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Forrester Research Reports 2019 Second-Quarter Financial Results

CAMBRIDGE, Mass., July 31, 2019 /PRNewswire/ -- Forrester Research, Inc. (FORR) today announced its 2019 second-quarter financial results.

Second-Quarter Financial Performance

Total revenues were $128.2 million for the second quarter of 2019, compared with $96.4 million for the second quarter of 2018. Research revenues increased 31%, and advisory services and events revenues increased 36%, compared with the second quarter of 2018. Pro forma revenues, which exclude the fair value adjustment to deferred revenue from the acquisition of SiriusDecisions, were $133.1 million for the second quarter of 2019, with $78.8 million from research services and $54.3 million from advisory services and events.

On a GAAP basis, net income was $1.6 million, or $0.08 per diluted share, for the second quarter of 2019, compared with net income of $7.8 million, or $0.43 per diluted share, for the same period in 2018.

On a pro forma basis, net income was $12.3 million, or $0.65 per diluted share, for the second quarter of 2019, 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 $5.1 million, acquisition-related deferred revenue fair value adjustment of $4.9 million, and acquisition and integration costs of $2.5 million. This compares with a pro forma net income of $9.6 million, or $0.53 million per diluted share, for the same period in 2018, which reflects a pro forma tax rate of 31%. Pro forma net income for the second quarter of 2018 excludes stock-based compensation of $2.1 million, amortization of acquisition-related intangible assets of $0.2 million, and acquisition and integration costs of $0.3 million.

"Forrester was at the upper end of pro forma revenue and operating margin guidance and exceeded our pro forma EPS target for the second quarter," said George F. Colony, Forrester's chairman and chief executive officer. "We are seeing meaningful progress in executing our strategy and accelerating the integration with SiriusDecisions across the business."

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

Third-Quarter 2019 (GAAP):

  • Total revenues of approximately $105.0 million to $109.0 million.
  • Operating margin of approximately (2.0)% to 0.0%.
  • Interest expense of approximately $2.1 million.
  • An effective tax rate of (10)% to (5)%.
  • Loss per share of approximately $0.19 to $0.23.

Third-Quarter 2019 (Pro Forma):

Pro forma financial guidance for the third quarter of 2019 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of $1.5 million to $2.0 million, stock-based compensation expense of $3.0 million to $3.2 million, amortization of acquisition-related intangible assets of $5.5 million to $6.0 million, acquisition and integration costs of $1.3 million to $1.6 million, and any investment gains or losses.

  • Pro forma revenue of approximately $107.0 million to $111.0 million.
  • Pro forma operating margin of approximately 9.0% to 11.0%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $0.27 to $0.31.

Our full-year 2019 guidance is as follows:

Full-Year 2019 (GAAP):

  • Total revenues of approximately $456.5 million to $466.5 million.
  • Operating margin of approximately (1.0)% to 0.0%.
  • Interest expense of approximately $8.6 million.
  • An effective tax rate of (10)% to (5)%.
  • Diluted loss per share of approximately $0.53 to $0.63.

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 $11.0 million to $11.5 million, stock-based compensation expense of $11.5 million to $12.0 million, amortization of acquisition-related intangible assets of $22.0 million to $23.0 million, acquisition and integration costs of $7.5 million to $8.0 million, and any investment gains or losses.

  • Pro forma revenue of approximately $468.0 million to $478.0 million.
  • Pro forma operating margin of approximately 10.5% to 11.5%.
  • Pro forma effective tax rate of 31%.
  • Pro forma diluted earnings per share of approximately $1.52 to $1.62.

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 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, analytics, custom consulting, exclusive executive peer groups, learning offerings, 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 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.

Contact:

Michael Doyle 
Chief Financial Officer 
Forrester Research, Inc. 
+1 617-613-6000 
mdoyle@forrester.com 

Shweta Agarwal  
Public Relations 
Forrester Research, Inc. 
+1 617-613-6805 
sagarwal@forrester.com 

© 2019, 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,



2019


2018


2019


2018










Revenues:









Research services


$                    76,279


$                    58,300


$                  144,888


$                  110,000

Advisory services and events


51,904


38,053


83,944


64,102

Total revenues


128,183


96,353


228,832


174,102

Operating expenses:









