PART I This section outlines Forrester's business, risk factors, properties, legal proceedings, and statutory disclosures [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Forrester is a global research and advisory firm, accelerating client growth via subscription research, consulting, and events - Forrester Research, Inc. is a global independent research and advisory firm focused on helping business and technology leaders achieve growth through 'customer obsession' via proprietary research, consulting, and events[14](index=14&type=chunk) - The core business model is built on increasing **Contract Value (CV)** through renewable subscription research products, with consulting and events playing complementary roles in driving **CV** growth[18](index=18&type=chunk)[19](index=19&type=chunk)[21](index=21&type=chunk) - **Forrester Decisions**, launched in 2021, is the primary subscription research product, with a goal to migrate existing clients and achieve approximately **two-thirds of CV** in **Forrester Decisions** products by the end of 2023. As of December 31, 2022, **Forrester Decisions** comprised approximately **32% of the company's CV**[25](index=25&type=chunk)[84](index=84&type=chunk) - The company's sales force increased from **637 personnel in 2021 to 709 in 2022**, selling products and services globally through various groups segmented by client size, geography, and market potential[30](index=30&type=chunk)[31](index=31&type=chunk) Contract Value and Client Metrics | Metric | December 31, 2022 (in millions) | December 31, 2021 (in millions) | Change (Absolute, in millions) | Change (Percentage) | |---|---|---|---|---| | Contract value | $353.4 | $343.0 | $10.4 | 3% | | Client retention | 74% | 78% | (4) points | — | | Wallet retention | 94% | 102% | (8) points | — | | Number of clients | 2,778 | 3,005 | (227) | (8%) | - The decline in **CV** growth rate, client retention, and client count in 2022 was primarily attributed to macroeconomic conditions (funding/budget pressure on smaller tech clients, inflation, rising interest rates, geopolitical turbulence, recession threat) and the ongoing transition to the **Forrester Decisions** product platform[84](index=84&type=chunk) - As of December 31, 2022, Forrester employed **2,033 persons** globally, with **1,487** in the US and Canada, **298** in EMEA, and **248** in Asia Pacific[39](index=39&type=chunk) [Item 1A. Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from declining renewals, reduced consulting demand, economic conditions, international operations, and talent retention - Key business risks include a decline in renewals or demand for subscription-based research services (especially during the **Forrester Decisions** migration), decreased demand for consulting services (which comprised **28% of 2022 revenues**), and adverse impacts from the economic environment (inflation, interest rates, recession threat) on technology spending[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - International operations, accounting for approximately **21% of 2022 revenues** across **79 countries**, expose the company to risks such as political/economic conditions, staffing challenges, regulatory changes, currency fluctuations, and intellectual property enforcement difficulties[47](index=47&type=chunk)[98](index=98&type=chunk) - The company's future success depends on its ability to develop and offer new products, attract and retain qualified professional staff (including key management like CEO George F. Colony), and anticipate/respond to rapidly changing market trends and technologies[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - Outstanding debt of **$50.0 million** under a **$150.0 million** revolving credit facility (as of December 31, 2022) could restrict business operations and affect financial condition, with covenants limiting financial flexibility[52](index=52&type=chunk)[129](index=129&type=chunk) - Competition is intense, primarily from other research/advisory firms (e.g., Gartner), marketing agencies, consulting firms, and free online information sources, with low barriers to entry in some market segments[53](index=53&type=chunk) - General risks include network disruptions or security breaches, challenges in enforcing and protecting intellectual property rights, compliance with evolving privacy laws (GDPR, CCPA), taxation risks from operating in multiple jurisdictions, and potential adverse impacts from health epidemics like COVID-19[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) [Item 1B. Unresolved Staff Comments](index=9&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has not received any unresolved written comments from the Securities and Exchange Commission - No unresolved written comments have been received from the Securities and Exchange Commission[63](index=63&type=chunk) [Item 2. Properties](index=9&type=section&id=Item%202.%20Properties) Forrester's corporate headquarters is in Cambridge, Massachusetts, with global leased offices, deemed adequate for current operations - The corporate headquarters is located in Cambridge, Massachusetts, comprising approximately **190,000 square feet**, with the lease expiring on February 28, 2027[64](index=64&type=chunk) - Additional office spaces are rented in San Francisco, New York City, McLean (VA), Nashville, Norwalk (CT), London, New Delhi, Singapore, and Sydney, along with other short-term leases globally[65](index=65&type=chunk) - Management believes current facilities are adequate and additional facilities are available for future needs[66](index=66&type=chunk) [Item 3. Legal Proceedings](index=10&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to ordinary course legal proceedings, which are not expected to materially impact its financial position or operations - The company is subject to legal proceedings and civil/regulatory claims in the ordinary course of business[67](index=67&type=chunk) - Accruals for legal contingencies are recorded when a liability is probable and estimable, with associated costs expensed as incurred[67](index=67&type=chunk) - Management believes current lawsuits and claims are not expected to have a material adverse effect on financial position, results of operations, or cash flows, though litigation can still be adverse due to costs and resource diversion[68](index=68&type=chunk)[69](index=69&type=chunk) [Item 4. Mine Safety Disclosures](index=10&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Forrester Research, Inc - Not applicable[70](index=70&type=chunk) PART II This section details the company's common equity market, financial condition, operations, market risks, and consolidated financial statements [Item 5. Market For Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=11&type=section&id=Item%205.%20Market%20For%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Forrester's common stock trades on Nasdaq, with a suspended dividend and **$510.0 million** utilized from authorized stock repurchases - Common stock is listed on the Nasdaq Global Select Market under the symbol 'FORR'[73](index=73&type=chunk) - The quarterly dividend program was indefinitely suspended starting in 2019[73](index=73&type=chunk) Stockholder and Repurchase Program Metrics | Metric | Value | |---|---| | Stockholders of record (as of March 6, 2023) | ~24 | | Closing stock price (as of March 6, 2023) | $34.09 per share | | Total authorized stock repurchase program | $585.0 million | | Aggregate cost of repurchased shares (as of Dec 31, 2022) | $510.0 million | | Number of shares repurchased (as of Dec 31, 2022) | ~17.0 million | | Shares outstanding (as of March 6, 2023) | 19,191,000 | | Market value of non-affiliate common equity (as of June 30, 2022) | ~$532,000,000 | - No shares were purchased under the stock repurchase program during the quarter ended December 31, 2022[75](index=75&type=chunk) [Item 6. [Reserved]](index=12&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Forrester's financial performance, noting slowed **Contract Value** growth, increased expenses, decreased net income, and cash flow changes [Overview](index=13&type=section&id=Overview) This overview describes Forrester's revenue streams, operating expenses, and **Contract Value (CV)** metric performance - Revenues are generated from Research subscriptions, electronic reprints, consulting projects, advisory services, and events. Subscription products are recognized ratably over the contract term, while consulting and event revenues are recognized as services are provided or events are completed[79](index=79&type=chunk) - Primary operating expenses include cost of services and fulfillment, selling and marketing, and general and administrative expenses, with overhead costs allocated based on employee headcount[80](index=80&type=chunk) - The company focuses on **Contract Value (CV)** products, which are its most profitable and have historically high renewal rates. **CV** is defined as the annualized value of all recurring research-related contracts in effect at a specific point in time[81](index=81&type=chunk)[83](index=83&type=chunk) Contract Value and Client Metrics | Metric | 2022 (in millions) | 2021 (in millions) | Absolute Change (in millions) | Percentage Change | |---|---|---|---|---| | Contract value | $353.4 | $343.0 | $10.4 | 3% | | Client retention | 74% | 78% | (4) points | — | | Wallet retention | 94% | 102% | (8) points | — | | Number of clients | 2,778 | 3,005 | (227) | (8%) | - The **3% CV growth** in 2022 represents an **11-point decrease** from **14% growth** in 2021, primarily due to macroeconomic conditions (funding/budget pressure, inflation, interest rates, geopolitical turbulence, recession threat) and the ongoing transition to the **Forrester Decisions** product platform[84](index=84&type=chunk) - Approximately **32% of CV** was composed of **Forrester Decisions** products as of December 31, 2022, with an anticipation of reaching **two-thirds** by the end of 2023. Macroeconomic conditions and product transition are expected to pressure key metrics through the first half of 2023[84](index=84&type=chunk) [Critical Accounting Estimates](index=14&type=section&id=Critical%20Accounting%20Estimates) This section outlines key accounting estimates for revenue recognition, goodwill impairment, and income taxes - Key accounting estimates include revenue recognition (determining performance obligations, standalone selling prices, and estimating unused prepaid obligations), goodwill and intangible asset impairment, and income taxes (deferred tax assets/liabilities and valuation allowances)[85](index=85&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[94](index=94&type=chunk) - **Goodwill** and intangible assets totaled **$291.7 million** as of December 31, 2022. The annual goodwill impairment test as of November 30, 2022, concluded no impairments[89](index=89&type=chunk)[91](index=91&type=chunk) - In 2022, the company recorded **$3.7 million** in right-of-use asset impairments and **$1.3 million** in