Forrester Research Reports 2021 Third-Quarter Financial Results
Forrester Research reported strong Q3 2021 results with total revenues of $118.1 million, a 8.8% increase from $108.6 million in Q3 2020. The company achieved a net income of $4.5 million ($0.23 per share), recovering from a loss of $3.8 million in the prior year. Forrester raised its full-year guidance for the third time, anticipating total revenues between $492 million and $497 million. Additionally, a $50 million increase in the stock repurchase program was authorized, enhancing shareholder value.
- Q3 revenue increased by 8.8% year-over-year.
- Net income of $4.5 million, compared to a loss of $3.8 million in Q3 2020.
- Raised full-year revenue guidance for the third time in 2021.
- 12% year-over-year growth in contract value.
- Strong growth in sales velocity and multiyear deals due to Forrester Decisions.
- Operating margin guidance for Q4 and full-year 2021 is relatively low at 7.0% to 9.5%.
CAMBRIDGE, Mass., Nov. 3, 2021 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2021 third-quarter financial results.
Total revenues were
On a GAAP basis, net income was
On an adjusted basis, net income was
"We continued to see strong momentum in Q3 and achieved our goal of driving double-digit contract value growth faster than we expected," said George F. Colony, Forrester's chairman and chief executive officer. "Year-over-year contract value increased by
"Our solid performance over the past few quarters has allowed us to make investments into sales, marketing, and technology, which will further propel our business forward. Additionally, our newly launched product portfolio, Forrester Decisions, is resonating well with our clients. This next-generation platform will help us drive sustained double-digit contract value growth. Forrester Decisions is already helping us improve our sales velocity, drive wallet retention, and deepen our relationship with clients, resulting in multiyear recurring deals."
As part of the company's pivot to contract value (CV) in 2021, Forrester is classifying all components of its CV subscription research products as research revenues. In prior periods, advisory sessions included in Forrester's research subscription products were classified as consulting revenues. This has resulted in approximately
Forrester is providing fourth-quarter and full-year 2021 financial guidance as follows:
Fourth-Quarter 2021 (GAAP):
- Total revenues of approximately
$131.0 million to$136.0 million . - Operating margin of approximately
7.5% to9.5% . - Interest expense of approximately
$1.0 million . - An effective tax rate of
28% . - Earnings per share of approximately
$0.33 to$0.39 .
Fourth-Quarter 2021 (Adjusted):
Adjusted financial guidance for the fourth quarter of 2021 excludes stock-based compensation expense of
- Adjusted operating margin of approximately
12.0% to14.0% . - Adjusted effective tax rate of
31% . - Adjusted diluted earnings per share of approximately
$0.53 to$0.59 .
Full-Year 2021 (GAAP):
- Total revenues of approximately
$492.0 million to$497.0 million . - Operating margin of approximately
7.0% to8.0% . - Interest expense of approximately
$4.2 million . - An effective tax rate of
27% . - Earnings per share of approximately
$1.20 to$1.26 .
Full-Year 2021 (Adjusted):
Adjusted financial guidance for full-year 2021 excludes stock-based compensation expense of
- Adjusted operating margin of approximately
12.0% to13.0% . - Adjusted effective tax rate of
31% . - Adjusted diluted earnings per share of approximately
$2.04 to$2.10 .
About Forrester
Forrester (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We help leaders across technology, marketing, customer experience, product, and sales functions use customer obsession to accelerate growth. Through Forrester's proprietary research, consulting, and events, leaders from around the globe are empowered to be bold at work — to navigate change and put their customers at the center of their leadership, strategy, and operations. Our unique insights are grounded in annual surveys of more than 675,000 consumers, business leaders, and technology leaders worldwide; rigorous and objective research methodologies, including Forrester Wave™ evaluations; over 52 million real-time feedback votes; and the shared wisdom of our clients. To learn more, 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 fourth quarter of and full-year 2021 and statements about the launch and performance of Forrester Decisions and 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; Forrester's ability to fulfill existing or generate new consulting engagements and advisory services; technology spending; the impact of health epidemics, including COVID-19, on Forrester's business; Forrester's ability to respond to business and economic conditions and market trends; the risks and challenges inherent in international business activities, including 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; the impact of Forrester's outstanding debt obligations; competition and industry consolidation; possible variations in Forrester's quarterly operating results; concentration of ownership of Forrester; the possibility of network disruptions and security breaches; any failure to enforce and protect Forrester's intellectual property rights; compliance with privacy laws; taxation risks; any weakness in Forrester's system of internal controls; and the amount and timing of the repurchase of Forrester stock. 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.
