• Revenue: $102.5 million, a decrease of 10% compared to the prior year period.
• Contract Value (CV): Declined 5% to $315.2 million.
• Research Revenue: Decreased 4% compared to Q3 2023.
• Consulting Revenue: $23.4 million, down 17% year-over-year.
• Events Revenue: $2.1 million, a decrease of 54% compared to Q3 2023.
• Operating Income: $8.2 million, a decrease of 33% from the previous year.
• Net Income: $5.6 million, a decrease of 35% year-over-year.
• Earnings Per Share (EPS): 29, down from 44 in Q3 2023.
• Cash and Investments: $114.9 million at the end of the quarter.
• Client Retention: 73%, up slightly from the previous quarter.
• Wall Retention: 89%, flat compared to the previous quarter.
• Forrester Decisions Client Retention: 81%, flat compared to the previous quarter.
• Headcount: Down 8% compared to the same period in 2023.
• Cash Flow from Operating Activities: Negative $2 million year-to-date.
• Stock Repurchase: Approximately $5 million worth of shares repurchased in the quarter.

• Warning! GuruFocus has detected 4 Warning Sign with FORR.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Forrester Research Inc (NASDAQ:FORR) is ahead of schedule on the Forrester Decisions (FD) migration, with 78% of contract value now in FD, and expects to finish the year with over 80%.
• The company saw strong performance in premier high-tech international and government sectors, including a significant $2.5 million deal with a multinational tech company in Asia Pacific.
• Forrester Decisions' unique continuous guidance model is gaining traction, with the Isola AI research portal becoming the third most used feature on the platform.
• The company divested its non-core FeedbackNow product line, receiving $6 million in cash and a $9 million note, allowing a sharper focus on the Forrester Decisions platform.
• Retention metrics are stabilizing, with client retention slightly up and Forrester Decisions-specific client retention remaining well above overall client retention.

Negative Points

• Forrester Research Inc (NASDAQ:FORR) experienced a 10% decline in revenue for the quarter, with contract value declining by 5%.
• The consulting business saw a 17% decrease in revenue, and the events business experienced a 54% decline compared to the previous year.
• Operating income decreased by 33% due to revenue declines in consulting and events, impacting overall profitability.
• Net income and earnings per share decreased by 35% and 34% respectively, compared to the same quarter last year.
• The company is navigating through a challenging macroeconomic environment, which has impacted CV bookings and overall financial performance.

Q & A Highlights

Q: Can you provide insights into the end market health and the reasons behind the CV bookings being below plan? A: Nate Swan, Chief Sales Officer, mentioned that while there were strong performances in several sectors, there was some underperformance in a specific group due to execution issues. Adjustments have been made, and the forecast for Q4 bookings looks promising, indicating that they are on track.

Q: What are the expectations for client budgets in 2025 compared to previous years? A: Carrie Johnson, Chief Product Officer, stated that tech budgets are expected to increase in 2025, aligning well with Forrester's strategy. The company sees significant growth opportunities with technology executives and their teams.

Q: How does Forrester measure the traction of its go-to-market strategies in a challenging environment? A: Nate Swan explained that they assess progress through various metrics such as pipelines, retention, and execution of the retention life cycle. The new motions are being well-received by clients and internal stakeholders, and they are identifying gaps quickly to improve execution.

Q: With the new guidance for contract value bookings, how should revenue growth be perceived for next year? A: Chris Finn, Chief Financial Officer, indicated that while they are not providing a detailed 2025 outlook yet, they expect CV to stabilize and grow, with improvements in consulting and events bookings. However, significant revenue growth is not anticipated immediately, with more details to be provided in February.

Q: What is the status of the sales team, and are they fully operational? A: Nate Swan noted that the sales team has undergone extensive training and development to target senior executives effectively. Continuous development is ongoing, with a focus on building pipeline and implementing the sales methodology. The team is responding well to these changes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.