CAMBRIDGE, Mass., July 30, 2020 /PRNewswire/ -- Forrester Research,
Inc. (Nasdaq: FORR) today announced its 2020 second-quarter
financial results.
Second-Quarter Financial Performance
Total revenues were $113.5 million
for the second quarter of 2020, compared with $128.2 million for the second quarter of 2019.
Adjusted revenues, which exclude the fair value adjustment to
deferred revenue from the acquisition of SiriusDecisions, were
$113.7 million for the second quarter
of 2020, compared with $133.1 million
for the second quarter of 2019.
"We performed better than we expected during a challenging
quarter," said George F. Colony,
Forrester's chairman and chief executive officer. "We exceeded our
revenue guidance by more than $5
million and exceeded EPS by 31
cents."
"The pandemic has disrupted every single business," continued
Colony. "With no existing playbook on how to manage this crisis,
business leaders are turning to Forrester for advice and research
on how to navigate these challenging times. We are continually
innovating our own business and sharing best practices with our
clients — our quick pivot to digital events is an example. As a
result, our client interactions are at an all-time high. As we look
ahead to 2021 and beyond, we are well positioned to come out of the
pandemic stronger."
On a GAAP basis, net income was $11.8
million, or $0.63 per diluted
share, for the second quarter of 2020, compared with a net income
of $1.6 million, or $0.08 per diluted share, for the same period in
2019.
On an adjusted basis, net income was $12.2 million, or $0.65 per diluted share, for the second quarter
of 2020, which reflects an adjusted effective tax rate of 31%.
Adjusted net income excludes stock-based compensation of
$2.5 million, amortization of
acquisition-related intangible assets of $4.7 million, acquisition-related deferred
revenue fair value adjustment of $0.1
million, acquisition and integration costs of $0.6 million, and gains on investments of
$2.4 million. This compares with an
adjusted net income of $12.3 million,
or $0.65 per diluted share, for the
same period in 2019, which reflects an adjusted tax rate of 31%.
Adjusted net income for the second quarter of 2019 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.
"Despite the continued economic uncertainty due to the pandemic,
we are noticing many bright spots in our business," said
Michael Doyle, Forrester's chief
financial officer. "As a result of a stronger than expected
performance in the second quarter in our research, consulting, and
events businesses, combined with successful implementation of
cost-reduction measures, we are raising our 2020 year-end
guidance."
Forrester is providing third-quarter 2020 financial guidance as
follows:
Third-Quarter 2020 (GAAP):
- Total revenues of approximately $99.0
million to $104.0
million.
- Operating margin of approximately (5.0)% to (3.0)%.
- Interest expense of approximately $1.3
million.
- An effective tax rate of approximately 1.0%.
- Loss per share of approximately $0.25 to $0.31.
Third-Quarter 2020 (Adjusted):
Adjusted financial guidance for the third 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
$2.4 million to $2.6 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.
- Adjusted operating margin of approximately 3.0% to 5.0%.
- Adjusted effective tax rate of 31%.
- Adjusted diluted earnings per share of approximately
$0.06 to $0.12.
Our full-year 2020 guidance is as follows:
Full-Year 2020 (GAAP):
- Total revenues of approximately $420.0
million to $430.0
million.
- Operating margin of approximately 0.5% to 2.5%.
- Interest expense of approximately $5.4
million.
- An effective tax rate of approximately 1%.
- Income per share of approximately breakeven to $0.25.
Full-Year 2020 (Adjusted):
Adjusted 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
$10.2 million to $10.7 million, amortization of
acquisition-related intangible assets of approximately $18.8 million, integration costs of $4.3 million to $4.7
million, and any investment gains or losses.
- Adjusted operating margin of approximately 8.5% to 10.5%.
- Adjusted effective tax rate of 31%.
- Adjusted diluted earnings per share of approximately
$1.15 to $1.40.
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 third 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.
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
© 2020, Forrester Research, Inc. All rights reserved. Forrester
is a trademark of Forrester Research, Inc.
Forrester
Research, Inc.