leasehold improvement impairments related to closing office space in San Francisco[94](index=94&type=chunk) - A valuation allowance of **$1.0 million** was maintained as of December 31, 2022, primarily for foreign net operating loss carryforwards[94](index=94&type=chunk) [Results of Operations for the years ended December 31, 2022 and 2021](index=16&type=section&id=Results%20of%20Operations%20for%20the%20years%20ended%20December%2031%2C%202022%20and%202021) This section analyzes Forrester's consolidated revenues and operating expenses for 2022 and 2021 Consolidated Statements of Income (as a percentage of total revenues) | Metric | 2022 (%) | 2021 (%) | |---|---|---| | Research revenues | 65.9% | 65.8% | | Consulting revenues | 28.4% | 31.6% | | Events revenues | 5.7% | 2.6% | | **Total revenues** | **100.0%** | **100.0%** | | Cost of services and fulfillment | 41.6% | 40.8% | | Selling and marketing | 33.8% | 34.6% | | General and administrative | 12.6% | 11.7% | | Depreciation | 1.7% | 1.9% | | Amortization of intangible assets | 2.5% | 3.1% | | Integration costs | — | 0.1% | | Restructuring costs | 1.7% | — | | **Income from operations** | **6.1%** | **7.8%** | | Interest expense | (0.5%) | (0.9%) | | Other income (expense), net | — | (0.2%) | | Gains on investments, net | 0.1% | — | | Income before income taxes | 5.7% | 6.7% | | Income tax expense | 1.6% | 1.7% | | **Net income** | **4.1%** | **5.0%** | Revenue Performance (2022 vs. 2021) | Revenue Category | 2022 (in millions) | 2021 (in millions) | Absolute Change (in millions) | Percentage Change | |---|---|---|---|---| | Total revenues | $537.8 | $494.3 | $43.5 | 9% | | Research revenues | $354.5 | $325.3 | $(29.1) | 9% | | Consulting revenues | $152.6 | $156.1 | $(3.5) | (2%) | | Events revenues | $30.7 | $12.9 | $17.9 | 139% | | Revenues attributable to customers outside of the U.S. | $111.7 | $112.7 | $(1.0) | (1%) | | Percentage of revenue attributable to customers outside of the U.S. | 21% | 23% | (2) points | — | - Total revenues increased **9%** (**10%** excluding foreign currency effects) in 2022, driven by a **139% increase in Events revenue** due to the return of in-person attendance, while Consulting revenues decreased **2%** due to a shift in research analysts' efforts to **CV products**[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) Operating Expenses (2022 vs. 2021) | Expense Category | 2022 (in millions) | 2021 (in millions) | Absolute Change (in millions) | Percentage Change | |---|---|---|---|---| | Cost of services and fulfillment | $223.8 | $201.8 | $22.0 | 11% | | Selling and marketing | $181.9 | $170.9 | $11.0 | 6% | | General and administrative | $67.7 | $58.1 | $9.6 | 17% | | Amortization of intangible assets | $13.2 | $15.1 | $(2.0) | (13%) | | Restructuring costs | $9.3 | $0.0 | $9.3 | — | | Interest expense | $(2.5) | $(4.2) | $1.8 | (43%) | | Income tax expense | $8.9 | $8.3 | $0.6 | 7% | - Cost of services and fulfillment increased **11%** due to higher event expenses, compensation/benefits (headcount, merit increases), and stock compensation. Selling and marketing expenses rose **6%** primarily from increased compensation/benefits. General and administrative expenses increased **17%** due to higher compensation/benefits, professional services, and software costs[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Amortization expense decreased by **$2.0 million** as certain intangible assets became fully amortized in 2021. Restructuring costs of **$9.3 million** were incurred in Q4 2022, including **$5.0 million** for office space impairment and **$4.3 million** for severance related to a **4% workforce reduction**[107](index=107&type=chunk)[108](index=108&type=chunk) - Interest expense decreased by **$1.8 million** due to lower average outstanding borrowings, partially offset by an increase in the annualized interest rate[109](index=109&type=chunk) - The effective tax rate increased from **25% in 2021 to 29% in 2022**, mainly due to increased non-deductible stock compensation, higher foreign subsidiary income subject to U.S. tax, and non-deductible expenses, partially offset by a tax legislation benefit[112](index=112&type=chunk) [Segment Results](index=19&type=section&id=Segment%20Results) This section details the financial performance of Forrester's Research, Consulting, and Events operating segments - The company operates in three reportable segments: Research, Consulting, and Events, with performance evaluated based on segment revenues and direct expenses[113](index=113&type=chunk)[117](index=117&type=chunk) Segment Revenues and Expenses (2022 vs. 2021, in thousands) | Segment | 2022 Revenues (in thousands) | 2021 Revenues (in thousands) | YoY Revenue Change (%) | 2022 Expenses (in thousands) | 2021 Expenses (in thousands) | YoY Expense Change (%) | |---|---|---|---|---|---|---| | Research | $396,012 | $372,587 | 6% | $(133,566) | $(118,155) | 13% | | Consulting | $111,028 | $108,867 | 2% | $(56,889) | $(51,770) | 10% | | Events | $30,747 | $12,861 | 139% | $(21,801) | $(12,709) | 72% | | **Consolidated Total** | **$537,787** | **$494,315** | **9%** | **$(212,256)** | **$(182,634)** | **16%** | - Research segment revenues increased **6%** in 2022, driven by a **9% increase in research product revenues** (due to 2021's strong **CV** growth), but partially offset by a **12% decrease in consulting product revenues** within this segment as analysts shifted focus to **CV products**. Research segment expenses increased **13%** due to higher compensation and travel[119](index=119&type=chunk)[120](index=120&type=chunk) - Consulting segment revenues increased **2%** due to demand for content marketing and strategy offerings. Expenses rose **10%** due to increased compensation and professional services[120](index=120&type=chunk)[121](index=121&type=chunk) - Event segment revenues surged **139%** due to increased sponsorship and paid ticket attendance from the return of in-person events. Expenses increased **72%** accordingly[122](index=122&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Forrester's cash flow, debt obligations, and overall financial resources and liquidity - Operations are primarily financed through funds generated from operations, with research revenues (**66% of 2022 revenues**) typically renewable annually and payable in advance[124](index=124&type=chunk) Cash Flow from Operating Activities | Year | Net Cash Provided (in millions) | |---|---| | 2022 | $39.4 | | 2021 | $107.1 | | **Change (2022 vs 2021)** | **$(67.6)** | - The **$67.6 million decrease in cash from operations** in 2022 was primarily due to a **$50.9 million decrease** from accounts receivable and deferred revenue (due to high client billings in 2021 not recurring) and a **$26.5 million increase** in cash used for accrued expenses (year-end incentive compensation payout)[124](index=124&type=chunk) Cash Flow from Investing Activities | Year | Net Cash Used (in millions) | |---|---| | 2022 | $6.8 | | 2021 | $29.3 | | **Change (2022 vs 2021)** | **$(22.5)** | - Investing activities in 2022 included **$5.7 million** for property and equipment purchases and **$1.4 million** in net marketable investments[125](index=125&type=chunk) Cash Flow from Financing Activities | Year | Net Cash Used (in millions) | |---|---| | 2022 | $38.9 | | 2021 | $49.1 | | **Change (2022 vs 2021)** | **$(10.2)** | - Financing activities in 2022 included **$25.0 million** in discretionary repayments of the revolving credit facility and **$15.1 million** for common stock repurchases[127](index=127&type=chunk) - As of December 31, 2022, the company had **$50.0 million outstanding** on its **$150.0 million revolving credit facility**, which matures in December 2026. The company was in full compliance with all loan covenants[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - As of December 31, 2022, cash, cash equivalents, and marketable investments totaled **$123.3 million**, with **$81.4 million held outside the U.S**. The company intends to permanently reinvest foreign funds and believes current liquidity is sufficient for the next twelve months and long-term cash requirements[133](index=133&type=chunk) [Recent Accounting Pronouncements](index=21&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to the notes for a description of recent accounting pronouncements affecting the company - The company refers to Note 1 – Summary of Significant Accounting Policies for a full description of recent accounting pronouncements[135](index=135&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Forrester manages market risks from foreign currency and variable interest rates on its **$50.0 million** debt, with minimal investment portfolio impact - The company is exposed to market risk from changes in foreign currency exchange rates (Euro, British Pound, etc.) and interest rates on its variable-rate debt[136](index=136&type=chunk)[137](index=137&type=chunk) - Foreign currency exchange losses were **$0.2 million** in 2022, down from **$1.4 million** in 2021. The company uses foreign currency forward contracts to mitigate these risks[137](index=137&type=chunk)[138](index=138&type=chunk) - As of December 31, 2022, all **$50.0 million of outstanding debt** was based on a floating interest rate. A hypothetical **25 basis point change** in interest rates would alter annual pretax interest expense by approximately **$0.1 million**[138](index=138&type=chunk)[139](index=139&type=chunk) - The investment portfolio, consisting of cash equivalents and marketable investments (U.S. government agencies, corporate notes, etc.), aims to preserve principal and maintain liquidity. Given short maturities and investment-grade quality, a **10% change in interest rates** is not expected to materially affect the fair value of cash and cash equivalents[140](index=140&type=chunk) Marketable Investment Portfolio by Maturity (as of December 31, 2022, in thousands) | Maturity Year | Corporate Obligations (in thousands) | Federal Obligations (in thousands) | Total (in thousands) | |---|---|---|---| | 2023 | $11,982 | — | $11,982 | | 2024 | $3,815 | $1,985 | $5,800 | | 2025 | $1,906 | — | $1,906 | | **Weighted average interest rates** | **3.45% (2023)** | **2.88% (2024)** | **2.53% (2025)** | [Item 8. Consolidated Financial Statements and Supplementary Data](index=23&type=section&id=Item%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Forrester's audited consolidated financial statements and supplementary data, with an **unqualified audit opinion** from PricewaterhouseCoopers LLP - PricewaterhouseCoopers LLP issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[149](index=149&type=chunk)[150](index=150&type=chunk) - A **critical audit matter** identified was **Revenue Recognition – Identification of Distinct Performance Obligations**, due to the significant audit effort required to evaluate management's judgments in identifying distinct performance obligations within customer contracts[157](index=157&type=chunk)[158](index=158&type=chunk) [Report