PR Newswire | Feb 11, 2021 04:06PM EST

02/11 15:05 CST

Forrester Research Reports 2020 Fourth-Quarter And Full-Year Financial Results CAMBRIDGE, Mass., Feb. 11, 2021

CAMBRIDGE, Mass., Feb. 11, 2021 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2020 fourth-quarter and full-year financial results.

Fourth-Quarter Financial Performance

Total revenues were $120.5 million for the fourth quarter of 2020, compared with $124.3 million for the fourth quarter of 2019. Adjusted revenues, which exclude the fair value adjustment to deferred revenue from the acquisition of SiriusDecisions, were $120.6 million for the fourth quarter of 2020, compared with $125.1 million for the fourth quarter of 2019.

On a GAAP basis, net income was $2.4 million, or $0.13 per diluted share, for the fourth quarter of 2020, compared with net income of $4.9 million, or $0.26 per diluted share, for the same period in 2019.

On an adjusted basis, net income was $6.6 million, or $0.35 per diluted share, for the fourth quarter of 2020, which reflects an adjusted effective tax rate of 31%. Adjusted net income excludes stock-based compensation of $2.9 million, amortization of acquisition-related intangible assets of $5.5 million, acquisition and integration costs of $2.0 million, lease incentive income of $3.4 million, and investment gains of $0.1 million. This compares with adjusted net income of $10.7 million, or $0.57 per diluted share, for the same period in 2019, which reflects an adjusted tax rate of 31%. Adjusted net income for the fourth quarter of 2019 excludes stock-based compensation of $3.1 million, amortization of acquisition-related intangible assets of $5.7 million, acquisition-related deferred revenue fair value adjustment of $0.8 million, acquisition and integration costs of $1.1 million, and investment gains of $0.1 million.

"Forrester had a strong finish to the year despite challenging macroeconomic conditions. We helped our clients find new ways to win and retain customers during the pandemic, shift their workforces to virtual, and prepare themselves for a post-pandemic digital world," said George F. Colony, Forrester's chairman and chief executive officer. "After the uncertainty of Q2, company momentum built in Q3 and Q4, with rising engagement across our research, consulting, and events businesses. We exceeded revenue and EPS guidance for the quarter and head into 2021 with healthy cash flow and a solid balance sheet.

"In 2021, the company is laser-focused on increasing research contract value bookings at double-digit rates - that is job number one."

Year Ended December 31, 2020, Financial Performance

Total revenues were $449.0 million, compared with $461.7 million for the same period in 2019. Adjusted revenues, which exclude the fair value adjustment to deferred revenue from the acquisition of SiriusDecisions, were $449.4 million, compared with $473.0 million for the same period in 2019.

On a GAAP basis, net income was $10.0 million, or $0.53 per diluted share, for 2020, compared with a net loss of $9.6 million, or $0.52 per diluted share, for 2019.

On an adjusted basis, net income was $30.4 million, or $1.60 per diluted share, for 2020, which reflects an adjusted effective tax rate of 31%. Adjusted net income excludes stock-based compensation of $10.9 million, amortization of acquisition-related intangible assets of $19.7 million, acquisition-related deferred revenue fair value adjustment of $0.4 million, acquisition and integration costs of $5.8 million, lease incentive income of $3.2 million, and investment gains of $2.5 million. This compares with adjusted net income of $31.0 million, or $1.65 per diluted share, for 2019, which reflects an adjusted tax rate of 31%. Adjusted net income for 2019 excludes stock-based compensation of $11.7 million, amortization of acquisition-related intangible assets of $22.6 million, acquisition-related deferred revenue fair value adjustment of $11.3 million, and acquisition and integration costs of $8.9 million.

A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.

2021 Guidance

Forrester is providing first-quarter 2021 financial guidance as follows:

First-Quarter 2021 (GAAP):

* Total revenues of approximately $104.0 million to $108.0 million. * Operating margin of approximately (1.0)% to 1.0%. * Interest expense of approximately $1.2 million. * An effective tax rate of 32%. * Loss per share of approximately $0.02 to $0.08.

