's fully productive in the virtual world. And given that the pandemic challenged companies to accelerate their technology efforts, our research gained value during the crisis. Challenging times stimulate demand for research as companies struggle to quickly adapt to new facts on the ground and new customer behavior, and I had called these times the golden age of research, as our clients turned to us for how to win and retain customers during the pandemic, how to shift their workforces to be virtual and how to prepare themselves for a post-pandemic digital world. I would now like to give a few highlights across our 3 areas of business: research, consulting and events. In research, active client readership increased year-over-year. Webinar attendance was up 88%. Analyst inquiries, these are the 30- to 60-minute client meetings conducted by analysts, were up 6%. So a good year in research. Our consulting business performed well in 2020. The consulting portfolio revenue grew 27% in the fourth quarter. The total economic impact of consulting products grew by 38% year-over-year in Q4. Over all, the entire consulting portfolio grew 16% in 2020 compared to 2019, highlighting our ability to balance capacity across teams and geographies and deliver growth during economic uncertainty. As you know, all Forrester events in 2020 were delivered virtually. We did not cancel any scheduled events and we delivered our full portfolio of 11 global forums and summits. Paid attendance at our virtual events was 14% higher than it was for our 2019 physical events, and feedback scores outpaced in-person events. In the year, there were over 200,000 views of streamed sessions. Employee attrition in the year was at historically low levels. This is a positive signal for our business in 2021 as we enter the year with the highest number of ramped sales reps and tenured analysts and consultants in our history. Forrester placed #32 among large U.S. companies on Glassdoor's annual Best Places to Work list, a score that will help our talent acquisition efforts in the coming year. I want to turn now to 2021. The biggest change for the year will be the company's laser focus on expanding contract value, the value of Forrester's annual recurring revenue from research. We define CV products as services that our clients use periodically over a year's time and renew on a yearly basis. In 2021, we are planning to grow CV bookings by double-digit rates. The consistent expansion of contract value is attractive to investors, as it results in predictable and profitable revenue streams. In past years, we have tracked the syndicated revenue and agreement value for investors; these are being replaced by the more conventional and simpler CV. There are 4 components to CV growth. One, current CV is renewed at high levels. Retention of contracts forms the base for growth. Two, additional CV services are sold to existing clients. This is what we formerly referred to as enrichment. Three, new client sign-on with Forrester. And four, Forrester acquires other companies, adding those contracts to our portfolio. And of course the latest example here is SiriusDecisions. The delta between starting and ending CV is CV growth, or net contract value increase. The terminology and concept is familiar to investors who follow the research and SaaS spaces. Now how will CV growth improve the long-term prospects of Forrester and drive shareholder value? As CV grows, earnings and free cash will increase. We will invest this cash in, one, the sales and marketing engine; two, research products; and three, acquisitions. A more powerful sales engine, coupled with enhanced CV products and acquired contracts, will enable Forrester to grow CV at faster rates, generating increased cash which we will then reinvest, continuing the cycle. In 2021, we will be introducing 3 new metrics for investors. One, CV growth. This is the year-over-year value of all active subscription-based contracts at a specific point in time compared to the prior year. We will be reporting on this quarterly. Two, wallet retention, the total contract value of current clients who were clients a year ago divided by the total contract value from the prior year. And finally, number three, CV client retention, the number of current CV clients who were clients a year ago divided by the total number of CV clients in the prior year. In 2021, the company will take a number of actions to drive CV growth. During the year, we will roll out a new CV research service that we spent much of 2020 developing, and I'll be updating investors on this product in future calls. In addition, we will be enhancing existing research products with new value and new digital features. Forrester now has 6 internal and 2 outsourced digital development groups dedicated to creating and enhancing our CV products. We will intensify the cross-sell between the SiriusDecisions and the Forrester client bases, accelerating wallet retention. Our SiriusDecisions research product for B2B marketing, sales and product management rebounded in the second half of 2020 as cross-sell increased and the full sales force was able to show the synergy between the vision and strategy research of Forrester and the execution research of Sirius. The sales force is structured to achieve the company goal of double-digit CV bookings growth in 2021. Sales compensation, awards and incentives are now focused on achieving CV targets, and we have a large number of ramped and tenured reps who are skilled at placing contracts. Our customer success organization, which is now 180 strong, gives us leverage to increase retention rates, and Kelley is going to give more color in her