of Independent Registered Public Accounting Firm](index=24&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued an **unqualified opinion** on Forrester's consolidated financial statements and internal control over financial reporting - PricewaterhouseCoopers LLP audited the consolidated financial statements and internal control over financial reporting, issuing an **unqualified opinion** for both as of December 31, 2022[149](index=149&type=chunk)[150](index=150&type=chunk) - The **critical audit matter** identified was '**Revenue Recognition – Identification of Distinct Performance Obligations**,' highlighting the significant judgment required by management and the extensive audit effort to evaluate the identification of distinct performance obligations in contracts[157](index=157&type=chunk)[158](index=158&type=chunk) [Consolidated Balance Sheets](index=26&type=section&id=Consolidated%20Balance%20Sheets) This section presents Forrester's consolidated financial position, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheet (in thousands) | Asset/Liability/Equity | December 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |---|---|---| | **ASSETS** | | | | Cash and cash equivalents | $103,629 | $115,769 | | Marketable investments | $19,688 | $18,509 | | Accounts receivable, net | $73,345 | $86,965 | | Deferred commissions | $24,559 | $29,631 | | Prepaid expenses and other current assets | $14,069 | $18,614 | | **Total current assets** | **$235,290** | **$269,488** | | Property and equipment, net | $23,208 | $28,245 | | Operating lease right-of-use assets | $49,970 | $65,009 | | Goodwill | $242,149 | $244,994 | | Intangible assets, net | $49,504 | $62,733 | | Other assets | $8,317 | $9,660 | | **Total assets** | **$608,438** | **$680,129** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $361 | $840 | | Accrued expenses and other current liabilities | $91,007 | $97,800 | | Deferred revenue | $178,021 | $213,696 | | **Total current liabilities** | **$269,389** | **$312,336** | | Long-term debt | $50,000 | $75,000 | | Non-current operating lease liabilities | $50,751 | $65,038 | | Other non-current liabilities | $16,642 | $23,848 | | **Total liabilities** | **$386,782** | **$476,222** | | **Total stockholders' equity** | **$221,656** | **$203,907** | | **Total liabilities and stockholders' equity** | **$608,438** | **$680,129** | [Consolidated Statements of Income](index=27&type=section&id=Consolidated%20Statements%20of%20Income) This section presents Forrester's consolidated revenues, expenses, and net income for the reported periods Consolidated Statements of Income (in thousands, except per share data) | Metric | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | |---|---|---|---| | **Revenues:** | | | | | Research | $354,453 | $325,340 | $301,544 | | Consulting | $152,587 | $156,114 | $137,303 | | Events | $30,747 | $12,861 | $10,137 | | **Total revenues** | **$537,787** | **$494,315** | **$448,984** | | **Operating expenses:** | | | | | Cost of services and fulfillment | $223,773 | $201,815 | $180,899 | | Selling and marketing | $181,940 | $170,949 | $166,200 | | General and administrative | $67,655 | $58,056 | $50,369 | | Depreciation | $9,269 | $9,390 | $9,879 | | Amortization of intangible assets | $13,161 | $15,129 | $19,683 | | Integration costs | — | $334 | $5,779 | | Restructuring costs | $9,335 | — | — | | **Total operating expenses** | **$505,133** | **$455,673** | **$432,809** | | **Income from operations** | **$32,654** | **$38,642** | **$16,175** | | Interest expense | $(2,461) | $(4,222) | $(5,340) | | Other income (expense), net | $222 | $(1,229) | $(374) | | Gains on investments, net | $309 | — | $2,472 | | Income before income taxes | $30,724 | $33,191 | $12,933 | | Income tax expense | $8,918 | $8,347 | $2,943 | | **Net income** | **$21,806** | **$24,844** | **$9,990** | | Basic income per common share | $1.15 | $1.30 | $0.53 | | Diluted income per common share | $1.14 | $1.28 | $0.53 | | Basic weighted average common shares outstanding | 18,967 | 19,110 | 18,827 | | Diluted weighted average common shares outstanding | 19,172 | 19,357 | 18,935 | [Consolidated Statements of Comprehensive Income](index=28&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents Forrester's comprehensive income, including net income and other comprehensive income components Consolidated Statements of Comprehensive Income (in thousands) | Metric | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | |---|---|---|---| | Net income | $21,806 | $24,844 | $9,990 | | **Other comprehensive income (loss), net of tax:** | | | | | Foreign currency translation | $(4,807) | $(3,083) | $4,884 | | Net change in market value of interest rate swap | $212 | $609 | $(717) | | Net change in market value of investments | $(134) | $(25) | — | | **Other comprehensive income (loss)** | **$(4,729)** | **$(2,499)** | **$4,167** | | **Comprehensive income** | **$17,077** | **$22,345** | **$14,157** | [Consolidated Statements of Stockholders' Equity](index=29&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section details changes in Forrester's stockholders' equity, including common stock, retained earnings, and treasury stock Consolidated Statements of Stockholders' Equity (in thousands) | Metric | December 31, 2022 (in thousands) | December 31, 2021 (in thousands) | December 31, 2020 (in thousands) | |---|---|---|---| | Common Stock ($0.01 Par Value) | $244 | $241 | $236 | | Additional Paid-in Capital | $261,766 | $245,985 | $230,128 | | Retained Earnings | $174,631 | $152,825 | $127,981 | | Treasury Stock (Cost) | $(207,067) | $(191,955) | $(171,889) | | Accumulated Other Comprehensive Loss | $(7,918) | $(3,189) | $(690) | | **Total Stockholders' Equity** | **$221,656** | **$203,907** | **$185,766** | - Key changes in 2022 include an increase in additional paid-in capital by **$15.8 million** (driven by stock-based compensation expense of **$14.5 million**), an increase in retained earnings by **$21.8 million** (net income), and an increase in treasury stock cost by **$15.1 million** (repurchases of common stock)[171](index=171&type=chunk) [Consolidated Statements of Cash Flows](index=30&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents Forrester's cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | |---|---|---|---| | Net cash provided by operating activities | $39,425 | $107,067 | $47,754 | | Net cash used in investing activities | $(6,814) | $(29,296) | $(4,570) | | Net cash used in financing activities | $(38,871) | $(49,143) | $(23,687) | | Effect of exchange rate changes on cash | $(6,117) | $(1,249) | $1,963 | | **Net increase (decrease) in cash, cash equivalents and restricted cash** | **$(12,377)** | **$27,379** | **$21,460** | | Cash, cash equivalents and restricted cash, beginning of year | $118,031 | $90,652 | $69,192 | | **Cash, cash equivalents and restricted cash, end of year** | **$105,654** | **$118,031** | **$90,652** | | Cash paid for interest | $2,015 | $3,279 | $4,373 | | Cash paid for income taxes | $8,901 | $9,815 | $3,194 | - Net cash from operating activities decreased significantly in 2022 to **$39.4 million** from **$107.1 million** in 2021, primarily due to a **$50.9 million decrease** in cash generated from accounts receivable and deferred revenue and a **$26.5 million increase** in cash used for accrued expenses[124](index=124&type=chunk)[174](index=174&type=chunk) - Net cash used in investing activities decreased to **$6.8 million** in 2022 from **$29.3 million** in 2021, mainly due to lower net purchases of marketable investments and property and equipment[125](index=125&type=chunk)[126](index=126&type=chunk)[174](index=174&type=chunk) - Net cash used in financing activities decreased to **$38.9 million** in 2022 from **$49.1 million** in 2021, driven by lower debt repayments and common stock repurchases[127](index=127&type=chunk)[174](index=174&type=chunk) [Notes to Consolidated Financial Statements](index=31&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on Forrester's significant accounting policies and specific financial statement accounts [Note 1 – Summary of Significant Accounting Policies](index=31&type=section&id=Note%201%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines Forrester's significant accounting policies, including revenue recognition, impairment, and income taxes - Forrester Research, Inc. is a global independent research and advisory firm, with consolidated financial statements prepared in accordance with GAAP and SEC rules[177](index=177&type=chunk)[178](index=178&type=chunk) - Significant accounting estimates include revenue recognition, goodwill and intangible asset impairment, and income taxes[180](index=180&type=chunk) - The company adopted ASU No. 2019-12 (Income Taxes) and ASU No. 2016-13 (Credit Losses) in 2021 and 2020, respectively. The adoption of Topic 326 resulted in a **$0.2 million decrease** to retained earnings[181](index=181&type=chunk)[182](index=182&type=chunk) - Revenue recognition follows a five-step model, identifying performance obligations and allocating transaction prices based on standalone selling prices. Revenue is recognized when control of products or services is transferred to the customer[205](index=205&type=chunk)[209](index=209&type=chunk) - Research revenues are primarily recognized ratably over the contract term. Consulting project revenues are recognized over time using an input method (hours expended), while advisory services and event revenues are recognized at a point in time (completion of service/event)[210](index=210&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) - Deferred revenue represents billings in excess of recognized revenue. As of December 31, 2022, approximately **$416.8 million of revenue** is expected to be recognized from remaining performance obligations over the next 24 months[221](index=221&type=chunk)[222](index=222&type=chunk) - Commissions paid to sales representatives are capitalized as deferred commissions and amortized over the initial contract term. Amortization expense was **$45.9 million** in 2022[223](index=223&type=chunk)[225](index=225&type=chunk) - All leases are operating leases, primarily for office space. Operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments. Total lease cost was **$19.7 million** in 2022[226](index=226&type=chunk)[227](index=227&type=chunk)[230](index=230&type=chunk)[261](index=261&type=chunk) - Stock-based compensation expense was **$14.5 million** in 2022. The unamortized fair value of stock-based awards was **$24.2 million** as of December 31, 2022, with a weighted average remaining recognition period of **2.4 years**[235](index=235&type=chunk)[236](index=236&type=chunk) - Depreciation and amortization of property and equipment are computed using the straight-line method. Amortization of intangible assets is computed using an accelerated method[237](index=237&type=chunk)[238](index=238&type=chunk) - The effective tax rate was **29.0% in 