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Consolidated
Statements of Income
|
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|
|
|
|
|
(Unaudited, In
thousands, except per share data)
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
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|
June 30,
|
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2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
|
|
|
|
Research
|
$
73,621
|
|
$
76,279
|
|
$
146,417
|
|
$
144,888
|
Consulting
|
34,888
|
|
34,017
|
|
68,347
|
|
65,803
|
Events
|
5,032
|
|
17,887
|
|
5,122
|
|
18,141
|
Total
revenues
|
113,541
|
|
128,183
|
|
219,886
|
|
228,832
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of services and
fulfillment
|
43,964
|
|
56,571
|
|
87,317
|
|
101,681
|
Selling and
marketing
|
39,117
|
|
44,017
|
|
79,390
|
|
86,050
|
General and
administrative
|
11,456
|
|
13,221
|
|
23,461
|
|
26,411
|
Depreciation
|
2,448
|
|
2,166
|
|
4,854
|
|
4,189
|
Amortization of
intangible assets
|
4,713
|
|
5,099
|
|
9,425
|
|
11,309
|
Acquisition and
integration costs
|
612
|
|
2,487
|
|
3,487
|
|
5,454
|
Total operating
expenses
|
102,310
|
|
123,561
|
|
207,934
|
|
235,094
|
Income (loss) from
operations
|
11,231
|
|
4,622
|
|
11,952
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|
(6,262)
|
Interest
expense
|
(1,307)
|
|
(2,085)
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|
(2,845)
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|
(4,437)
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Other income
(expense), net
|
(201)
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|
(86)
|
|
109
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|
(356)
|
Gains (losses) on
investments
|
2,352
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|
(8)
|
|
2,365
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|
(44)
|
Income (loss)
before income taxes
|
12,075
|
|
2,443
|
|
11,581
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|
(11,099)
|
Income tax
expense
|
238
|
|
888
|
|
257
|
|
662
|
Net income
(loss)
|
$
11,837
|
|
$
1,555
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|
$
11,324
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|
$
(11,761)
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|
|
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|
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|
Basic income (loss)
per common share
|
$
0.63
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|
$
0.08
|
|
$
0.60
|
|
$
(0.64)
|
Diluted income (loss)
per common share
|
$
0.63
|
|
$
0.08
|
|
$
0.60
|
|
$
(0.64)
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Basic weighted
average shares outstanding
|
18,759
|
|
18,435
|
|
18,732
|
|
18,399
|
Diluted weighted
average shares outstanding
|
18,831
|
|
18,780
|
|
18,828
|
|
18,399
|
|
|
|
|
|
|
|
|
Adjusted data
(1):
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|
Total revenues -
GAAP
|
$
113,541
|
|
$
128,183
|
|
$
219,886
|
|
$
228,832
|
Deferred revenue fair
value adjustment
|
137
|
|
4,905
|
|
322
|
|
8,810
|
Adjusted
revenues
|
$
113,678
|
|
$
133,088
|
|
$
220,208
|
|
$
237,642
|
|
|
|
|
|
|
|
|
Income (loss) from
operations - GAAP
|
$
11,231
|
|
$
4,622
|
|
$
11,952
|
|
$
(6,262)
|
Deferred revenue fair
value adjustment
|
137
|
|
4,905
|
|
322
|
|
8,810
|
Amortization of
intangible assets
|
4,713
|
|
5,099
|
|
9,425
|
|
11,309
|
Acquisition and
integration costs
|
612
|
|
2,487
|
|
3,487
|
|
5,454
|
Stock-based
compensation included in the
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|
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|
|
following expense
categories:
|
|
|
|
|
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|
|
Cost of services and
fulfillment
|
1,232
|
|
1,567
|
|
2,825
|
|
3,030
|
Selling and
