PR Newswire | Jul 28, 2021 04:06PM EDT

07/28 15:05 CDT

Forrester Research Reports 2021 Second-Quarter Financial ResultsYear-over-year total contract value increases by 9% to $320 million CAMBRIDGE, Mass., July 28, 2021

CAMBRIDGE, Mass., July 28, 2021 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2021 second-quarter financial results.

Second-Quarter Financial Performance

Total revenues were $128.7 million for the second quarter of 2021, compared with $113.5 million for the second quarter of 2020.

On a GAAP basis, net income was $8.3 million, or $0.43 per diluted share, for the second quarter of 2021, compared with net income of $11.8 million, or $0.63 per diluted share, for the same period in 2020.

On an adjusted basis, net income was $12.7 million, or $0.66 per diluted share, for the second quarter of 2021, which reflects an adjusted effective tax rate of 31%. Adjusted net income excludes stock-based compensation of $2.4 million, amortization of acquisition-related intangible assets of $4.0 million, and integration costs of $0.2 million. This compares with adjusted net income of $12.2 million, or $0.65 per diluted share, for the same period in 2020, which reflects an adjusted tax rate of 31%. Adjusted net income for the second quarter of 2020 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, integration costs of $0.6 million, and gains on investments of $2.4 million.

"Our laser focus on increasing contract value resulted in another strong quarter," said George F. Colony, Forrester's chairman and chief executive officer. "Year over year, contract value grew 9%, and revenue increased across all business units: research, consulting, and events. We generated $70 million of cash in the first half of 2021 - more than the company has produced in any previous full year. Operating margin and earnings per share also exceeded the upper end of guidance. As a result of our continued strong performance in Q2 and the first half of the year, we are raising guidance for the second time this year."

"Our products and engagement model are resonating with clients, and we are confident that our new product portfolio, Forrester Decisions, will further accelerate our ability to deliver sustained double-digit contract value growth. Forrester Decisions brings together the vision and strategy of Forrester with the operational research of SiriusDecisions into one unique offering. Despite pandemic-related headwinds, we believe that the company can achieve its 2021 goals and continue to expand its annually recurring relationships with clients."

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 $1.4 million and $2.9 million of revenue being reclassified from consulting revenues to research revenues in the three and six months ended June 30, 2020, respectively.

Forrester is providing third-quarter and full-year 2021 financial guidance as follows:

Third-Quarter 2021 (GAAP):

* Total revenues of approximately $114.0 million to $118.0 million. * Operating margin of approximately 1.0% to 3.0%. * Interest expense of approximately $1.0 million. * An effective tax rate of 31%. * Earnings per share of approximately $0.01 to $0.07.

Third-Quarter 2021 (Adjusted):

Adjusted financial guidance for the third quarter of 2021 excludes stock-based compensation expense of $2.3 million to $2.5 million, amortization of acquisition-related intangible assets of approximately $3.6 million, and any investment gains or losses.

* Adjusted operating margin of approximately 6.0% to 8.0%. * Adjusted effective tax rate of 31%. * Adjusted diluted earnings per share of approximately $0.22 to $0.28.

Full-Year 2021 (GAAP):

* Total revenues of approximately $485.0 million to $495.0 million. * Operating margin of approximately 6.0% to 7.0%. * Interest expense of approximately $4.3 million. * An effective tax rate of 31%. * Earnings per share of approximately $0.85 to $0.95.

Full-Year 2021 (Adjusted):

Adjusted financial guidance for full-year 2021 excludes stock-based compensation expense of $9.5 million to $10.0 million, amortization of acquisition-related intangible assets of approximately $15.2 million, integration costs of $0.3 million, and any investment gains or losses.

* Adjusted operating margin of approximately 11.0% to 12.0%. * Adjusted effective tax rate of 31%. * Adjusted diluted earnings per share of approximately $1.75 to $1.85.

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(tm) 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 third quarter of and full-year 2021 and statements about the launch 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; 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:Scott ChouinardInterim Chief Financial Officer and TreasurerForrester Research, Inc.+1 617-613-6060schouinard@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.

Forrester Research, Inc.

