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Forrester Research Reports 2017 Second-Quarter Financial Results

 (PRNewsfoto/Forrester Research, Inc.)

News provided by

Forrester Research, Inc.

Jul 26, 2017, 16:05 ET

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CAMBRIDGE, Mass., July 26, 2017 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2017 second-quarter financial results.

Second-Quarter Financial Performance

Total revenues were $89.7 million for the second quarter of 2017, compared with $87.8 million for the second quarter of 2016. Research revenues decreased 1%, and advisory services and events revenues increased 7%, compared with the second quarter of 2016.

On a GAAP basis, net income was $6.1 million, or $0.34 per diluted share, for the second quarter of 2017, compared with a net income of $7.5 million, or $0.41 per diluted share, for the same period in 2016.

On a pro forma basis, net income was $7.6 million, or $0.42 per diluted share, for the second quarter of 2017, which reflects a pro forma effective tax rate of 40%. Pro forma net income excludes stock-based compensation of $2.2 million and amortization of acquisition-related intangible assets of $0.2 million. This compares with pro forma net income of $8.3 million, or $0.46 per diluted share, for the same period in 2016, which reflects a pro forma tax rate of 40%. Pro forma net income for the second quarter of 2016 excludes stock-based compensation of $1.6 million, amortization of acquisition-related intangible assets of $0.2 million, and investment losses of $0.1 million.

"Forrester exceeded revenue, pro forma operating margin, and EPS guidance for the second quarter of 2017," said George F. Colony, Forrester's chairman and chief executive officer. "The rollout of our new selling model is progressing on schedule, now under the direction of our new chief sales officer, Kelley Hippler. Our strategy has not changed — the challenges posed by the age of the customer remain front and center for our clients."    

Forrester is providing third-quarter 2017 financial guidance as follows:

Third-Quarter 2017 (GAAP):

  • Total revenues of approximately $77.5 million to $80.5 million.
  • Operating margin of approximately 5.0% to 7.0%.
  • Other income (expense), net of zero.
  • An effective tax rate of 40%.
  • Diluted earnings per share of approximately $0.13 to $0.17.

Third-Quarter 2017 (Pro Forma):

Pro forma financial guidance for the third quarter of 2017 excludes stock-based compensation expense of $2.1 million to $2.3 million, amortization of acquisition-related intangible assets of approximately $0.2 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 8.0% to 10.0%.
  • Pro forma effective tax rate of 40%.
  • Pro forma diluted earnings per share of approximately $0.21 to $0.25.

Our full-year 2017 guidance is as follows:

Full-Year 2017 (GAAP):

  • Total revenues of approximately $324.0 million to $332.0 million.
  • Operating margin of approximately 7.5% to 8.5%.
  • Other income, net of zero.
  • An effective tax rate of 36%.
  • Diluted earnings per share of approximately $0.87 to $0.94.

Full-Year 2017 (Pro Forma):

Pro forma financial guidance for full-year 2017 excludes stock-based compensation expense of $8.6 million to $9.0 million, amortization of acquisition-related intangible assets of approximately $0.8 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 10.5% to 11.5%.
  • Pro forma effective tax rate of 40%.
  • Pro forma diluted earnings per share of approximately $1.13 to $1.20.

Quarterly Dividend

Forrester also announced today that its board of directors has approved a quarterly cash dividend of $0.19 per share, payable September 20, 2017, to shareholders of record on September 6, 2017.

Adoption Of FASB ASU No. 2016-09

Effective January 1, 2017, Forrester adopted Financial Accounting Standards Board Accounting Standards Update 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting (ASU No. 2016-09), which changes the accounting for stock-based compensation awards. Among the changes in ASU No. 2016-09 that impacted Forrester is the requirement to recognize certain tax benefits that arise from the settlement/exercise of stock-based compensation awards in the income statement, whereas previously these benefits were recorded in stockholders' equity. This change was applied on a prospective basis to settlements/exercises occurring on or after January 1, 2017, and had an insignificant effect on our financial results in the second quarter of 2017.

In addition, ASU No. 2016-09 requires that all income-tax-related cash flows resulting from share-based payments be reported as operating activities and that cash paid by directly withholding shares for tax withholding purposes be classified as a financing activity in the statement of cash flows. These changes were applied retrospectively and resulted in an increase in operating cash flows, with a corresponding decrease in financing cash flows of $0.8 million for the six months ended June 30, 2016.

About Forrester Research

Forrester Research 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, data, custom consulting, exclusive executive peer groups, 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 2017, 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, demand for advisory and consulting services, technology spending, Forrester's ability to respond to business and economic conditions and market trends, Forrester's ability to develop and offer new products and services, 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 realize the anticipated benefits from recent internal reorganizations, the possibility of network disruptions and security breaches, Forrester's ability to enforce and protect its intellectual property, and possible variations in Forrester's quarterly operating results. Dividend declarations are at the discretion of Forrester's board of directors, and plans for future dividends may be revised by the board at any time. 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
[email protected]

Meaghan Rhyasen
Public Relations
Forrester Research, Inc.
+ 1 617-613-6070
[email protected]

© 2017, 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,



2017


2016


2017


2016










Revenues:









Research services


$                    54,575


$                    55,023


$                  106,318


$                  108,271

Advisory services and events


35,158


32,798


60,609


56,951

Total revenues


89,733


87,821


166,927


165,222










Operating expenses:









Cost of services and fulfillment


36,910


34,417


68,306


65,540

Selling and marketing


30,508


29,335


61,130


59,739

General and administrative


10,419


10,300


20,589


20,273

Depreciation


1,489


2,076


3,168


4,041

Amortization of intangible assets


194


210


385


419

Reorganization costs


-


11


-


1,026

Total operating expenses


79,520


76,349


153,578


151,038










Income from operations


10,213


11,472


13,349


14,184










Other income, net


93


473


102


145

Losses on investments, net


(22)


(54)


(225)


(54)

Income before income taxes


10,284


11,891


13,226


14,275










Income tax provision


4,220


4,431


4,132


5,526

Net income


$                      6,064


$                      7,460


$                      9,094


$                      8,749










Diluted income per common share 


$                        0.34


$                        0.41


$                        0.50


$                        0.49










Diluted weighted average shares outstanding


18,050


18,145


18,293


18,035










Basic income per common share


$                        0.34


$                        0.42


$                        0.51


$                        0.49










Basic weighted average shares outstanding


17,715


17,863


17,973


17,812










Pro forma data (1):


















Income from operations


$                    10,213


$                    11,472


$                    13,349


$                    14,184

Amortization of intangible assets


194


210


385


419

Reorganization costs


-


11


-


1,026

Stock-based compensation included in the 









following expense categories:









Cost of services and fulfillment


1,103


870


2,299


2,064

Selling and marketing


202


109


364


423

General and administrative


891


647


1,582


1,274










Pro forma income from operations


12,603


13,319


17,979


19,390










Other income, net


93


473


102


145

Pro forma income before income taxes


12,696


13,792


18,081


19,535










Pro forma income tax provision


5,078


5,517


7,232


7,814










Pro forma net income


$                      7,618


$                      8,275


$                    10,849


$                    11,721










Pro forma diluted income per share 


$                        0.42


$                        0.46


$                        0.59


$                        0.65

Pro forma diluted weighted average shares outstanding


18,050


18,145


18,293


18,035










(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, stock-based compensation, reorganization costs and net gains or losses from

investments, as well as their related tax effects. The pro forma data does not purport to be prepared in accordance with Accounting Principles

Generally Accepted in the United States. 




























Forrester Research, Inc.





Key Financial Data





(Unaudited, dollars in thousands)












June 30,


December 31,



2017


2016

Balance sheet data:





Cash, cash equivalents and marketable investments


$                125,235


$                138,105

Accounts receivable, net


$                  50,954


$                  58,812

Deferred revenue


$                145,350


$                134,265













Six Months Ended



June 30,



2017


2016

Cash flow data:





Net cash provided by operating activities


$                  26,893


$                   31,455

Purchases of property and equipment


$                  (3,240)


$                   (2,318)

Repurchases of common stock


$                (36,426)


$                            -

Dividends paid


$                  (6,815)


$                   (6,428)













As of



June 30,



2017


2016

Metrics:





Agreement value


$                236,700


$                241,800

Client retention


75%


76%

Dollar retention


87%


88%

Enrichment


94%


96%

Number of clients


2,417


2,481








As of



June 30,



2017


2016

Headcount:





Total headcount


1,381


1,336

Research and consulting staff


521


494

Sales force


538


526






SOURCE Forrester Research, Inc.

Related Links

http://www.forrester.com

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