Contact:
Chris Finn
Chief Financial Officer
Forrester Research, Inc.
+1 617-613-6129
cfinn@forrester.com
Shweta Agarwal
Public Relations
Forrester Research, Inc.
+1 617-613-6805
sagarwal@forrester.com
© 2021, 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 | Nine Months Ended | |||||||
September 30, | September 30, | |||||||
2021 | 2020 | 2021 | 2020 | |||||
Revenues: | ||||||||
Research | $ 79,876 | $ 74,445 | $ 235,846 | $ 223,746 | ||||
Consulting | 37,393 | 33,001 | 116,903 | 98,464 | ||||
Events | 867 | 1,131 | 7,838 | 6,253 | ||||
Total revenues | 118,136 | 108,577 | 360,587 | 328,463 | ||||
Operating expenses: | ||||||||
Cost of services and fulfillment | 49,836 | 46,125 | 149,571 | 133,442 | ||||
Selling and marketing | 41,340 | 42,209 | 123,175 | 121,599 | ||||
General and administrative | 14,383 | 12,475 | 41,895 | 35,936 | ||||
Depreciation | 2,342 | 2,544 | 6,887 | 7,398 | ||||
Amortization of intangible assets | 3,696 | 4,722 | 11,567 | 14,147 | ||||
Integration costs | - | 328 | 334 | 3,815 | ||||
Total operating expenses | 111,597 | 108,403 | 333,429 | 316,337 | ||||
Income from operations | 6,539 | 174 | 27,158 | 12,126 | ||||
Interest expense | (1,056) | (1,259) | (3,251) | (4,104) | ||||
Other expense, net | (195) | (274) | (866) | (165) | ||||
Gains on investments | — | — | — | 2,365 | ||||
Income (loss) before income taxes | 5,288 | (1,359) | 23,041 | 10,222 | ||||
Income tax expense | 766 | 2,401 | 6,220 | 2,658 | ||||
Net income (loss) | $ 4,522 | $ (3,760) | $ 16,821 | $ 7,564 | ||||
Basic income (loss) per common share | $ 0.24 | $ (0.20) | $ 0.88 | $ 0.40 | ||||
Diluted income (loss) per common share | $ 0.23 | $ (0.20) | $ 0.87 | $ 0.40 | ||||
Basic weighted average shares outstanding | 19,134 | 18,872 | 19,107 | 18,779 | ||||
Diluted weighted average shares outstanding | 19,388 | 18,872 | 19,351 | 18,873 | ||||
Adjusted data (1): | ||||||||
Total revenues - GAAP | $ 118,136 | $ 108,577 | $ 360,587 | $ 328,463 | ||||
Deferred revenue fair value adjustment | — | 80 | — | 402 | ||||
Adjusted revenues | $ 118,136 | $ 108,657 | $ 360,587 | $ 328,865 | ||||
Income from operations - GAAP | $ 6,539 | $ 174 | $ 27,158 | $ 12,126 | ||||
Deferred revenue fair value adjustment | — | 80 | — | 402 | ||||
Amortization of intangible assets | 3,696 | 4,722 | 11,567 | 14,147 | ||||
Integration costs | — | 328 | 334 | 3,815 | ||||
Lease incentive | — | 219 | — | 219 | ||||
Stock-based compensation included in the | ||||||||
following expense categories: | ||||||||
Cost of services and fulfillment | 1,554 | 1,638 | 4,389 | 4,463 | ||||
Selling and marketing | 372 | 446 | 1,220 | 1,231 | ||||
General and administrative | 536 | 614 | 1,742 | 2,270 | ||||
Adjusted income from operations | $ 12,697 | $ 8,221 | $ 46,410 | $ 38,673 | ||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Amount | Per Share | Amount | Per Share | Amount | Per Share | Amount | Per Share | |||||||||
Net income (loss) - GAAP | $ 4,522 | $ 0.23 | $ (3,760) | $ (0.20) | $ 16,821 | $ 0.87 | $ 7,564 | $ 0.40 | ||||||||