Cost of services and fulfillment


56,571


39,071


101,681


73,176

Selling and marketing


44,017


32,709


86,050


65,720

General and administrative


13,221


10,940


26,411


21,679

Depreciation


2,166


2,095


4,189


4,091

Amortization of intangible assets


5,099


182


11,309


368

Acquisition and integration costs


2,487


329


5,454


329

Total operating expenses


123,561


85,326


235,094


165,363

Income (loss) from operations


4,622


11,027


(6,262)


8,739

Interest expense


(2,085)



(4,437)


Other income (expense), net


(86)


271


(356)


153

Losses on investments


(8)


(20)


(44)


(45)

Income (loss) before income taxes


2,443


11,278


(11,099)


8,847

Income tax expense


888


3,490


662


2,792

Net income (loss)


$                      1,555


$                      7,788


$                  (11,761)


$                      6,055










Basic income (loss) per common share


$                        0.08


$                        0.43


$                      (0.64)


$                        0.34

Diluted income (loss) per common share 


$                        0.08


$                        0.43


$                      (0.64)


$                        0.33

Basic weighted average shares outstanding


18,435


17,965


18,399


18,001

Diluted weighted average shares outstanding


18,780


18,290


18,399


18,313










Pro forma data (1):









GAAP total revenues


$                  128,183


$                    96,353


$                  228,832


$                  174,102

Deferred revenue fair value adjustment


4,905



8,810


Pro forma revenues


$                  133,088


$                    96,353


$                  237,642


$                  174,102










Income (loss) from operations


$                      4,622


$                    11,027


$                    (6,262)


$                      8,739

Amortization of intangible assets


5,099


182


11,309


368

Deferred revenue fair value adjustment


4,905



8,810


Acquisition and integration costs


2,487


329


5,454


329

Stock-based compensation included in the 









following expense categories:









Cost of services and fulfillment


1,567


1,108


3,030


2,127

Selling and marketing


485


246


925


491

General and administrative


796


754


1,578


1,453










Pro forma income from operations


19,961


13,646


24,844


13,507

Interest expense


(2,085)



(4,437)


Other income (expense), net


(86)


271


(356)


153

Pro forma income before income taxes


17,790


13,917


20,051


13,660










Income tax expense GAAP


888


3,490


662


2,792

Tax effects of pro forma items (2)


3,871


603


7,768


1,131

Adjustment to tax expense to reflect pro forma tax rate (3)


756


221


(2,214)


312










Pro forma net income


$                    12,275


$                      9,603


$                    13,835


$                      9,425










Pro forma diluted income per share 


$                        0.65


$                        0.53


$                        0.74


$                        0.51

Pro forma diluted weighted average shares outstanding


18,780


18,290


18,716


18,313










(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, acquisition-related deferred revenue fair value





adjustments, stock-based compensation, acquisition and integration costs, net gains or losses





from investments, as well as their related tax effects. We also utilized an assumed tax rate of 31%





in both 2019 and 2018, which excludes items such as any release of reserves for uncertain tax





positions established in prior years and the effect of any adjustments related to the filing of prior





year tax returns. The pro forma data does not purport to be prepared in accordance with Accounting




Principles Generally Accepted in the United States. 


















(2) The tax effect of adjusting items is based on the accounting treatment and rate for the





jurisdiction of each item.


















(3) To compute pro forma net income, we apply a pro forma effective tax rate of 31%.





 

Forrester Research, Inc.





Key Financial Data





(Unaudited, dollars in thousands)







June 30,


December 31,



2019


2018

Balance sheet data:





Cash and cash equivalents


$                  69,762


$                140,296

Accounts receivable, net


$                  65,824


$                  67,318

Deferred revenue


$                180,910


$                135,332

Debt outstanding


$                141,875


$                         —








Six Months Ended



June 30,



2019


2018

Cash flow data:





Net cash provided by operating activities


$                 33,529


$                  28,286

Purchases of property and equipment


$                 (4,666)


$                  (2,544)

Cash paid for acquisitions


$              (238,943)


$                  (1,289)

Repayments of debt


$                (33,125)


$                         —

Repurchases of common stock


$                         —


$                  (9,642)

Dividends paid


$                         —


$                  (7,196)








As of



June 30,



2019


2018

Metrics:





Agreement value


$                348,900


$                249,500

Client retention


73%


71%

Dollar retention


90%


89%

Enrichment


108%


107%

Number of clients


2,875


2,355








As of



June 30,



2019


2018

Headcount:





Total headcount


1,777


1,402

Products and advisory services staff


670


539

Sales force


697


520

 

 

Cision

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