First-Quarter 2021 (Adjusted):

Adjusted financial guidance for the first quarter of 2021 excludes stock-based compensation expense of $2.4 million to $2.6 million, amortization of acquisition-related intangible assets of approximately $3.8 million, integration costs of approximately $0.1 million, and any investment gains or losses.

* Adjusted operating margin of approximately 5.0% to 7.0%. * Adjusted effective tax rate of 31%. * Adjusted diluted earnings per share of approximately $0.15 to $0.21.

Our full-year 2021 guidance is as follows:

Full-Year 2021 (GAAP):

* Total revenues of approximately $466.0 million to $476.0 million. * Operating margin of approximately 4.5% to 5.5%. * Interest expense of approximately $4.5 million. * An effective tax rate of 32%. * Diluted earnings per share of approximately $0.57 to $0.67.

Full-Year 2021 (Adjusted):

Adjusted financial guidance for full-year 2021 excludes stock-based compensation expense of $10.2 million to $10.7 million, amortization of acquisition-related intangible assets of approximately $15.2 million, integration costs of $0.3 million to $0.5 million, and any investment gains or losses.

* Adjusted operating margin of approximately 10.0% to 11.0%. * Adjusted effective tax rate of 31%. * Adjusted diluted earnings per share of approximately $1.50 to $1.60.

About Forrester Research

Forrester?(Nasdaq: FORR) is one of the most influential research and advisory firms in the world.?We help business and technology leaders 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 methodologies, including Forrester Wave(tm) evaluations; and the shared wisdom of our most innovative 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 first quarter of and full-year 2021 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 DoyleChief Financial OfficerForrester Research, Inc.+1 617-613-6000mdoyle@forrester.com

Shweta AgarwalPublic RelationsForrester Research, Inc.+1 617-613-6805sagarwal@forrester.com

(c) 2021, Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc.

ForresterResearch, Inc.

ConsolidatedStatements ofIncome

(Unaudited, Inthousands,except pershare data)

Three Months Ended Year Ended

December 31, December 31,

2020 2019 2020 2019

Revenues:

Research $ 75,255 $ 79,299 $ 294,485 $ 298,735

Consulting 41,382 37,530 144,362 135,952

Events 3,884 7,440 10,137 27,010

Total revenues 120,521 124,269 448,984 461,697

Operatingexpenses:

Cost ofservices and 47,457 50,116 180,899 196,726fulfillment

Selling and 44,601 45,210 166,200 172,865marketing

General and 14,433 13,098 50,369 53,042administrative

Depreciation 2,481 2,262 9,879 8,572

Amortizationof intangible 5,536 5,656 19,683 22,619assets

Acquisitionand 1,964 1,100 5,779 8,948integrationcosts

Totaloperating 116,472 117,442 432,809 462,772expenses

Income (loss)from 4,049 6,827 16,175 (1,075)operations

Interest (1,236) (1,713) (5,340) (8,054)expense

Other expense, (209) (286) (374) (515)net

Gains oninvestments, 107 106 2,472 45net

Income (loss)before income 2,711 4,934 12,933 (9,599)taxes

Income taxexpense 285 44 2,943 (29)(benefit)

Net income $ 2,426 $ 4,890 $ 9,990 $ (9,570)(loss)

Basic income $ $ $ $ (loss) per 0.13 0.26 0.53 (0.52)common share

Diluted income $ $ $ $ (loss) per 0.13 0.26 0.53 (0.52)common share

Basic weightedaverage common 18,971 18,624 18,827 18,492sharesoutstanding

Dilutedweightedaverage common 19,119 18,720 18,935 18,492sharesoutstanding

Adjusted data(1):

Total revenues $ 120,521 $ 124,269 $ 448,984 $ 461,697- GAAP

Deferredrevenue fair 42 790 444 11,257valueadjustment

Adjusted $ 120,563 $ 125,059 $ 449,428 $ 472,954revenues

Income (loss)from $ 4,049 $ 6,827 $ 16,175 $ (1,075)operations -GAAP

Deferredrevenue fair 42 790 444 11,257valueadjustment

Amortizationof intangible 5,536 5,656 19,683 22,619assets

Acquisitionand 1,964 1,100 5,779 8,948integrationcosts

Lease (3,445) - (3,226) -incentive

Stock-basedcompensationincluded inthe

followingexpensecategories:

Cost ofservices and 1,693 1,815 6,156 6,627fulfillment

Selling and 520 402 1,751 1,768marketing

General and 700 862 2,970 3,289administrative

Adjustedincome from $ 11,059 $ 17,452 $ 49,732 $ 53,433operations

Three Months Ended Year Ended

December 31, December 31,

2020 2019 2020 2019

Amount Per Share Amount Per Share Amount Per Share Amount Per Share

Net income(loss) - $ 2,426 $ 0.13 $ 4,890 $ 0.26 $ 9,990 $ 0.53 $ (9,570) $ (0.52)GAAP

Effect onGAAP netloss of - - - 0.01dilutedshares

Deferredrevenue fair 42 - 790 0.04 444 0.02 11,257 0.60valueadjustment

Amortizationof 5,536 0.29 5,656 0.30 19,683 1.04 22,619 1.20intangibleassets

Acquisitionand 1,964 0.10 1,100 0.06 5,779 0.30 8,948 0.48integrationcosts

Lease (3,445) (0.18) - - (3,226) (0.17) - -incentive

Stock-based 2,913 0.15 3,079 0.16 10,877 0.57 11,684 0.62compensation

Gains on (107) - (106) - (2,472) (0.13) (45) -investments

Tax effectsof items (1,632) (0.08) (4,166) (0.22) (8,612) (0.45) (15,062) (0.80)above (2)

Adjustmentto taxexpense for (1,063) (0.06) (580) (0.03) (2,091) (0.11) 1,125 0.06adjusted taxrate (3)

Adjusted net $ 6,634 $ 0.35 $ 10,663 $ 0.57 $ 30,372 $ 1.60 $ 30,956 $ 1.65income

Dilutedweightedaverage 19,119 18,720 18,935 18,720sharesoutstanding

(1) Forrester believes that adjusted financial results provide investors withconsistent and comparable information to aid in the understanding ofForrester's ongoing business, and are also used by Forrester in makingcompensation decisions. Our adjusted presentation excludes amortization ofacquisition-related intangible assets, acquisition-related deferred revenuefair value adjustments, stock-based compensation, acquisition and integrationcosts, net gains or losses from investments, lease incentive cost and credits,as well as their related tax effects. We also utilized an assumed tax rate of31% in both 2020 and 2019, which excludes items such as any release of reservesfor uncertain tax positions established in prior years, the settlement of prioryear tax audits, and the effect of any adjustments related to the filing ofprior year tax returns. The adjusted data does not purport to be prepared inaccordance with Accounting Principles Generally Accepted in the United States.

(2) The tax effect of adjusting items is based on the accounting treatment andrate for the jurisdiction of each item.

(3) To compute adjusted net income, we apply an adjusted effective tax rate of31%.

Forrester Research, Inc.

Key Financial Data

(Unaudited, dollars in thousands)

December 31, December 31,

2020 2019

Balance sheet data:

Cash and cash equivalents $ $ 90,257 67,904

Accounts receivable, net $ $ 84,695 84,605

Deferred revenue $ $ 179,968 179,194

Debt outstanding $ $ 109,375 132,750

Year Ended

December 31,

2020 2019

Cash flow data:

Net cash provided by operating $ $ activities 47,754 48,406

Purchases of property and equipment $ $ (8,905) (11,890)

Cash paid for acquisitions $ $ - (237,684)

Repayments of debt $ $ (23,375) (42,250)

As of

December 31,

2020 2019

Metrics:

Agreement value $ $ 345,300 358,000

Client retention 65% 72%

Dollar retention 88% 90%

Enrichment 100% 106%

Number of clients 2,697 2,880

As of

December 31,

2020 2019

Headcount:

Total headcount 1,798 1,795

Products and advisory services 704 688staff

Sales force 701 698

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SOURCE Forrester Research