remarks. Forrester's consulting and events businesses are focused on leveraging their activities to increase CV growth. Clients that use consulting renew their CV services at 15% higher rates than the average client. Prospects that attend a Forrester forum or summit convert to a CV contract at 14% higher rates than average. And finally, FeedbackNow, Forrester's venture to enable companies to measure and improve customer experience in real-time, is poised to grow its CV in 2021. We have developed touchless smiley boxes for the post-pandemic world, and we have quickly sold out of these devices. The new regime of cleanliness and customer feedback, which will not abate when the pandemic is over, is driving demand for real-time, and we are prepared to deliver this year. We just signed the largest FeedbackNow deal ever, a multimillion-dollar contract with a large government agency. And a final note on CV. Because of the challenges posed by the pandemic in 2020, CV growth will ramp from low to high as we move through the year and replace contracts that were lost in 2021. And Mike and Scott will give more detail in their remarks. I wanted to end by summarizing Forrester's financial position. In 2020, we generated over $47 million of cash from operations, allowing us to increase the cash on our balance sheet by over $22 million, while paying down over $23 million of debt. We currently have $90 million of cash, and we expect to continue to generate strong cash flow in 2021. So to conclude, Forrester successfully managed its way through the pandemic in 2020. We are laser-focused on growing contract value bookings by double digits in 2021 through a CV-tuned sales engine and new and improved CV products. In short, we stayed on the offense in 2020, and that mindset continues into 2021. Now the pandemic is not yet over, and the global economy remains uneven. So we will remain fiscally vigilant. That said, Forrester is in a strong financial position, and we are ready to resume our voyage to $1 billion in revenue. The post-pandemic world will be more digital, favoring our value proposition of helping business and technology leaders use customer obsession to accelerate growth. So I hope that you are all staying well and that your families are safe. And now I'm going to pass the call over to Kelley Hippler, Forrester's Chief Sales Officer. Kelley? -------------------------------------------------------------------------------- Kelley Hippler, Forrester Research, Inc. - Chief Sales Officer [3] -------------------------------------------------------------------------------- Thank you, George. I want to reiterate how much we appreciate the efforts of our global Forrester team to focus on our clients first. We've been by our clients' side and on their side, helping them navigate change, innovate and grow throughout the COVID-19 pandemic. As George said, our clients need Forrester's insights now more than ever, and we are proud and honored to be their trusted strategic partner. Today, I want to spend a few minutes discussing 2 things: number one, our strong 2020 close; and number two, our laser focus on driving double-digit contract value bookings growth in 2021. So number one, our strong 2020 close. The Forrester sales team showed tremendous resilience throughout 2020. This culminated in a strong Q4 bookings performance of 8% growth versus the prior year. Several key performance indicators improved over prior quarter, including agreement value, 12-month rolling enrichment, client count and average ramped rep productivity. I'll highlight a few examples of our Q4 wins and renewals. Several end user clients renewed contracts worth over $1 million, which highlights the value of and need for Forrester's research across multiple disciplines. We also continue to secure long-term contracts. One example is a 3-year, $7.2 million renewal with a large U.S. financial services company who has been leveraging Forrester's research to help guide its digital transformation. New business was also strong in Q4, as we closed several six-figure new business deals, including a 3-year deal with the IT department of a health care provider worth over $630,000. We saw strong performance across our sales organization which sells to high-tech companies under $1 billion. With our sales force fully ramped, they increased the number of joint Forrester and SiriusDecisions contracts. We grew the contract value, or CV, of one of our longstanding software clients by 67%, to over $270,000, by including both product lines. In addition, our pipeline conversion was 4.8 points higher than prior year, and we halved our attrition rate on quota carriers from 2019 levels, to set us up for success in 2021. Which brings me to number two, our laser focus on driving double-digit contract value bookings growth in 2021. As George discussed, Forrester is aligning the entire organization to drive contract value growth. That requires some changes to how we operate. And within sales and customer success, specifically, we're prioritizing 4 imperatives to accelerate our CV growth mission. Number one, improved client retention. The single greatest lever to drive contract value is improving our client retention rates. The transformations that clients look to Forrester to help guide are multiyear journeys. We will continue to position multiyear deals as our standard model for engagement. We've also been working to automate a number of our client journeys to expedite the onboarding process so we can deliver value sooner in the customer life cycle with Forrester. Number two, increased client acquisition. We are partnering with marketing on demand generation aligned to key buying centers across