2022**, up from **25.1% in 2021**, primarily due to increased non-deductible stock compensation and foreign subsidiary income subject to U.S. tax[240](index=240&type=chunk)[241](index=241&type=chunk)[279](index=279&type=chunk) - Basic and diluted net income per common share were **$1.15** and **$1.14**, respectively, in 2022[242](index=242&type=chunk)[243](index=243&type=chunk) [Note 2 – Marketable Investments](index=39&type=section&id=Note%202%20%E2%80%93%20Marketable%20Investments) This note details Forrester's marketable investments, classified as available-for-sale securities, and their fair value measurements Marketable Investments (as of December 31, 2022, in thousands) | Category | Amortized Cost (in thousands) | Gross Unrealized Gains (in thousands) | Gross Unrealized Losses (in thousands) | Market Value (in thousands) | |---|---|---|---|---| | Corporate obligations | $17,900 | $8 | $(205) | $17,703 | | Federal agency obligations | $1,999 | — | $(14) | $1,985 | | **Total** | **$19,899** | **$8** | **$(219)** | **$19,688** | - Marketable investments are classified as available-for-sale securities and carried at fair value, with unrealized gains and losses recorded in accumulated other comprehensive loss. No realized gains or losses were recorded in 2022 or 2021[192](index=192&type=chunk)[193](index=193&type=chunk) Marketable Investments by Maturity (as of December 31, 2022, in thousands) | Maturity Year | Corporate Obligations (in thousands) | Federal Agency Obligations (in thousands) | Total (in thousands) | |---|---|---|---| | 2023 | $11,982 | — | $11,982 | | 2024 | $3,816 | $1,985 | $5,801 | | 2025 | $1,905 | — | $1,905 | | **Total** | **$17,703** | **$1,985** | **$19,688** | [Note 3 – Goodwill and Other Intangible Assets](index=40&type=section&id=Note%203%20%E2%80%93%20Goodwill%20and%20Other%20Intangible%20Assets) This note provides information on Forrester's goodwill and amortizable intangible assets, including impairment testing and amortization Goodwill by Segment (in thousands) | Segment | December 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |---|---|---| | Research | $234,020 | $236,770 | | Consulting | $8,129 | $8,224 | | **Total Goodwill** | **$242,149** | **$244,994** | - **Goodwill** decreased by **$2.8 million** in 2022, primarily due to translation adjustments. The annual impairment test as of November 30, 2022, concluded no impairments[250](index=250&type=chunk) Amortizable Intangible Assets (as of December 31, 2022, in thousands) | Category | Gross Carrying Amount (in thousands) | Accumulated Amortization (in thousands) | Net Carrying Amount (in thousands) | |---|---|---|---| | Customer relationships | $77,786 | $33,805 | $43,981 | | Technology | $16,803 | $14,696 | $2,107 | | Trademarks | $12,472 | $9,056 | $3,416 | | **Total** | **$107,061** | **$57,557** | **$49,504** | - Amortization expense for intangible assets was **$13.2 million** in 2022, and is estimated to be **$11.9 million** for 2023[251](index=251&type=chunk) [Note 4 – Debt](index=41&type=section&id=Note%204%20%E2%80%93%20Debt) This note describes Forrester's debt obligations, including its revolving credit facility and compliance with covenants - On December 21, 2021, the company amended its credit facility, increasing the revolving credit facility to **$150.0 million**, eliminating the term loan, and extending maturity to December 2026[252](index=252&type=chunk)[253](index=253&type=chunk) - The amendment reduced applicable margins for revolving loans and commitment fees, replaced the minimum fixed charge coverage ratio with a minimum consolidated interest coverage ratio of **3.50:1.00**, and included a capital expenditure limit[253](index=253&type=chunk) Outstanding Borrowings (in thousands) | Description | December 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |---|---|---| | Revolving credit facility | $50,000 | $75,000 | | **Total** | **$50,000** | **$75,000** | - The contractual annualized interest rate on the revolving credit facility was **5.6875%** as of December 31, 2022. The weighted average annual effective rate on total debt was **2.9%** in 2022[259](index=259&type=chunk) - The company was in full compliance with all restrictive loan covenants as of December 31, 2022[259](index=259&type=chunk) [Note 5 – Leases](index=42&type=section&id=Note%205%20%E2%80%93%20Leases) This note details Forrester's operating lease arrangements, lease costs, and future minimum lease payments Components of Lease Expense (in thousands) | Expense Category | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | |---|---|---|---| | Operating lease cost | $14,284 | $15,527 | $16,188 | | Short-term lease cost | $754 | $439 | $330 | | Variable lease cost | $5,416 | $5,582 | $1,871 | | Sublease income | $(746) | $(549) | $(256) | | **Total lease cost** | **$19,708** | **$20,999** | **$18,133** | - Cash paid for operating lease liabilities was **$12.9 million** in 2022. The weighted-average remaining lease term for operating leases was **5.1 years**, with a weighted-average discount rate of **4.3%**[262](index=262&type=chunk) Future Minimum Lease Payments (as of December 31, 2022, in thousands) | Year | Operating Lease Payments (in thousands) | |---|---| | 2023 | $16,463 | | 2024 | $16,027 | | 2025 | $14,074 | | 2026 | $12,118 | | 2027 | $5,589 | | Thereafter | $8,728 | | **Total lease payments** | **$72,999** | | Less imputed interest | $(8,616) | | **Present value of lease liabilities** | **$64,383** | - In 2022, the company recorded **$3.7 million of ROU asset impairments** and **$1.3 million of leasehold improvement impairments** related to closing office space in San Francisco, included in restructuring costs[264](index=264&type=chunk) [Note 6 – Derivatives and Hedging](index=44&type=section&id=Note%206%20%E2%80%93%20Derivatives%20and%20Hedging) This note explains Forrester's use of derivative contracts to manage interest rate and foreign currency risks - The company uses derivative contracts (interest rate swaps and foreign currency forwards) to mitigate cash flow risk from interest rate changes on variable debt and foreign exchange rate fluctuations[266](index=266&type=chunk) - An interest rate swap contract, designated as a cash flow hedge, matured on December 31, 2022. Changes in its fair value were recorded in accumulated other comprehensive loss[267](index=267&type=chunk)[268](index=268&type=chunk) - Foreign currency forward exchange contracts are used to mitigate adverse fluctuations in foreign currency rates. These are not designated as hedges for accounting purposes, with gains and losses recorded in other income (expense), net[269](index=269&type=chunk) Amounts Recognized in Consolidated Statements of Income for Derivative Contracts (in thousands) | Expense Category | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | |---|---|---|---| | Interest expense (from interest rate swap) | $(103) | $(807) | $(858) | | Other income (expense), net (net realized losses on foreign currency forward contracts) | $(194) | $(90) | $(157) | | **Total** | **$(297)** | **$(897)** | **$(1,015)** | [Note 7 – Fair Value Measurements](index=44&type=section&id=Note%207%20%E2%80%93%20Fair%20Value%20Measurements) This note describes Forrester's fair value measurements for financial assets and liabilities, categorized by hierarchy levels - Financial assets and liabilities measured at fair value are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), or Level 3 (unobservable inputs)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) Fair Value Hierarchy for Financial Assets and Liabilities (as of December 31, 2022, in thousands) | Category | Level 1 (in thousands) | Level 2 (in thousands) | Total (in thousands) | |---|---|---|---| | **Assets:** | | | | | Money market funds | $5,800 | — | $5,800 | | Marketable investments | — | $19,688 | $19,688 | | **Total Assets** | **$5,800** | **$19,688** | **$25,488** | | **Liabilities:** | | | | | Interest rate swap | — | $(294) | $(294) | | **Total Liabilities** | **—** | **$(294)** | **$(294)** | - Marketable investments are valued using third-party pricing services and observable market inputs (Level 2). The interest rate swap's fair value is based on mark-to-market valuations from a third-party broker using observable interest rates (Level 2)[276](index=276&type=chunk) - Level 3 activity consisted entirely of contingent purchase price related to the FeedbackNow acquisition, which was fully settled by December 31, 2020[277](index=277&type=chunk)[278](index=278&type=chunk) [Note 8 – Income Taxes](index=46&type=section&id=Note%208%20%E2%80%93%20Income%20Taxes) This note provides details on Forrester's income tax expense, effective tax rate, deferred taxes, and net operating loss carryforwards Income Before Income Taxes (in thousands) | Category | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | |---|---|---|---| | Domestic | $16,552 | $22,424 | $7,237 | | Foreign | $14,172 | $10,767 | $5,696 | | **Total** | **$30,724** | **$33,191** | **$12,933** | Components of Income Tax Expense (in thousands) | Category | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | |---|---|---|---| | Current | $15,570 | $8,622 | $4,620 | | Deferred | $(6,652) | $(275) | $(1,677) | | **Income tax expense** | **$8,918** | **$8,347** | **$2,943** | Effective Tax Rate Reconciliation | Factor | 2022 (%) | 2021 (%) | 2020 (%) | |---|---|---|---| | Income tax provision at federal statutory rate | 21.0% | 21.0% | 21.0% | | State tax provision, net of federal benefit | 5.2% | 3.8% | 2.6% | | Foreign tax rate differential | (0.5%) | (0.4%) | (0.2%) | | Stock compensation | 0.9% | (0.4%) | 5.7% | | Withholding taxes | 1.7% | 1.3% | 3.3% | | Non-deductible expenses | 1.5% | — | 2.2% | | Change in valuation allowance | 1.0% | — | (5.8%) | | Foreign subsidiary income subject to U.S. tax | 0.6% | (0.5%) | (4.3%) | | Change in tax legislation | (1.6%) | (0.3%) | (1.9%) | | Other, net | (0.8%) | 0.6% | 0.2% | | **Effective tax rate** | **29.0%** | **25.1%** | **22.8%** | - The effective tax rate increased in 2022 primarily due to increased non-deductible stock compensation, higher foreign subsidiary income subject to U.S. tax, and non-deductible expenses, partially offset by a tax legislation benefit[279](index=279&type=chunk) - As of December 31, 2022, the company had a net deferred tax liability of **$13.4 million** and maintained a valuation allowance of **$1.0 million**, primarily related to foreign net operating loss carryforwards[281](index=281&type=chunk)[285](index=285&type=chunk) - The company has foreign net operating loss carryforwards of approximately **$18.9 million**, which can be carried forward indefinitely[282](index=282&type=chunk) - As of December 31, 2022, the company had no significant unrecognized tax benefits and no jurisdictions under audit[287](index=287&type=chunk)[289](index=289&type=chunk) [Note 9 – Stockholders' Equity](index=48&type=section&id=Note%209%20%E2%80%93%20Stockholders%27%20Equity) This note details Forrester's