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Forrester Research Reports 2017 Third-Quarter Financial Results

CAMBRIDGE, Mass., Oct. 25, 2017 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced its 2017 third-quarter financial results.

Third-Quarter Financial Performance

Total revenues were $80.4 million for the third quarter of 2017, compared with $77.4 million for the third quarter of 2016. Research revenues increased 3%, and advisory services and events revenues increased 6%, compared with the third quarter of 2016.

On a GAAP basis, net income was $4.0 million, or $0.22 per diluted share, for the third quarter of 2017, compared with net income of $3.1 million, or $0.17 per diluted share, for the same period in 2016.

On a pro forma basis, net income was $5.6 million, or $0.31 per diluted share, for the third 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, amortization of acquisition-related intangible assets of $0.2 million, and net investment losses of $0.8 million. This compares with pro forma net income of $6.0 million, or $0.32 per diluted share, for the same period in 2016, which reflects a pro forma tax rate of 40%. Pro forma net income for the third quarter of 2016 excludes stock-based compensation of $2.0 million, amortization of acquisition-related intangible assets of $0.2 million, and net investment losses of $1.1 million.

"Forrester was at the upper end of revenue guidance while exceeding pro forma operating margin and EPS guidance for the third quarter of 2017," said George F. Colony, Forrester's chairman and chief executive officer. "We remain positive about our strategy and growth."

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

Fourth-Quarter 2017 (GAAP):

  • Total revenues of approximately $83.0 million to $86.0 million.
  • Operating margin of approximately 6.8% to 8.8%.
  • Other income (expense), net of zero.
  • An effective tax rate of 40%.
  • Diluted earnings per share of approximately $0.20 to $0.24.

Fourth-Quarter 2017 (Pro Forma):

Pro forma financial guidance for the fourth quarter of 2017 excludes stock-based compensation expense of $2.0 million to $2.2 million, amortization of acquisition-related intangible assets of approximately $0.2 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 9.5% to 11.5%.
  • Pro forma effective tax rate of 40%.
  • Pro forma diluted earnings per share of approximately $0.27 to $0.31.

Our full-year 2017 guidance is as follows:

Full-Year 2017 (GAAP):

  • Total revenues of approximately $330.0 million to $333.0 million.
  • Operating margin of approximately 7.7% to 8.7%.
  • Other income, net of $0.2 million.
  • An effective tax rate of 35%.
  • Diluted earnings per share of approximately $0.90 to $0.94.

Full-Year 2017 (Pro Forma):

Pro forma financial guidance for full-year 2017 excludes stock-based compensation expense of $8.4 million to $8.6 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 $1.17 to $1.21.

Quarterly Dividend

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

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 fourth 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.

Contacts:

Michael Doyle
Chief Financial Officer
Forrester Research, Inc.
+1 617-613-6000
mdoyle@forrester.com

Meaghan Rhyasen
Public Relations
Forrester Research, Inc.
+ 1 617-613-6070
press@forrester.com

© 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


Nine Months Ended



September 30,


September 30,



2017


2016


2017


2016










Revenues:









Research services


$ 54,235


$ 52,727


$ 160,553


$ 160,998

Advisory services and events


26,134


24,700


86,743


81,651

Total revenues


80,369


77,427


247,296


242,649










Operating expenses:









Cost of services and fulfillment


32,508


29,889


100,814


95,429

Selling and marketing


29,225


27,751


90,355


87,490

General and administrative


10,083


10,086


30,672


30,359

Depreciation


1,607


1,941


4,775


5,982

Amortization of intangible assets


197


208


582


627

Reorganization costs


-


-


-


1,026

Total operating expenses


73,620


69,875


227,198


220,913










Income from operations


6,749


7,552


20,098


21,736










Other income, net


146


229


248


374

Losses on investments, net


(772)


(1,085)


(997)


(1,139)

Income before income taxes


6,123


6,696


19,349


20,971










Income tax provision


2,170


3,584


6,302


9,110

Net income


$ 3,953


$ 3,112


$ 13,047


$ 11,861










Diluted income per common share


$ 0.22


$ 0.17


$ 0.72


$ 0.65










Diluted weighted average shares outstanding


18,051


18,435


18,212


18,168










Basic income per common share


$ 0.22


$ 0.17


$ 0.73


$ 0.66










Basic weighted average shares outstanding


17,747


18,062


17,897


17,896










Pro forma data (1):


















Income from operations


$ 6,749


$ 7,552


$ 20,098


$ 21,736

Amortization of intangible assets


197


208


582


627

Reorganization costs


-


-


-


1,026

Stock-based compensation included in the









following expense categories:









Cost of services and fulfillment


1,088


1,077


3,387


3,141

Selling and marketing


170


272


535


695

General and administrative


920


622


2,501


1,895










Pro forma income from operations


9,124


9,731


27,103


29,120










Other income, net


146


229


248


374

Pro forma income before income taxes


9,270


9,960


27,351


29,494










Pro forma income tax provision


3,708


3,984


10,940


11,798










Pro forma net income


$ 5,562


$ 5,976


$ 16,411


$ 17,696










Pro forma diluted income per share


$ 0.31


$ 0.32


$ 0.90


$ 0.97

Pro forma diluted weighted average shares outstanding


18,051


18,435


18,212


18,168










(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)












September 30,


December 31,



2017


2016

Balance sheet data:





Cash, cash equivalents and marketable investments


$ 133,979


$ 138,105

Accounts receivable, net


$ 39,481


$ 58,812

Deferred revenue


$ 132,929


$ 134,265













Nine Months Ended



September 30,



2017


2016

Cash flow data:





Net cash provided by operating activities


$ 36,863


$ 38,305

Purchases of property and equipment


$ (5,806)


$ (3,334)

Repurchases of common stock


$ (39,967)


$ -

Dividends paid


$ (10,205)


$ (9,696)













As of



September 30,



2017


2016

Metrics:





Agreement value


$ 237,800


$ 241,100

Client retention


76%


76%

Dollar retention


88%


88%

Enrichment


94%


95%

Number of clients


2,393


2,482








As of



September 30,



2017


2016

Headcount:





Total headcount


1,374


1,332

Research and consulting staff


510


488

Sales force


530


514

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SOURCE Forrester