technology, marketing, customer experience, sales and product functions. Our audience-centered approach, coupled with a [win back] program that is targeted to clients lost during the pandemic, will drive contract value by increasing our client count. Number three, enhanced digital selling and engagement. We continue to leverage our tech stack across sales and customer success to effectively engage with clients and prospects. As we evolve our outreach, we continue to engage on a more personal level to support our clients' most important initiatives to help drive business results and their personal success. And finally, number four, drive ecosystem alignment. Our SiriusDecisions research shows that companies with alignment across sales, marketing and product grow 19% faster and are 15% more profitable. To that end, we have implemented the SiriusDecisions demand waterfall internally. The demand waterfall is a SiriusDecisions strategic framework that defines a shared view between marketing and sales of the lead management process and the health of new business-related activities. Waterfall analysis measures the efficiency, velocity and throughput of leads. This insight is leveraged in marketing and sales activities to help model, measure and improve our marketing campaigns and lead management processes. As we focus on double-digit contract value growth, we will deliver on our core value proposition of helping business and technology leaders create customer-obsessed organizations that drive growth. Our own research shows that customer experience differentiation is the key to post-pandemic success, and we will continue helping our clients to build strategies and execute programs to differentiate their brands based on customer experience. With that, I will turn the call over to Mike Doyle. -------------------------------------------------------------------------------- Michael A. Doyle, Forrester Research, Inc. - CFO [4] -------------------------------------------------------------------------------- Thanks, Kelley. I'm now going to review Forrester's financial performance for the fourth quarter of 2020, including a look at our financial results, the balance sheet at December 31, our fourth quarter metrics. And then Scott Chouinard will provide the outlook for the first quarter and full year 2021. Please note that the income statement figures we review on this call are non-GAAP results, which we refer to as adjusted results and exclude those items mentioned in our press release today. For the fourth quarter, Forrester delivered adjusted revenue and earnings per share that exceeded the upper end of guidance and operating margin which met guidance. The momentum in our business has continued to accelerate, with fourth quarter bookings increasing to high-single-digit growth levels versus prior year. As Kelley discussed, we had excellent performance from our sales organizations, as all sales regions achieved their target for the fourth quarter, and we saw new business rebound resulting in a net increase in client count versus the prior quarter. Revenue performance for the quarter was led by reprints and content marketing offerings, which have grown at double-digit rates every quarter of 2020. Our core Forrester Research service and Executive Programs performed better than targeted levels, as did our North American strategy consulting business. Expenses were up slightly to prior year levels due to higher employee compensation costs, offset by continued savings in travel and entertainment. With strong revenue performance and continued check on expenses, EPS exceeded the upper end of guidance. As we look back at the full year, the second quarter was the low point in our bookings activity, declining significantly versus prior year. While bookings for the full year were down versus 2019, we've seen a steady improvement and acceleration in our business since the end of the second quarter. Forrester finished 2020 with revenue that exceeded our revised guidance and EPS that met the top end of our revised guidance. Now let me turn to a more detailed review of our fourth quarter results. Fourth quarter revenue decreased by 4%. Compared to the fourth quarter of last year, research revenue declined by 6%, consulting revenue increased by 10% and events revenue decreased by 48%. Operating expenses for the fourth quarter increased by 2%, driven by a higher average headcount and merit increases that were issued early in the year, higher bonuses that were partially restored in 2020 and higher professional services. These increases were materially offset by lower travel and entertainment expenses due to travel restrictions and lower events production costs due to our move to virtual events. Ended headcount was up only nominally compared to the fourth quarter of 2019. Operating income was $11.1 million, or 9.2% of revenue, compared to $17.5 million, or 14% of revenue, in the fourth quarter of 2019. Interest expense for the quarter was $1.2 million, as compared to $1.7 million in the fourth quarter of 2019, due to reduced debt and interest rates in the quarter. Net income for the quarter was $6.6 million and earnings per share was $0.35, compared with net income of $10.7 million and earnings per share of $0.57 in the fourth quarter of 2019. Our business' key metrics reflect some improvement in the fourth quarter, as agreement value, client count and enrichment all improved compared to the third quarter. We have not yet returned to 2019 levels, but we're pleased with how these indicators are trending. We've provided details in today's earnings release. Now I'd like to review the balance sheet. Our cash at December 31, 2020, was $90.3 