common stock, stock repurchase program, equity incentive plans, and accumulated other comprehensive loss - The Board of Directors has authorized **$585.0 million** for common stock repurchases, with **$510.0 million** used to repurchase approximately **17.0 million shares** as of December 31, 2022[291](index=291&type=chunk) - The company does not currently pay cash dividends on its common stock[292](index=292&type=chunk) - The Equity Incentive Plan, running until May 2026, provides for stock-based awards (ISOs, NSOs, RSUs). As of December 31, 2022, approximately **1.4 million shares** were available for future grant[293](index=293&type=chunk) Restricted Stock Unit (RSU) Activity (in thousands, except per share data) | Metric | Number of Shares (in thousands) | Weighted Average Grant Date Fair Value | |---|---|---| | Unvested at December 31, 2021 | 634 | $42.45 | | Granted | 355 | $50.37 | | Vested | (230) | $42.45 | | Forfeited | (77) | $44.99 | | **Unvested at December 31, 2022** | **682** | **$46.28** | Stock Option Activity (in thousands, except per share data) | Metric | Number of Shares (in thousands) | Weighted Average Exercise Price Per Share | |---|---|---| | Outstanding at December 31, 2021 | 114 | $35.52 | | Exercised | (23) | $35.35 | | Forfeited | (2) | $34.91 | | **Outstanding at December 31, 2022** | **89** | **$35.58** | | Vested and Exercisable at December 31, 2022 | 89 | $35.58 | - The Employee Stock Purchase Plan allows eligible employees to purchase common stock at a discount. As of December 31, 2022, approximately **0.7 million shares** remain available for issuance under the plan[299](index=299&type=chunk) Accumulated Other Comprehensive Loss (AOCL) Components (in thousands) | Component | December 31, 2022 (in thousands) | December 31, 2021 (in thousands) | December 31, 2020 (in thousands) | |---|---|---|---| | Marketable Investments | $(159) | $(25) | — | | Interest Rate Swap | — | $(212) | $(821) | | Translation Adjustment | $(7,759) | $(2,952) | $131 | | **Total AOCL** | **$(7,918)** | **$(3,189)** | **$(690)** | - The increase in AOCL in 2022 was primarily due to foreign currency translation losses of **$4.8 million**[301](index=301&type=chunk) [Note 10 – Employee Pension Plans](index=50&type=section&id=Note%2010%20%E2%80%93%20Employee%20Pension%20Plans) This note describes Forrester's defined contribution employee pension plans and related contributions - Forrester sponsors several defined contribution plans for eligible employees. Contributions totaled approximately **$8.2 million** in 2022, up from **$6.5 million** in 2021[302](index=302&type=chunk) [Note 11 – Restructuring](index=50&type=section&id=Note%2011%20%E2%80%93%20Restructuring) This note details restructuring costs incurred in Q4 2022, including office space impairment and severance expenses - In Q4 2022, the company incurred **$9.3 million in restructuring costs**, including **$5.0 million** for office space impairment (ROU asset and leasehold improvements) and **$4.3 million** for severance related to a **4% workforce reduction** in January 2023[303](index=303&type=chunk) - Approximately all **$4.3 million of severance** and related benefit costs incurred in 2022 are expected to be paid in 2023[304](index=304&type=chunk) [Note 12 – Non-Marketable Investments](index=51&type=section&id=Note%2012%20%E2%80%93%20Non-Marketable%20Investments) This note provides information on Forrester's non-marketable investments, primarily in technology-related private equity funds - Non-marketable investments, primarily interests in technology-related private equity funds, had a carrying value of **$0.9 million** as of December 31, 2022[305](index=305&type=chunk) - These investments are accounted for using the equity method. The company recorded **$0.3 million in gains** from non-marketable investments in 2022[306](index=306&type=chunk) [Note 13 – Operating Segment and Enterprise Wide Reporting](index=51&type=section&id=Note%2013%20%E2%80%93%20Operating%20Segment%20and%20Enterprise%20Wide%20Reporting) This note details Forrester's reportable segments (Research, Consulting, Events) and revenue breakdown by geographic destination - The company operates in three reportable segments: Research, Consulting, and Events. Segment performance is evaluated based on revenues and direct expenses[308](index=308&type=chunk)[312](index=312&type=chunk) Total Segment Revenues (in thousands) | Segment | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | |---|---|---|---| | Research | $396,012 | $372,587 | $351,950 | | Consulting | $111,028 | $108,867 | $86,897 | | Events | $30,747 | $12,861 | $10,137 | | **Consolidated Total** | **$537,787** | **$494,315** | **$448,984** | Revenues by Geographic Destination (2022, 2021, 2020, in thousands and as % of total) | Region | 2022 Revenue (in thousands) | 2022 (%) | 2021 Revenue (in thousands) | 2021 (%) | 2020 Revenue (in thousands) | 2020 (%) | |---|---|---|---|---|---|---| | United States | $426,041 | 79% | $381,662 | 77% | $356,288 | 79% | | Europe (excluding UK) | $36,664 | 7% | $41,264 | 9% | $34,897 | 8% | | United Kingdom | $20,079 | 4% | $21,913 | 5% | $15,741 | 4% | | Canada | $20,759 | 4% | $17,213 | 3% | $14,005 | 3% | | Asia Pacific | $26,548 | 5% | $26,768 | 5% | $22,969 | 5% | | Other | $7,696 | 1% | $5,495 | 1% | $5,084 | 1% | | **Total** | **$537,787** | **100%** | **$494,315** | **100%** | **$448,984** | **100%** | [Note 14 – Certain Balance Sheet Accounts](index=54&type=section&id=Note%2014%20%E2%80%93%20Certain%20Balance%20Sheet%20Accounts) This note provides detailed breakdowns of specific balance sheet accounts, including property and equipment, and accrued liabilities Property and Equipment, Net (in thousands) | Category | December 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |---|---|---| | Computers and equipment | $14,303 | $15,751 | | Computer software | $34,903 | $39,858 | | Furniture and fixtures | $9,745 | $10,896 | | Leasehold improvements | $30,285 | $31,697 | | Total property and equipment | $89,236 | $98,202 | | Less accumulated depreciation | $(66,028) | $(69,957) | | **Total property and equipment, net** | **$23,208** | **$28,245** | - Amortization of capitalized internal use software costs was **$4.8 million** in 2022[316](index=316&type=chunk) Accrued Expenses and Other Current Liabilities (in thousands) | Category | December 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |---|---|---| | Payroll and related benefits | $53,581 | $61,979 | | Taxes | $5,823 | $4,731 | | Lease liability | $13,632 | $12,992 | | Other | $17,971 | $18,098 | | **Total** | **$91,007** | **$97,800** | Non-Current Liabilities (in thousands) | Category | December 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |---|---|---| | Deferred tax liability | $14,133 | $21,346 | | Other | $2,509 | $2,502 | | **Total** | **$16,642** | **$23,848** | Allowance for Doubtful Accounts (in thousands) | Metric | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | |---|---|---|---| | Balance, beginning of year | $610 | $708 | $628 | | Provision for doubtful accounts | $638 | $225 | $721 | | Write-offs | $(669) | $(318) | $(850) | | **Balance, end of year** | **$560** | **$610** | **$708** | [Note 15 – Contingencies](index=55&type=section&id=Note%2015%20%E2%80%93%20Contingencies) This note discusses Forrester's legal contingencies and the management's assessment of their potential financial impact - The company is subject to legal proceedings and civil/regulatory claims in the ordinary course of business. Accruals are recorded when a liability is probable and estimable[320](index=320&type=chunk) - Management believes current lawsuits and claims are not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows, despite potential defense and settlement costs[321](index=321&type=chunk)[322](index=322&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=55&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable, indicating no changes in or disagreements with accountants on accounting and financial disclosure - Not applicable[324](index=324&type=chunk) [Item 9A. Controls and Procedures](index=55&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and auditors concluded Forrester's disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Disclosure controls and procedures were evaluated and deemed effective as of December 31, 2022[325](index=325&type=chunk) - Management assessed and concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the **COSO 2013 framework**[326](index=326&type=chunk)[327](index=327&type=chunk) - PricewaterhouseCoopers LLP audited and attested to the effectiveness of internal control over financial reporting[328](index=328&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2022[329](index=329&type=chunk) [Item 9B. Other Information](index=56&type=section&id=Item%209B.%20Other%20Information) Forrester's Board of Directors approved a bylaw amendment on March 8, 2023, to clarify procedures for advance notice and director nominations - On March 8, 2023, the Board of Directors approved an amendment to the company's bylaws to clarify procedures for advance notice bylaws and director nominations under Rule 14a-19[330](index=330&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=55&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Forrester Research, Inc - Not applicable[332](index=332&type=chunk) PART III This section provides information on Forrester's directors, executive officers, corporate governance, compensation, and security ownership [Item 10. Directors, Executive Officers, and Corporate Governance](index=57&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) This section lists Forrester's executive officers, references its Code of Business Conduct, and incorporates governance details from the 2023 Proxy Statement - The executive officers as of March 10, 2023, include George F. Colony (Chairman & CEO), Ryan D. Darrah (Chief Legal Officer), L. Christian Finn (CFO), Carrie Johnson (Chief Product Officer), Mike Kasparian (CIO), Sharyn Leaver (Chief Research Officer), Sarah Le Roy (Chief People Officer), Shirley Macbeth (Chief Marketing Officer), Steven Peltzman (Chief Business Technology Officer), and Nate Swan (Chief Sales Officer)[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) - The company's Code of Business Conduct and Ethics covers all employees, officers, and directors and is available on its website[344](index=344&type=chunk)[345](index=345&type=chunk) - Disclosures regarding amendments to or waivers from the Code of Business Conduct and Ethics will be posted on the company's website[347](index=347&type=chunk) - Further information on director elections and Section 16(a) Beneficial Ownership Reporting Compliance is incorporated by reference from the 2023 Proxy Statement[348](index=348&type=chunk) [Item 11. Executive Compensation](index=59&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details are incorporated by reference from the company's 2023 Proxy Statement - Executive compensation