marketing
|
423
|
|
485
|
|
785
|
|
925
|
General and
administrative
|
809
|
|
796
|
|
1,656
|
|
1,578
|
Adjusted income
from operations
|
$
19,157
|
|
$
19,961
|
|
$
30,452
|
|
$
24,844
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
Net income (loss)
- GAAP
|
$
11,837
|
|
$
0.63
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|
$
1,555
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|
$
0.08
|
|
$
11,324
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|
$
0.60
|
|
$
(11,761)
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|
$
(0.64)
|
Effect on GAAP net
loss of diluted shares
|
|
|
-
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|
|
-
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|
-
|
|
|
|
0.01
|
Deferred revenue fair
value adjustment
|
137
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|
0.01
|
|
4,905
|
|
0.26
|
|
322
|
|
0.02
|
|
8,810
|
|
0.47
|
Amortization of
intangible assets
|
4,713
|
|
0.25
|
|
5,099
|
|
0.28
|
|
9,425
|
|
0.50
|
|
11,309
|
|
0.61
|
Acquisition and
integration costs
|
612
|
|
0.03
|
|
2,487
|
|
0.13
|
|
3,487
|
|
0.19
|
|
5,454
|
|
0.29
|
Stock-based
compensation
|
2,464
|
|
0.13
|
|
2,848
|
|
0.15
|
|
5,266
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|
0.28
|
|
5,533
|
|
0.30
|
(Gains) losses on
investments
|
(2,352)
|
|
(0.12)
|
|
8
|
|
-
|
|
(2,365)
|
|
(0.13)
|
|
44
|
|
-
|
Tax effects of items
above (2)
|
(2,441)
|
|
(0.13)
|
|
(3,871)
|
|
(0.21)
|
|
(5,153)
|
|
(0.27)
|
|
(7,768)
|
|
(0.42)
|
Adjustment to tax
expense for adjusted tax rate (3)
|
(2,792)
|
|
(0.15)
|
|
(756)
|
|
(0.04)
|
|
(3,182)
|
|
(0.17)
|
|
2,214
|
|
0.12
|
Adjusted net
income
|
$
12,178
|
|
0.65
|
|
$
12,275
|
|
$
0.65
|
|
$
19,124
|
|
1.02
|
|
$
13,835
|
|
$
0.74
|
Diluted weighted
average shares outstanding
|
18,831
|
|
|
|
18,780
|
|
|
|
18,828
|
|
|
|
18,716
|
|
|
|
|
|
|
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|
(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, 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 2020 and 2019, which
excludes items such as any release of reserves for uncertain
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.
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(2) The tax effect of
adjusting items is based on the accounting treatment and rate for
the jurisdiction of each item.
|
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(3) To compute
adjusted net income, we apply an adjusted effective tax rate of
31%.
|
Forrester
Research, Inc.
|
|
|
|
|
Key Financial
Data
|
|
|
|
|
(Unaudited, dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
2020
|
|
2019
|
Balance sheet
data:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
68,377
|
|
$
67,904
|
Accounts receivable,
net
|
|
$
54,108
|
|
$
84,605
|
Deferred
revenue
|
|
$
170,777
|
|
$
179,194
|
Debt
outstanding
|
|
$
114,063
|
|
$
132,750
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
June 30,
|
|
|
2020
|
|
2019
|
Cash flow
data:
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
25,002
|
|
$
33,529
|
Purchases of property
and equipment
|
|
$
(5,110)
|
|
$
(4,666)
|
Cash paid for
acquisitions
|
|
$
—
|
|
$
(238,943)
|
Repayments of
debt
|
|
$
(18,688)
|
|
$
(33,125)
|
|
|
|
|
|
|
|
As
of
|
|
|
June 30,
|
|
|
2020
|
|
2019
|
Metrics:
|
|
|
|
|
Agreement
value
|
|
$
339,400
|
|
$
348,900
|
Client
retention
|
|
66%
|
|
73%
|
Dollar
retention
|
|
88%
|
|
90%
|
Enrichment
|
|
98%
|
|
108%
|
Number of
clients
|
|
2,679
|
|
2,875
|
|
|
|
|
|
|
|
As
of
|
|
|
June 30,
|
|
|
2020
|
|
2019
|
Headcount:
|
|
|
|
|
Total
headcount
|
|
1,843
|
|
1,777
|
Products and advisory
services staff
|
|
726
|
|
670
|
Sales
force
|
|
719
|
|
697
|
|
|
|
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|
View original
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SOURCE Forrester