million, which is an increase of $22.4 million from the end of 2019. Cash from operations was $18.6 million for the quarter, as compared to $2.8 million in the fourth quarter of last year. For the full year, we generated $47.8 million of cash from operations, which we are pleased with in this economic environment, and it is down just 1% from the strong cash flow we generated in 2019. Debt payments were $2.3 million during the quarter and $23.4 million for the year, which includes $14 million of payments to fully pay down our line of credit. Property and equipment purchases were $1.6 million for the quarter, compared to $3.5 million for the fourth quarter of last year. Accounts receivable at December 31, 2020, was $84.7 million, compared to $84.6 million as of December 31, 2019, with accounts receivable over 90 days at 3% at December 31, 2020, compared to 6% as of December 31, 2019. This is a remarkable collections performance in a difficult economic environment. Deferred revenue at December 31, 2020, was $180 million, essentially flat from the prior year. So in summary, from the low point at the end of May we experienced steady improvement and acceleration in our bookings in the third and fourth quarters. The pandemic has placed increased demands on our clients to have strong digital platforms for both the front and back office, increasing the demand for our products and services. Our financial results reflect that improvement, with revenue and EPS exceeding the revised guidance we issued at the end of the third quarter. Cash flow finished strong, and our balance sheet ended with more cash and less debt than we had at the start of the year. More importantly, with our most important asset, our people, we ended the year with low attrition. We made a conscious decision early in the pandemic to retain our people so we were staffed for growth, which has paid off. In particular, with our sales organization, we believe we start the year with headcount necessary to deliver our 2021 bookings plan. While the bookings shortfall in the first half of 2020 will have an impact on revenue in the first half of 2021, which Scott will address, we end the year well positioned for a very successful 2021. I will now turn the call over to Scott. -------------------------------------------------------------------------------- Scott R. Chouinard, Forrester Research, Inc. - CAO & Treasurer [5] -------------------------------------------------------------------------------- Thanks, Mike. Before I get into our guidance for 2021, I want to discuss the metrics that we'll be reporting beginning with our first quarter earnings release. As George mentioned, we'll be laser-focused on growing contract value in 2021, and we'll be updating our metrics accordingly. This will involve a few changes. First, we'll be replacing our current agreement value metric with contract value. The contract value metric will measure the annualized value of our recurring research products. We'll also modify our client retention metric to measure CV client activity only, and we'll introduce a new metric called wallet retention, which will measure the amount of CV that is retained and enriched over a 12-month period. We plan to publish historical CV and retention metrics in the first quarter so that you'll be able to see the trends in the business. And speaking to the trends, the bookings shortfall during 2020 that Mike mentioned will have a negative effect on CV growth in the early part of the year. However, with our focus on double-digit CV bookings this year, we should see meaningful growth in CV in the second half of the year, with growth rates in the high single-digits. Now regarding our 2021 guidance, we're projecting about a 1-point lift on revenue and expenses from foreign currency rates in 2021, which will have a small negative effect on both operating income and margins. We are expecting a second half recovery in the economy and are planning for a hybrid event experience in the second half of the year, which will be a mix of in-person and virtual experiences. And lastly, I wanted to comment on the expected trending of our financial results for 2021. As you know, with a subscription business, bookings recover faster than revenue, and our revenues in the first half of the year will be impacted by the decline in subscription bookings during the middle of last year. This will compress margins and EPS during the first half of 2021 as compared to 2020, especially since we had significant cost cuts in the first half of 2020. However, we should generate improved year-over-year operating margins and EPS in the second half of 2021 and would expect that trend to continue into 2022. Now we've provided guidance on a GAAP basis and listed the items excluded from our adjusted guidance in our press release and 8-K filed today. Our first quarter 2021 guidance on an adjusted basis is as follows: revenues of $104 million to $108 million; operating margin of 5% to 7%; an effective tax rate of 31%; and diluted earnings per share of $0.15 to $0.21. Our full year 2021 guidance on an adjusted basis is as follows: revenues of $466 million to $476 million; operating margin of 10% to 11%; an effective tax rate of 31%; and diluted earnings per share of $1.50 to $1.60. Thank you very much, and I will now turn the call over to the operator for the Q&A portion of the call. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from Andrew Nicholas, with William Blair. -------------------------------------------------------------------------------- Andrew Owen Nicholas, William Blair & Company L.L.C., Research Division - Analyst [2] -------------------------------------------------------------------------------- Scott touched on it briefly, but I just wanted to dig in a little bit to the operating margin guidance. It sounds like revenue dynamics in the first half of the year are, one, headwind. But I wanted to kind of just make sure I understand the different puts and takes on the margin outlook relative to last year. How much in the way of temporary cost savings from last year maybe tied to travel and entertainment are coming back online? And then to kind of wrap up this question, is there any update on how you're thinking about those margins in the medium to long term now that '21 guidance is out there? -------------------------------------------------------------------------------- Scott R. Chouinard, Forrester Research, Inc. - CAO & Treasurer [3] -------------------------------------------------------------------------------- Sure. This is Scott. I'll take that. So as we said on the call, margins in the first half were affected by a couple of things. First, the revenue shortfall from the bookings decline in the first half of 2020. And then, first half of 2020, we had full effect of our cost cuts. As you noted, some of them temporary, some of them more permanent. So first half margins really affected by that. Certainly, bonuses have been restored for 2021. That's going to be a big first half of '21 versus '20 comparison. As we'd mentioned on earlier calls, we've restored a lot of those cuts in the second half of 2020. So the margin story progressively gets better as we move through 2021 compared to 2020. So we would expect second half margins and EPS growth to be significant on a comparative basis. And then to get to the second part of your question, from a 2022 perspective, if we hit on our CV bookings like we expect to hit, then we certainly would expect to see margins improve in 2022, likely in the 100 to 200 basis ballpark. -------------------------------------------------------------------------------- Michael A. Doyle, Forrester Research, Inc. - CFO [4] -------------------------------------------------------------------------------- Andrew, as a quick reminder, too, this is Mike, I think you've heard George and I say this before, in terms of medium-term outlook for the business our view is with double-digit contract value growth this business should be running at a minimum of 15% to 17% on the operating margin side. So that's how you should think about us when you get to the medium-term level. So we're obviously in a march towards that right now, and I think we like our current trends. And to Scott's point, we don't get all the way there in '22, but I think you start making real headway. Okay? -------------------------------------------------------------------------------- Andrew Owen Nicholas, William Blair & Company L.L.C., Research Division - Analyst [5] -------------------------------------------------------------------------------- Got it. Got it. That's helpful. And then as my follow-up, on the events business, I think in your prepared remarks you mentioned an assumption for hybrid conferences in the back half of the year. How should we kind of think about the sensitivity to that business, whether or not it goes full year virtual or there's a bigger part of the year than half that is hybrid? Any kind of sensitivity that you can give around the various scenarios on the conference business and if there's any change to kind of how you're looking at that balance long term, too, that would be helpful. -------------------------------------------------------------------------------- Scott R. Chouinard, Forrester Research, Inc. - CAO & Treasurer [6] -------------------------------------------------------------------------------- Sure. This is Scott. I'll take that. So based upon the progression of our events during the year, we're not overly sensitive in 2021. Our 2 biggest events, the B2B Summit North America and CX North America, are first half events. So those are just planned as virtual events. So a lot of our smaller events are in the second half of the year. So we're expecting maybe $2 million to $3 million revenue impact from that. So if those were to go completely virtual, there would be that kind of top line effect. And from an expense standpoint, it really depends on the timing of that decision if we were to go full virtual, but I would expect the expense impact to be maybe half of that from a revenue standpoint. -------------------------------------------------------------------------------- Operator [7] -------------------------------------------------------------------------------- Our next question comes from Anja, with Sidoti. -------------------------------------------------------------------------------- Anja Marie Theresa Soderstrom, Sidoti & Company, LLC - Senior Equity Research Analyst [8] -------------------------------------------------------------------------------- First of all, I'm curious about the cadence through the quarter and, if it builds up, how the momentum continues into the first quarter. -------------------------------------------------------------------------------- Kelley Hippler, Forrester Research, Inc. - Chief Sales Officer [9] -------------------------------------------------------------------------------- Anja, it's Kelley Hippler. Thank you for the question. In terms of momentum, I would say actually starting with Q3 we saw a steady uptick in acceleration throughout the quarter. We had a strong October. November was a little sluggish; I think there was a lot of uncertainty around that time due to the election in the U.S., resurgence of COVID. But had a very strong finish to the year in December. And we are cautiously optimistic that that