Consolidated Statements of Income

(Unaudited, in thousands, except per share data)

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenues:

Research $ 81,002 $ 75,034 $ 155,970 $ 149,301

Consulting 40,960 33,475 79,510 65,463

Events 6,708 5,032 6,971 5,122

Total revenues 128,670 113,541 242,451 219,886

Operating expenses:

Cost of services and 52,258 43,964 99,735 87,317fulfillment

Selling and marketing 42,556 39,117 81,835 79,390

General and administrative 14,334 11,456 27,512 23,461

Depreciation 2,255 2,448 4,545 4,854

Amortization of intangible 3,968 4,713 7,871 9,425assets

Integration costs 216 612 334 3,487

Total operating expenses 115,587 102,310 221,832 207,934

Income from operations 13,083 11,231 20,619 11,952

Interest expense (1,066) (1,307) (2,195) (2,845)

Other income (expense), (201) (201) (671) 109net

Gains on investments - 2,352 - 2,365

Income before income taxes 11,816 12,075 17,753 11,581

Income tax expense 3,473 238 5,454 257

Net income $ 8,343 $ 11,837 $ 12,299 $ 11,324

Basic income per common $ 0.44 $ 0.63 $ 0.64 $ 0.60share

Diluted income per common $ 0.43 $ 0.63 $ 0.64 $ 0.60share

Basic weighted average 19,126 18,759 19,094 18,732shares outstanding

Diluted weighted average 19,377 18,831 19,332 18,828shares outstanding

Adjusted data (1):

Total revenues - GAAP $ 128,670 $ 113,541 $ 242,451 $ 219,886

Deferred revenue fair - 137 - 322value adjustment

Adjusted revenues $ 128,670 $ 113,678 $ 242,451 $ 220,208

Income from operations - $ 13,083 $ 11,231 $ 20,619 $ 11,952GAAP

Deferred revenue fair - 137 - 322value adjustment

Amortization of intangible 3,968 4,713 7,871 9,425assets

Integration costs 216 612 334 3,487

Stock-based compensationincluded in the

following expensecategories:

Cost of services and 1,401 1,232 2,835 2,825fulfillment

Selling and marketing 399 423 848 785

General and administrative 597 809 1,206 1,656

Adjusted income from $ 19,664 $ 19,157 $ 33,713 $ 30,452operations

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

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

Net income - $ 8,343 $ 0.43 $ 11,837 $ 0.63 $ 12,299 $ 0.64 $ 11,324 $ 0.60GAAP

Deferredrevenue fair - - 137 0.01 - - 322 0.02valueadjustment

Amortizationof 3,968 0.21 4,713 0.25 7,871 0.41 9,425 0.50intangibleassets

Integration 216 0.01 612 0.03 334 0.02 3,487 0.19costs

Stock-based 2,397 0.12 2,464 0.13 4,889 0.25 5,266 0.28compensation

Gains on - - (2,352) (0.12) - - (2,365) (0.13)investments

Tax effectsof items (1,768) (0.09) (2,441) (0.13) (3,415) (0.18) (5,153) (0.27)above (2)

Adjustmentto taxexpense for (462) (0.02) (2,792) (0.15) (694) (0.04) (3,182) (0.17)adjusted taxrate (3)

Adjusted net $ 12,694 0.66 $ 12,178 $ 0.65 $ 21,284 1.10 $ 19,124 $ 1.02income

Dilutedweightedaverage 19,377 18,831 19,332 18,828sharesoutstanding

(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, integration costs, and netgains or losses from investments, as well as their related tax effects. We alsoutilized an assumed tax rate of 31% in both 2021 and 2020, which excludes itemssuch as any release of reserves for uncertain tax positions established inprior years, the settlement of prior year tax audits, and the effect of anyadjustments related to the filing of prior year tax returns. The adjuted datadoes not purport to be prepared in accordance with Accounting PrinciplesGenerally 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)

June 30, December 31,

2021 2020

Balance sheet data:

Cash and cash equivalents $ 146,387 $ 90,257

Accounts receivable, net $ 63,397 $ 84,695

Deferred revenue $ 210,288 $ 179,968

Debt outstanding $ 103,125 $ 109,375

Six Months Ended

June 30,

2021 2020

Cash flow data:

Net cash provided by operating activities $ 70,093 $ 25,002

Purchases of property and equipment $ (5,243) $ (5,110)

Repayments of debt $ (6,250) $ (18,688)

Repurchases of common stock $ (2,673) $ -

As of

June 30,

2021 2020

Metrics:

Contract value $ 319,800 $ 294,000

Client retention 77% 72%

Wallet retention 96% 87%

Number of clients 2,940 2,760

As of

June 30,

2021 2020

Headcount:

Total headcount 1,719 1,843

Sales force 638 719

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SOURCE Forrester