details are incorporated by reference from the 2023 Proxy Statement under 'Director Compensation' and 'Executive Compensation'[349](index=349&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=59&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section incorporates security ownership data from the 2023 Proxy Statement, detailing outstanding and available shares under equity plans - Information on security ownership of certain beneficial owners and management is incorporated by reference from the 2023 Proxy Statement[350](index=350&type=chunk) Equity Compensation Plan Summary (as of December 31, 2022) | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |---|---|---|---| | Equity compensation plans approved by stockholders | 771,072 (includes 682,122 restricted stock units) | $35.58 | 2,136,068 (includes 1,412,830 shares under Equity Incentive Plan and 723,238 shares under Stock Purchase Plan) | | Equity compensation plans not approved by stockholders | N/A | N/A | N/A | | **Total** | **771,072** | **$35.58** | **2,136,068** | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=59&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the 2023 Proxy Statement - Details on certain relationships, related transactions, and director independence are incorporated by reference from the 2023 Proxy Statement[352](index=352&type=chunk) [Item 14. Principal Accountant Fees and Services](index=59&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference from the 2023 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement under 'Independent Auditors' Fees and Other Matters'[353](index=353&type=chunk) PART IV This section lists the exhibits and financial statement schedules filed as part of the annual report [Item 15. Exhibits and Financial Statement Schedules](index=60&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits included in the 2022 Annual Report on Form 10-K, with a comprehensive Exhibit Index - Financial statements are filed as part of this 2022 Annual Report on Form 10-K[354](index=354&type=chunk) - A complete listing of exhibits is provided in the Exhibit Index[354](index=354&type=chunk) [Item 16. Form 10-K Summary](index=60&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[355](index=355&type=chunk) [EXHIBIT INDEX](index=61&type=section&id=EXHIBIT%20INDEX) The Exhibit Index provides a comprehensive list of documents filed with the Form 10-K, including corporate governance, equity plans, and certifications - The Exhibit Index lists various documents filed with the Form 10-K, including corporate governance documents, equity plans, lease agreements, and credit agreements[358](index=358&type=chunk)[359](index=359&type=chunk)[360](index=360&type=chunk) - Key exhibits include the Agreement and Plan of Merger (2.1), Restated Certificate of Incorporation (3.1), Amended and Restated By-Laws (3.5), Amended and Restated Employee Stock Purchase Plan (10.02+), Amended and Restated Equity Incentive Plan (10.03+), Credit Agreement (10.21), and First Amendment to Credit Agreement (10.22)[358](index=358&type=chunk)[359](index=359&type=chunk)[360](index=360&type=chunk) - Certifications from the Principal Executive Officer (31.1) and Principal Financial Officer (31.2) are included, along with the Consent of PricewaterhouseCoopers LLP (23.1)[360](index=360&type=chunk)

Financial Data and Key Metrics Changes - For the full year 2022, revenue increased by 9%, adjusted operating margin was 13%, and EPS grew by 18% [12][38] - In Q4 2022, revenue was $136.9 million, a 2% increase from $133.7 million in the prior year [39] - Net income decreased by 25% to $8.5 million in Q4 2022 compared to $11.3 million in the previous year [74] - EPS decreased by 24% in Q4 to $0.45 compared to $0.59 in the year-ago quarter [74] Business Line Data and Key Metrics Changes - Forrester Decisions achieved a wallet retention rate of 101% in Q4, significantly higher than the total portfolio's 94% [8][35] - Client retention for Forrester Decisions was 89%, 15 points higher than the total portfolio [35] - Research revenues increased by 3% in Q4 and 9% for the full year [44] - Consulting revenues were $37.5 million in Q4, down 4%, and $152.6 million for the full year, down 2% [45] Market Data and Key Metrics Changes - The events business grew 139% in 2022, with Q4 revenue of $7.2 million, a 43% increase [16][41] - The company anticipates slight declines in key metrics in the first half of 2023, with a return to growth expected in the second half [17][83] Company Strategy and Development Direction - The company is focused on transitioning clients to Forrester Decisions, aiming for approximately two-thirds of contract value to be on the new platform by year-end 2023 [20][32] - Three initiatives for 2023 include enhancing Forrester Decisions, increasing sales force effectiveness, and optimizing consulting and events businesses [28][20] - The company is managing costs and driving the transition to Forrester Decisions to build a strong base for future growth [33][42] Management's Comments on Operating Environment and Future Outlook - Management expects 2023 to be a tale of two halves, with pressure on key metrics in the first half and growth returning in the second half [17][78] - The macroeconomic environment remains challenging, with ongoing inflation and potential recession impacting performance [42][82] - Confidence in the ability to navigate challenges is bolstered by strong client acceptance of Forrester Decisions [43][93] Other Important Information - The company has over $120 million in cash and investments on hand, with priorities including reinvesting in the business and exploring value-creating acquisitions [50][75] - The company plans to maintain a cautious approach to share buybacks while focusing on growth opportunities [100] Q&A Session Summary Question: What factors impacted 2022's performance? - Management identified funding pressure on smaller tech clients, inflation, and the transition to Forrester Decisions as key factors affecting performance [98] Question: What is the capital allocation strategy for 2023? - The company plans to be opportunistic regarding share buybacks and will focus on value-creating acquisitions while managing existing debt [99][100] Question: What complexities were encountered during the transition to Forrester Decisions? - The transition faced unexpected challenges, particularly with smaller tech vendors who were less willing to migrate than anticipated [106][117] Question: How is the sales team being managed amid workforce reductions? - The company clarified that the reduction in workforce did not impact quota-carrying sales representatives, and hiring will continue to enhance productivity [112][114]

Financial Data and Key Metrics Changes - Forrester's revenue grew 8% year-over-year, impacted by a two-point foreign currency headwind [11] - Margin increased, and earnings per share (EPS) rose 39% year-over-year [11][41] - Net contract value increase (NCVI) was up 7% overall, down three percentage points compared to Q2 [11] - Client retention declined to 75%, and wallet retention was down to 97% [34] Business Line Data and Key Metrics Changes - Research revenues increased by 9% compared to Q3 2021, driven by growth in contract value [33] - Consulting business revenues were flat at $37.4 million compared to the prior year [37] - Events business revenues surged 276% year-over-year, reaching $3.3 million [38] Market Data and Key Metrics Changes - The European business experienced a slowdown due to the Ukraine war and energy uncertainty, with the slowest NCVI growth among global regions [12] - The event business showed strong recovery, with record attendance and sponsorship growth [21] Company Strategy and Development Direction - The company is focused on transitioning clients to the Forrester Decisions research platform, which is expected to constitute one-third of contract value by year-end [14][27] - The strategy includes enhancing client contracts and retention through the new platform, which offers 16 different services [15][72] - The company plans to stop selling new legacy research contracts as of January 1, 2023 [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges and emphasized the importance of financial discipline [10][22] - The company anticipates continued macroeconomic headwinds, including recession risks in 2023 [49][50] - Despite challenges, management remains optimistic about long-term growth potential driven by the Forrester Decisions platform [50][52] Other Important Information - The company has raised its margin and EPS guidance for the fourth quarter due to ongoing expense management [13][47] - Cash flow from operating activities year-to-date was $37.8 million, with capital expenditures of $4.2 million [41] - The company plans to provide annual guidance moving forward, rather than quarterly [53] Q&A Session Summary Question: Client retention and conversion rates - Management noted that client retention and wallet retention are expected to remain in the low 70s in the near term due to macroeconomic issues and the transition to Forrester Decisions [58][59] Question: Cost savings areas - Cost savings have been achieved through tighter control on travel and entertainment expenses and non-critical headcount [63] Question: Industry performance - Smaller tech clients are underperforming, while larger clients transitioning to Forrester Decisions are showing improved retention rates [66][67] Question: Hiring a new head of sales - The search for a new Chief Sales Officer is ongoing, with a focus on candidates experienced in scaling businesses and driving metrics-driven sales organizations [75][76] Question: Exposure to small tech clients - The company has some exposure to small tech clients, but it is not characterized as material [82] Question: Sales force growth expectations - The company expects to grow its sales force in 2023, but the rate will depend on macroeconomic conditions [83][85]