will carry over into the start of 2021. -------------------------------------------------------------------------------- Anja Marie Theresa Soderstrom, Sidoti & Company, LLC - Senior Equity Research Analyst [10] -------------------------------------------------------------------------------- Okay. That was helpful color. And I'm just curious, when you talk about the small events in the second half, how many people attend this kind of events? (inaudible) -------------------------------------------------------------------------------- George F. Colony, Forrester Research, Inc. - Founder, Chairman, CEO & President [11] -------------------------------------------------------------------------------- Anja, George here. What was the question? -------------------------------------------------------------------------------- Anja Marie Theresa Soderstrom, Sidoti & Company, LLC - Senior Equity Research Analyst [12] -------------------------------------------------------------------------------- So specifically, the size of those events that you are having in the second half that you're planning to have physical, how many attendees do you normally have at this kind of events? -------------------------------------------------------------------------------- George F. Colony, Forrester Research, Inc. - Founder, Chairman, CEO & President [13] -------------------------------------------------------------------------------- So I would say it's about one-third of the attendees for the full year will be in the second half. So it is -- again, as Scott had said, Summit and CX forum are the 2 largest events in the world. So it's in the low thousands, probably. And by the way, just to go back to Andrew's question, we're going to make the call. Get to midyear, find out where we're at with the vaccines. We recently surveyed our attendees from 2020, and about half of them said that they'd be willing to go to a physical event in the second half of the year, but 50% at this point are not willing. So it's going to be -- we'll make the call sometime in the May-June time frame for those for the second half. And last one thing, Anja, as Scott had also said, we're planning quite conservatively for events financially. So we're pretty well hedged there. -------------------------------------------------------------------------------- Anja Marie Theresa Soderstrom, Sidoti & Company, LLC - Senior Equity Research Analyst [14] -------------------------------------------------------------------------------- Okay. Understand. And you alluded to growth by acquisition, potentially. What do you see in that environment? -------------------------------------------------------------------------------- George F. Colony, Forrester Research, Inc. - Founder, Chairman, CEO & President [15] -------------------------------------------------------------------------------- Prices are high, primarily because of the IPO moves that we have seen. So prices remain somewhat high. But I would say our war chest is growing. We have a lot of dry powder now, and we're going to flow good cash in the first and second quarters. So I would say we are looking. We are still of course digesting SiriusDecisions, which was the largest acquisition in the history of the company, but we are warming up, let's put it that way. Mike, do you want to add something there? -------------------------------------------------------------------------------- Michael A. Doyle, Forrester Research, Inc. - CFO [16] -------------------------------------------------------------------------------- I would say that I'm with George. I think the likelihood of anything in the first half is very slim, just because we don't have anything currently in the hopper. If something of interest would come along, to George's point, we are in a position that we could do something relatively quickly. I think the greater likelihood is it would come -- everything is going to come more in the second half and then into 2022, just given how we're looking at the rhythm. And I agree with George: a lot of overpriced stuff out there right now. And that's not been how we've typically approached the M&A market. We tend to be pretty disciplined about pricing. -------------------------------------------------------------------------------- George F. Colony, Forrester Research, Inc. - Founder, Chairman, CEO & President [17] -------------------------------------------------------------------------------- Anja, most of the opportunities are really in the data space. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- Our next question comes from Vincent Colicchio, with Barrington Research. -------------------------------------------------------------------------------- Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [19] -------------------------------------------------------------------------------- George, could you give us a sense for the cadence of when some of the new products will be released during the year and maybe give us some color in terms of the cadence of when the more important ones will be released? -------------------------------------------------------------------------------- George F. Colony, Forrester Research, Inc. - Founder, Chairman, CEO & President [20] -------------------------------------------------------------------------------- I have a really ?- I have a one-word answer for you, Vince: no. Just watch the space. It's going to be -- as I said before, we stayed on the offense in 2020. I'm really proud of everything we've developed in 2020 and looking to introduce in this year. So I'm going to keep it really ?