Deferred revenue fair value adjustment | — | — | 80 | — | — | — | 402 | 0.02 | ||||||||
Amortization of intangible assets | 3,696 | 0.19 | 4,722 | 0.26 | 11,567 | 0.59 | 14,147 | 0.76 | ||||||||
Integration costs | — | — | 328 | 0.02 | 334 | 0.02 | 3,815 | 0.20 | ||||||||
Lease incentive | — | — | 219 | 0.01 | — | — | 219 | 0.01 | ||||||||
Stock-based compensation | 2,462 | 0.13 | 2,698 | 0.14 | 7,351 | 0.38 | 7,964 | 0.42 | ||||||||
Gains on investments | — | — | — | — | — | — | (2,365) | (0.13) | ||||||||
Tax effects of items above (2) | (1,861) | (0.09) | (1,828) | (0.10) | (5,276) | (0.27) | (6,980) | (0.37) | ||||||||
Adjustment to tax expense for adjusted tax rate (3) | (921) | (0.05) | 2,156 | 0.11 | (1,615) | (0.08) | (1,027) | (0.05) | ||||||||
Adjusted net income | $ 7,898 | 0.41 | $ 4,615 | $ 0.24 | $ 29,182 | 1.51 | $ 23,739 | $ 1.26 | ||||||||
Diluted weighted average shares outstanding | 19,388 | 18,963 | 19,351 | 18,873 | ||||||||||||
(1) Forrester believes that adjusted 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 adjusted presentation excludes amortization of acquisition-related intangible assets, | ||||||||||||||||
acquisition-related deferred revenue fair value adjustments, stock-based compensation, integration costs, lease incentive costs and credits, and net gains from investments, | ||||||||||||||||
as well as their related tax effects. We also utilized an assumed tax rate of | ||||||||||||||||
tax positions established in prior years, the settlement of prior-year tax audits, and the effect of any adjustments related to the filing of prior-year tax returns. The adjusted | ||||||||||||||||
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 adjusted net income, we apply an adjusted effective tax rate of | ||||||||||||||||
Forrester Research, Inc. | ||||
Key Financial Data | ||||
(Unaudited, dollars in thousands) | ||||
September 30, | December 31, | |||
2021 | 2020 | |||
Balance sheet data: | ||||
Cash, cash equivalents, and marketable investments | $ 146,350 | $ 90,257 | ||
Accounts receivable, net | $ 52,317 | $ 84,695 | ||
Deferred revenue | $ 194,164 | $ 179,968 | ||
Debt outstanding | $ 100,000 | $ 109,375 | ||
Nine Months Ended | ||||
September 30, | ||||
2021 | 2020 | |||
Cash flow data: | ||||
Net cash provided by operating activities | $ 84,992 | $ 29,199 | ||
Purchases of property and equipment | $ (9,845) | $ (7,279) | ||
Repayments of debt | $ (9,375) | $ (21,031) | ||
Repurchases of common stock | $ (10,646) | $ — | ||
As of | ||||
September 30, | ||||
2021 | 2020 | |||
Metrics: | ||||
Contract value | $ 331,030 | $ 295,646 | ||
Client retention | ||||
Wallet retention | ||||
Number of clients | 2,964 | 2,750 | ||
As of | ||||
September 30, | ||||
2021 | 2020 | |||
Headcount: | ||||
Total headcount | 1,763 | 1,823 | ||
Sales force | 648 | 716 | ||
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SOURCE Forrester
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