PART I FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements for Q3 and nine months ended September 30, 2022, show revenue and net income growth, with decreased operating cash flow and total assets [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) - As of September 30, 2022, total assets decreased to **$585.2 million** from **$680.1 million** at year-end 2021, primarily due to reductions in accounts receivable, deferred commissions, and goodwill. Total liabilities also decreased to **$371.4 million** from **$476.2 million**, driven by lower deferred revenue and long-term debt. Stockholders' equity increased to **$213.9 million**[11](index=11&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$585,240** | **$680,129** | | Total Current Assets | $204,284 | $269,488 | | Goodwill | $238,949 | $244,994 | | **Total Liabilities** | **$371,351** | **$476,222** | | Deferred Revenue | $180,758 | $213,696 | | Long-term Debt | $50,000 | $75,000 | | **Total Stockholders' Equity** | **$213,889** | **$203,907** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) - For the third quarter of 2022, total revenues grew to **$127.7 million** from **$118.1 million** in Q3 2021, with net income increasing to **$5.4 million** from **$4.5 million**. For the nine-month period, revenues rose to **$400.9 million** from **$360.6 million**, and net income grew to **$23.4 million** from **$16.8 million** year-over-year[14](index=14&type=chunk) Financial Performance Summary (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | 9 Months 2022 | 9 Months 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$127,679** | **$118,136** | **$400,896** | **$360,587** | | Research | $87,038 | $79,876 | $262,265 | $235,846 | | Consulting | $37,382 | $37,393 | $115,075 | $116,903 | | Events | $3,259 | $867 | $23,556 | $7,838 | | **Income from Operations** | **$8,557** | **$6,539** | **$35,731** | **$27,158** | | **Net Income** | **$5,414** | **$4,522** | **$23,436** | **$16,821** | | **Diluted EPS** | **$0.28** | **$0.23** | **$1.22** | **$0.87** | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) - For the nine months ended September 30, 2022, net cash provided by operating activities was **$37.8 million**, a significant decrease from **$85.0 million** in the prior-year period. Net cash used in investing activities was **$5.7 million**, while financing activities used **$38.8 million**, primarily for debt repayment and stock repurchases[20](index=20&type=chunk) Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $37,803 | $84,992 | | Net cash used in investing activities | ($5,719) | ($26,850) | | Net cash used in financing activities | ($38,789) | ($15,528) | | **Net change in cash, cash equivalents and restricted cash** | **($17,432)** | **$41,150** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes 11% revenue growth to Research and Events segments, despite slight declines in client retention, with increased operating expenses and solid liquidity [Key Metrics](index=22&type=section&id=Key%20Metrics) - Contract Value (CV) increased by **7%** to **$353.0 million** as of September 30, 2022, driven by increased contract bookings. However, client retention and wallet retention decreased by **3** and **2 percentage points**, respectively, attributed to higher turnover in smaller clients amid macroeconomic conditions and a product platform transition[104](index=104&type=chunk) Key Business Metrics as of September 30 | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Contract value | $353.0 M | $328.6 M | +7% | | Client retention | 75% | 78% | (3) points | | Wallet retention | 97% | 99% | (2) points | | Number of clients | 2,875 | 2,964 | (3%) | [Results of Operations](index=23&type=section&id=Results%20of%20Operations) - Total revenues for Q3 2022 increased **8%** (**10% constant currency**) YoY, driven by **9%** growth in Research revenues and **276%** growth in Events revenues. For the nine-month period, total revenues grew **11%** (**13% constant currency**)[108](index=108&type=chunk)[109](index=109&type=chunk) - Operating expenses rose across all categories for both the three and nine-month periods. The increases were primarily due to higher compensation and benefits from increased headcount, higher travel expenses related to the return of in-person events, and increased professional services costs[113](index=113&type=chunk)[115](index=115&type=chunk)[117](index=117&type=chunk) - Interest expense decreased for the three and nine-month periods due to lower average outstanding borrowings, despite a rise in the effective interest rate[121](index=121&type=chunk) [Segment Results](index=26&type=section&id=Segment%20Results) - **Research Segment:** Revenues grew **6%** in Q3 and **8%** in the nine-month period, driven by increased contract value. Expenses rose **15%** and **13%** respectively, due to higher compensation costs from increased headcount[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - **Consulting Segment:** Revenues increased **6%** in Q3 and **4%** in the nine-month period, led by demand for content marketing and strategy consulting. Expenses for this segment grew **13%** in both periods, mainly from higher compensation and contractor costs[130](index=130&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - **Events Segment:** Revenues saw a significant increase of **276%** in Q3 and **201%** in the nine-month period, reflecting the return to in-person events. Expenses also rose sharply, up **93%** for the nine-month period, due to costs associated with hosting these events[130](index=130&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash from operations decreased to **$37.8 million** for the nine months ended Sep 30, 2022, from **$85.0 million** in the prior year period, primarily due to changes in deferred revenue and accrued expenses[137](index=137&type=chunk) - The company amended its credit facility in December 2021, increasing its revolving credit facility to **$150.0 million** and extending the maturity to 2026. As of September 30, 2022, **$50.0 million** was outstanding[140](index=140&type=chunk)[141](index=141&type=chunk) - During the first nine months of 2022, the company repurchased approximately **0.3 million shares** for **$15.1 million**. The remaining stock repurchase authorization was approximately **$75.0 million** as of September 30, 2022[89](index=89&type=chunk)[139](index=139&type=chunk) - As of September 30, 2022, the company held **$118.7 million** in cash, cash equivalents, and marketable investments, with **$77.5 million** held outside the U.S. Management believes current cash and operational cash flows are sufficient to meet requirements for the next twelve months[145](index=145&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the company's assessment of market risk sensitivity since its 2021 Annual Report on Form 10-K - There have been no material changes in the company's market risk exposure since its 2021 year-end report[149](index=149&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[150](index=150&type=chunk) - No material changes to the company's internal control over financial reporting were identified during the third quarter of 2022[151](index=151&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course legal proceedings and claims, which could materially impact operations due to costs and management resource diversion - The company is subject to legal proceedings from time to time in the ordinary course of business[153](index=153&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the 2021 Annual Report on Form 10-K have occurred, and prior risks remain applicable - The risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2021, remain applicable to the business[154](index=154&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock under its authorized program during the quarter ended September 30, 2022 - No shares of common stock were repurchased during the third quarter of 2022[155](index=155&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - The report includes a list of exhibits filed, such as officer certifications and Inline XBRL documents[162](index=162&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. COMMISSION FILE NUMBER: 000-21433 FORRESTER RESEARCH, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 60 Acorn Pa ...

Financial Data and Key Metrics Changes - In Q2 2022, the company achieved revenue growth of 15%, reaching $148.2 million compared to $128.7 million in the prior year period, exceeding guidance [7][21] - Operating margin was 19%, surpassing guidance, and net income increased by 51% to $19.2 million, with earnings per share (EPS) rising by 52% to $1 [7][28] - Contract value (CV) growth dropped to 10% in Q2 from 15% in the previous quarter, attributed to higher sales attrition and lower conversion rates [8][21] Business Line Data and Key Metrics Changes - Research revenues increased by 10% year-over-year, driven by double-digit CV growth, although client retention and wallet retention were down [22] - Consulting business revenues decreased by 4% to $39.3 million due to analysts focusing on CV business and client project delays [24] - Events business revenues surged by 191% to $19.5 million, driven by the return to in-person events [25] Market Data and Key Metrics Changes - The company noted that client decision-making delays were prevalent, particularly in Europe, due to macroeconomic headwinds [23][46] - The strengthening dollar is expected to continue impacting top-line results, with FX headwinds estimated at 1% to 2% for the year [30][35] Company Strategy and Development Direction - The company aims to continue growing its Forrester Decisions platform, which has seen strong market reception and pricing [19][20] - Plans to ramp up sales headcount in the second half of the year to support double-digit CV growth [9][33] - The company is focused on managing economic and product transition headwinds while maintaining a strong pipeline for future growth [6][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting full-year guidance for CV growth, EPS, and profit margin despite macroeconomic challenges [9][19] - The company remains cautiously optimistic about the future, acknowledging ongoing geopolitical and economic headwinds [42] Other Important Information - The company is committed to reducing carbon emissions by 50% by 2025 and is assessing travel policies to support this goal [18] - The events business is expected to continue thriving, with successful hybrid events held thus far [38] Q&A Session Summary Question: Can you elaborate on the macro uncertainty and its impact on client behavior? - Management noted that softness is more concentrated in Europe, with longer sales cycles but confidence in winning business throughout the year [46] Question: What factors contributed to the deceleration in CV growth? - The primary challenge was the number of ramp sales representatives in the field, impacting performance metrics [48] Question: How does the current CV pipeline compare to last quarter? - The pipeline for Q3 is in a better position than Q2, with a strategy to sign multiyear deals contributing positively [53] Question: Are you on track for your sales growth goals? - Management confirmed they are on pace to meet original targets for 2022 and are proactively hiring for 2023 [56] Question: What is the distribution of attrition among senior staff? - Attrition was noted to be higher among senior representatives, but new hires are aligned with the company's strategic focus [57]

Forrester Research, Inc. (NASDAQ:FORR) Q1 2022 Earnings Conference Call May 5, 2022 4:30 PM ET Company Participants Chris Finn - Chief Financial Officer Tyson Seely - Vice President-Investor Relations George Colony - Chairman of the Board & Chief Executive Officer Carrie Johnson - Chief Product Officer Conference Call Participants Andrew Nicholas - William Blair Vincent Colicchio – Barrington Research Anja Soderstrom - Sidoti Operator Good day, ladies and gentlemen, and thank you for standing by. Welcome t ...