- I'll keep it fuzzy for the moment. More detail on the April call. Sorry not to be more specific. -------------------------------------------------------------------------------- Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [21] -------------------------------------------------------------------------------- That's fine. And Kelley, could you give us a sense for maybe the research pipeline of opportunity? Is that markedly better right now than it was this time last quarter? -------------------------------------------------------------------------------- Kelley Hippler, Forrester Research, Inc. - Chief Sales Officer [22] -------------------------------------------------------------------------------- Thanks, Vince. So at this point, we did a really nice job converting our Q4 pipeline. So we are in a pipeline-rebuild mode. So actually, our conversion rate was 5% higher than prior year in Q4. So the downside of that means we have less pipeline walking into the quarter. But we are building things at a normal cadence that we would expect to see and have good confidence that we will be able to get to our contract value bookings growth targets this year based on what we're seeing out of the gates. -------------------------------------------------------------------------------- Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [23] -------------------------------------------------------------------------------- Okay. And then can you give any color on pricing? Did you guys increase prices this year? Or do you plan to increase prices? -------------------------------------------------------------------------------- Kelley Hippler, Forrester Research, Inc. - Chief Sales Officer [24] -------------------------------------------------------------------------------- So we did do our annual price increase at the start of January. So historically, we had done that in July. And given the market conditions in 2020, we did hold off and put it into market effective January 1. So we are expecting to see a bump in our research sales, given the price increase. -------------------------------------------------------------------------------- Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [25] -------------------------------------------------------------------------------- And then, George, could you give me some color on why consulting was so strong? And will that follow through in the first half of next year? -------------------------------------------------------------------------------- George F. Colony, Forrester Research, Inc. - Founder, Chairman, CEO & President [26] -------------------------------------------------------------------------------- I think it was a big surprise for the year. You go virtual and you figure consultants can't get on airplanes and be in conference rooms and boardrooms. So we're worried about it, Vince. But companies, our clients adjusted quickly and the staff adjusted really quickly. I think it's one of those big lessons we're all going to take from the pandemic, that, hey, you can do a lot of great projects virtually. So it was one of the good surprises of the year. And a little weaker in Europe, stronger in the U.S., and a little bit stronger in Asia. And by the way, that will continue forward, being able to do those network virtually. -------------------------------------------------------------------------------- Michael A. Doyle, Forrester Research, Inc. - CFO [27] -------------------------------------------------------------------------------- The other item, George, because it's in our consulting, which you highlighted it I think when you opened, was the content marketing teams absolutely became so important as well as research reprints in a virtual environment where people couldn't get out on the road. So I think those things really accelerated our consulting performance in a really meaningful way. -------------------------------------------------------------------------------- Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [28] -------------------------------------------------------------------------------- And I assume the reprint strength will follow through in the first half? -------------------------------------------------------------------------------- Michael A. Doyle, Forrester Research, Inc. - CFO [29] -------------------------------------------------------------------------------- Yes, I think that's right. I think as long as the environment continues to -- look, it's been a good business for us, period. But it clearly stepped up and accelerated in the pandemic, where people don't have the opportunity to be out there. The reprint business was a great way to market. So I think we're expecting that it will continue in the first half. -------------------------------------------------------------------------------- Operator [30] -------------------------------------------------------------------------------- Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Mike Doyle for any further remarks. -------------------------------------------------------------------------------- Michael A. Doyle, Forrester Research, Inc. - CFO [31] -------------------------------------------------------------------------------- Great. Thanks, everybody. Listen, we appreciate you joining the call. We are going to be out virtually in the -- to be visiting with investors in the first quarter. We're going to be at the Sidoti conference, and we're also making dates available. So looking forward to seeing all of you in a virtual manner with investors shortly. -------------------------------------------------------------------------------- Operator [32] -------------------------------------------------------------------------------- Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.