Forrester Investor Summary May 5, 2022 Safe Harbor This presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. These projections or statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements. Please see the Company's Annual Report to shareholders and its filings with the SEC, including its recent filings on Forms 10-K and 10-Q, f ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. (State or other jurisdiction of incorporation or organization) 60 Acorn Park Drive CAMBRIDGE, MASSACHUSETTS (Address of principal executive offices) DELAWARE 04-2797789 (I.R.S. Employer I ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) Forrester Research is a global independent research and advisory firm that helps business and technology leaders accelerate growth through a focus on 'customer obsession' via its research, consulting, and events segments - Forrester is a global research and advisory firm helping leaders use customer obsession to accelerate growth through its proprietary research, consulting, and events[12](index=12&type=chunk) - The company's strategy is built around a 'CV growth engine,' which focuses on increasing contract value (CV) from recurring, renewable research products to generate predictable and profitable revenue streams[16](index=16&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - In 2021, Forrester launched 'Forrester Decisions,' a new portfolio of 15 standardized research services that is expected to become the company's flagship research product[23](index=23&type=chunk) Key Business Metrics (as of Dec 31, 2021) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Contract Value (CV) | $345.8 million | $301.3 million | +15% | | Client Companies | >3,000 | - | - | - The company's main competitors include other independent research firms like Gartner, consulting firms, marketing agencies, and free online information sources[34](index=34&type=chunk) - As of December 31, 2021, the company employed 1,781 people, with 1,316 in the United States and Canada, 267 in EMEA, and 198 in the Asia Pacific region[36](index=36&type=chunk) [Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company faces various business, operational, and general risks, including dependency on subscriptions, competition, and impacts from economic downturns or health epidemics - The COVID-19 pandemic significantly impacted the Events business, causing revenues to fall from **$27.0 million** in 2019 to **$12.9 million** in 2021 as events shifted from in-person to virtual formats[47](index=47&type=chunk) - As of December 31, 2021, the company had **$75.0 million** in outstanding debt under its revolving credit facility, which could restrict business operations and affect financial condition[52](index=52&type=chunk) - A significant concentration of ownership exists, with founder, Chairman, and CEO George F. Colony owning approximately **40%** of the company's outstanding stock, enabling him to strongly influence or control matters requiring stockholder approval[56](index=56&type=chunk) - The company faces competition from direct competitors like Gartner and indirect competitors such as internal client staff and free online information sources like Google[53](index=53&type=chunk) [Unresolved Staff Comments](index=9&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has not received any written comments from the Securities and Exchange Commission that remain unresolved [Properties](index=10&type=section&id=Item%202.%20Properties) Forrester's corporate headquarters is a leased 190,000 square foot office in Cambridge, Massachusetts, supplemented by other leased offices globally, which management deems adequate - The corporate headquarters is located in a leased facility of approximately **190,000 square feet** in Cambridge, Massachusetts, with the lease expiring on February 28, 2027[63](index=63&type=chunk) [Legal Proceedings](index=10&type=section&id=Item%203.%20Legal%20Proceedings) The company may be subject to legal proceedings and claims that arise in the ordinary course of business, which could have a material adverse effect due to defense costs and diversion of management resources [Mine Safety Disclosures](index=10&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=11&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Forrester's common stock trades on Nasdaq under 'FORR', with its dividend program suspended since 2019 and approximately **$90.1 million** remaining authorized for stock repurchases as of December 31, 2021 - The company's quarterly dividend program has been indefinitely suspended since the beginning of 2019[69](index=69&type=chunk) - As of December 31, 2021, the Board had authorized **$585.0 million** for stock repurchases, with **$494.9 million** used to repurchase **16.7 million shares**, leaving approximately **$90.1 million** available[71](index=71&type=chunk)[122](index=122&type=chunk) Share Repurchases (Q4 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 1 - Oct 31 | 13,116 | $49.53 | | Nov 1 - Nov 30 | 107,900 | $58.79 | | Dec 1 - Dec 31 | 42,000 | $57.78 | | **Total for Quarter** | **163,016** | **-** | [Reserved](index=12&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews the company's financial performance, noting a **10% revenue increase** to **$494.3 million** in 2021, **15% CV growth**, increased operating expenses, and a strong liquidity position with **$115.8 million** in cash [Overview and Key Metrics](index=13&type=section&id=Overview%20and%20Key%20Metrics) The company's revenue streams include Research, Consulting, and Events, with contract value (CV) as a primary metric, which increased **15%** in 2021 alongside improved client and wallet retention Key Performance Metrics (as of Dec 31) | Metric | 2021 | 2020 | % Increase | | :--- | :--- | :--- | :--- | | Contract value | $345.8 M | $301.3 M | 15% | | Client retention | 78% | 72% | 8% | | Wallet retention | 102% | 86% | 19% | | Number of clients | 3,005 | 2,808 | 7% | [Results of Operations](index=16&type=section&id=Results%20of%20Operations) Total revenues increased **10%** to **$494.3 million** in 2021 across all segments, with operating expenses rising due to reinstated incentive programs, significantly boosting income from operations and net income Revenue Performance (2021 vs. 2020) | Revenue Category | 2021 (in millions) | 2020 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Research | $325.3 | $301.5 | 8% | | Consulting | $156.1 | $137.3 | 14% | | Events | $12.9 | $10.1 | 27% | | **Total Revenues** | **$494.3** | **$449.0** | **10%** | - Cost of services and fulfillment increased **12%** in 2021, primarily due to a **$10.4 million** increase in compensation from reinstated incentive programs and a **$9.5 million** increase in professional services costs[97](index=97&type=chunk) - Selling and marketing expenses increased **3%** in 2021, driven by higher compensation and commissions, as well as increased advertising and marketing expenses[98](index=98&type=chunk) - Acquisition and integration costs decreased by **$5.4 million** in 2021 as the integration of SiriusDecisions was substantially completed in 2020[103](index=103&type=chunk) Income Tax Summary (2021 vs. 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Provision for income taxes | $8.3 M | $2.9 M | | Effective tax rate | 25.1% | 22.8% | [Segment Results](index=19&type=section&id=Segment%20Results) All three operating segments reported revenue growth in 2021, with Research up **6%** to **$372.6 million**, Consulting up **25%** to **$108.9 million**, and Events up **27%** to **$12.9 million** Segment Revenue and Expense Changes (2021 vs. 2020) | Segment | Revenue Change | Expense Change | | :--- | :--- | :--- | | Research | +6% | +7% | | Consulting | +25% | +29% | | Events | +27% | +3% | - Consulting segment revenue increased **25%** due to continued strong demand for content marketing and strategy consulting offerings[114](index=114&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, with cash from operating activities increasing to **$107.1 million** in 2021, **$115.8 million** in cash and equivalents, and an amended **$150.0 million** revolving credit facility with **$75.0 million** outstanding - Cash from operating activities increased by **$59.3 million** to **$107.1 million** in 2021, primarily due to increased contract bookings, strong collections, and a reduction in cash used for working capital[119](index=119&type=chunk)[120](index=120&type=chunk) - In December 2021, the company amended its credit agreement to increase its revolving credit facility to **$150.0 million** and eliminate the existing term loan. As of December 31, 2021, **$75.0 million** was outstanding on the facility[123](index=123&type=chunk)[124](index=124&type=chunk) - As of December 31, 2021, the company held **$115.8 million** in cash and cash equivalents, of which **$69.1 million** was held outside the U.S. and is intended to be permanently reinvested abroad[128](index=128&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency exchange rates, resulting in a **$1.5 million** loss in 2021, and interest rates on its **$75.0 million** floating-rate debt, where a **25 basis point** change impacts pre-tax interest expense by approximately **$0.1 million** - The company faces exposure to foreign currency exchange rate movements and incurred losses of **$1.5 million**, **$0.6 million**, and **$0.9 million** in 2021, 2020, and 2019, respectively[133](index=133&type=chunk)[134](index=134&type=chunk) - As of December 31, 2021, the company had **$75.0 million** in floating-rate debt. An interest rate swap hedges a portion of this debt. A hypothetical **25 basis point** change in interest rates on the unhedged balance of approximately **$35.9 million** would change annual pretax interest expense by about **$0.1 million**[134](index=134&type=chunk)[135](index=135&type=chunk) [Consolidated Financial Statements and Supplementary Data](index=24&type=section&id=Item%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal year 2021, along with the independent auditor's report and detailed notes on financial position, operations, and cash flows [Report of Independent Registered Public Accounting Firm](index=25&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements and internal controls, identifying 'Revenue Recognition – Identification of Distinct Performance Obligations' as a critical audit matter - The auditor, PricewaterhouseCoopers LLP, issued an unqualified (clean) opinion on the financial statements and the effectiveness of internal controls over financial reporting[144](index=144&type=chunk) - A Critical Audit Matter was identified related to Revenue Recognition, specifically the significant management judgment involved in identifying distinct performance obligations within customer contracts[151](index=151&type=chunk)[152](index=152&type=chunk) [Consolidated Financial Statements](index=27&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show total assets increased to **$680.1 million** in 2021, with total liabilities at **$476.2 million**, stockholders' equity at **$203.9 million**, and net income significantly improved to **$24.8 million** Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $115,769 | $90,257 | | Goodwill | $244,994 | $247,211 | | Total Assets | $680,129 | $644,218 | | Deferred revenue | $213,696 | $179,968 | | Long-term debt, net | $75,000 | $95,299 | | Total Liabilities | $476,222 | $458,452 | | Total Stockholders' Equity | $203,907 | $185,766 | Consolidated Statement of Operations Highlights (in thousands) | Account | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Total revenues | $494,315 | $448,984 | $461,697 | | Income (loss) from operations | $38,642 | $16,175 | $(1,075) | | Net income (loss) | $24,844 | $9,990 | $(9,570) | | Diluted EPS | $1.28 | $0.53 | $(0.52) | [Notes to Consolidated Financial Statements](index=32&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial items, including the SiriusDecisions acquisition, goodwill, credit facility, leases, income taxes, and segment data, with a reclassification of certain revenues from Consulting to Research - Effective January 1, 2021, the company reclassified revenue from advisory sessions included in subscription research products from Consulting revenues to Research revenues. Prior periods were reclassified, moving **$7.1 million** for 2020 and **$5.1 million** for 2019[174](index=174&type=chunk) - The 2019 acquisition of SiriusDecisions had a total consideration of **$245.5 million**, resulting in **$158.6 million** of goodwill and **$115.0 million** of identifiable intangible assets[244](index=244&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) - As of December 31, 2021, the company had **$245.0 million** in goodwill and **$62.7 million** in net intangible assets. The annual impairment test concluded that no impairments existed[253](index=253&type=chunk)[254](index=254&type=chunk) - The company's stock repurchase program has an aggregate authorization of **$585.0 million**, with **$494.9 million** used as of December 31, 2021[299](index=299&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=58&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable [Controls and Procedures](index=58&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, a conclusion also supported by the independent auditor's unqualified opinion - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[329](index=329&type=chunk) - Based on the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2021[331](index=331&type=chunk) [Other Information](index=58&type=section&id=Item%209B.%20Other%20Information) This item is not applicable [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=58&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable PART III [Directors, Executive Officers, and Corporate Governance](index=59&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) This section lists executive officers as of March 10, 2022, including George F. Colony (Chairman & CEO), with further director and corporate governance information incorporated by reference from the 2022 Proxy Statement Executive Officers (as of March 10, 2022) | Name | Age | Position | | :--- | :--- | :--- | | George F. Colony | 68 | Chairman of the Board, Chief Executive Officer | | Ryan D. Darrah | 50 | Chief Legal Officer and Secretary | | L. Christian Finn | 51 | Chief Financial Officer | | Kelley Hippler | 53 | Chief Sales Officer | | Carrie Johnson | 46 | Chief Product Officer | [Executive Compensation](index=60&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement under the captions 'Director Compensation' and 'Executive Compensation' [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=60&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details equity compensation plans as of December 31, 2021, showing **748,933** securities to be issued at a weighted average exercise price of **$35.52**, and **1,906,052** securities available for future issuance Equity Compensation Plan Information (as of Dec 31, 2021) | Category | Securities to be Issued Upon Exercise | Weighted Avg. Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by stockholders | 748,933 | $35.52 | 1,906,052 | [Certain Relationships and Related Transactions, and Director Independence](index=60&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related party transactions, and director independence is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement [Principal Accountant Fees and Services](index=60&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement under the caption 'Independent Auditors' Fees and Other Matters' PART IV [Exhibits and Financial Statement Schedules](index=61&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section confirms financial statements are indexed within the report, with no financial statement schedules filed, and a complete listing of exhibits provided in the Exhibit Index [Form 10-K Summary](index=61&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable