Forrester Research(FORR) - 2024 Q2 - Quarterly Results

Press Release Overview This section provides an overview of Forrester Research's Q2 2024 financial results and key announcements Headline and Initial Announcement Forrester Research announced its Q2 2024 financial results on July 30, 2024, reporting a 3% year-over-year decrease in contract value (CV) to $323.0 million - Forrester Research announced Q2 2024 financial results on July 30, 2024[13] Contract Value (CV) Overview | Metric | Q2 2024 | | :----- | :------ | | Contract Value (CV) | $323.0 million | | YoY Change | -3% | CEO Commentary CEO George F. Colony discussed product migration progress, stabilizing CV metrics, and challenges in non-CV businesses, leading to revised 2024 guidance - Product migration to Forrester Decisions platform is on track, targeting 80% of CV by year-end[6] - CV metrics are stabilizing, and retention shows improvement from the prior quarter[6] - Non-CV businesses (consulting and events) had a challenging quarter, leading to lowered 2024 guidance[6] - Company is focused on stabilizing non-CV businesses and confident in returning to CV growth by year-end[6] Second Quarter 2024 Financial Performance This section details Forrester's consolidated financial results for the second quarter of 2024, including income statements, balance sheet, and cash flow data Total Revenues (Q2 2024 vs Q2 2023) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | YoY Change | | :----- | :--------------------- | :--------------------- | :--------- | | Total Revenues | $121,825 | $135,589 | -10.15% | Income from Operations (Q2 2024 vs Q2 2023) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | YoY Change | | :----- | :--------------------- | :--------------------- | :--------- | | Income from Operations | $11,314 | $8,288 | +36.51% | Consolidated Statements of Income Forrester reported its consolidated income statement for Q2 2024, showing a GAAP net income increase for the quarter but a net loss for the six-month period, with adjusted net income decreasing GAAP Results GAAP net income for Q2 2024 increased to $6.3 million, while the six-month period reported a net loss GAAP Net Income & EPS (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | YoY Change | | :----- | :------ | :------ | :--------- | | Net Income | $6.3 million | $5.3 million | +18.87% | | Diluted EPS | $0.33 | $0.28 | +17.86% | GAAP Net Income & EPS (Six Months Ended June 30) | Metric | 2024 | 2023 | Change | | :----- | :--- | :--- | :----- | | Net Income (loss) | $(381) thousand | $1,229 thousand | -131.00% | | Diluted EPS | $(0.02) | $0.06 | -133.33% | Adjusted Results Adjusted net income for Q2 2024 decreased to $12.9 million, with a consistent adjusted effective tax rate Adjusted Net Income & EPS (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | YoY Change | | :----- | :------ | :------ | :--------- | | Adjusted Net Income | $12.9 million | $18.1 million | -28.69% | | Adjusted Diluted EPS | $0.68 | $0.94 | -27.66% | - Adjusted net income excludes stock-based compensation, amortization of acquisition-related intangible assets, and restructuring costs[14][19] Revenue Breakdown Total revenues for Q2 2024 decreased by 10.15% year-over-year, with declines across all segments Revenue by Segment (Q2 2024 vs Q2 2023, in thousands) | Segment | Q2 2024 | Q2 2023 | YoY Change | | :------ | :------ | :------ | :--------- | | Research | $83,663 | $87,699 | -4.61% | | Consulting | $24,811 | $29,970 | -17.21% | | Events | $13,351 | $17,920 | -25.50% | | Total Revenues | $121,825 | $135,589 | -10.15% | Operating Expenses Total operating expenses decreased by 13.19% year-over-year in Q2 2024, primarily due to reduced restructuring costs Key Operating Expenses (Q2 2024 vs Q2 2023, in thousands) | Expense Category | Q2 2024 | Q2 2023 | YoY Change | | :--------------- | :------ | :------ | :--------- | | Cost of services and fulfillment | $51,164 | $54,614 | -6.32% | | Selling and marketing | $40,253 | $41,581 | -3.20% | | General and administrative | $14,437 | $15,315 | -5.73% | | Amortization of intangible assets | $2,513 | $3,068 | -18.10% | | Restructuring costs | $82 | $10,532 | -99.22% | | Total Operating Expenses | $110,511 | $127,301 | -13.19% | Key Financial Data This section presents key balance sheet and cash flow data as of June 30, 2024, including changes in cash, receivables, and operating cash flow - Contract value (CV) was $323.0 million as of June 30, 2024, compared to $333.2 million (recast) as of June 30, 2023[13][20] - Client retention was 74% and wallet retention was 89% as of June 30, 2023[20] - Total headcount was 1,793 and sales force was 616 as of June 30, 2023[20] Balance Sheet Data Cash, cash equivalents, and marketable investments decreased, while deferred revenue increased, and debt remained stable Balance Sheet Highlights (as of June 30, 2024 vs Dec 31, 2023, in thousands) | Metric | June 30, 2024 | Dec 31, 2023 | Change | | :----- | :------------ | :----------- | :----- | | Cash, cash equivalents and marketable investments | $110,813 | $124,489 | -10.99% | | Accounts receivable, net | $47,702 | $58,999 | -19.15% | | Deferred revenue | $164,117 | $156,798 | +4.67% | | Debt outstanding | $35,000 | $35,000 | 0.00% | Cash Flow Data Net cash provided by operating activities was negative for Q2 2024, and the company repurchased a significant amount of common stock Cash Flow Highlights (Q2 2024 vs Q2 2023, in thousands) | Metric | Q2 2024 | Q2 2023 | Change | | :----- | :------ | :------ | :----- | | Net cash provided by operating activities | $(2,295) | $15,788 | -114.54% | | Purchases of property and equipment | $(2,256) | $(2,664) | +15.39% | | Repayments of debt | $0 | $(15,000) | +100.00% | | Repurchases of common stock | $(8,015) | $(820) | +877.44% | Full-Year 2024 Financial Guidance This section outlines Forrester's financial guidance for the full-year 2024, including both GAAP and adjusted projections GAAP Guidance Forrester provided GAAP guidance for full-year 2024, projecting total revenues between $425 million and $435 million, with specific operating margin and EPS ranges Full-Year 2024 GAAP Guidance | Metric | Range | | :----- | :---- | | Total revenues | $425 million to $435 million | | Operating margin | 1.2% to 2.2% | | Interest expense | Approximately $3.0 million | | Effective tax rate | Approximately 65% to 80% | | Earnings per share | Approximately $0.06 to $0.19 | Adjusted Guidance The adjusted full-year 2024 guidance includes an operating margin of 8.5% to 9.5% and diluted earnings per share of $1.37 to $1.57, excluding specific non-GAAP adjustments Full-Year 2024 Adjusted Guidance | Metric | Range | | :----- | :---- | | Adjusted operating margin | Approximately 8.5% to 9.5% | | Adjusted effective tax rate | Approximately 29% | | Adjusted diluted earnings per share | Approximately $1.37 to $1.57 | - Adjusted guidance excludes stock-based compensation ($14.5M-$15.0M), amortization of acquisition-related intangibles (~$10.0M), restructuring costs (~$7.0M), and any investment gains or losses[21] About Forrester This section provides a brief overview of Forrester Research, its mission, and the services it offers Company Description Forrester is a leading research and advisory firm that helps global leaders accelerate growth through customer obsession, offering proprietary research, consulting, and events - Forrester is an influential research and advisory firm[8] - Helps leaders across various functions (technology, customer experience, digital, marketing, sales, product) accelerate growth through customer obsession[8] - Services include proprietary research, consulting, and events[8] - Insights are based on annual surveys of over 700,000 consumers, business leaders, and technology leaders worldwide, rigorous research, and real-time feedback[8] Forward-Looking Statements and Risk Factors This section addresses forward-looking statements and outlines key risks and uncertainties that could impact Forrester's future financial performance Forward-Looking Statements and Risks This section contains forward-looking statements regarding Forrester's financial guidance and future performance, subject to various risks including membership retention, technology spending, and international business challenges - Press release contains forward-looking statements regarding 2024 financial guidance and future performance[4] - Statements involve risks and uncertainties that could cause actual results to differ materially[4] - Important factors include ability to retain and enrich memberships, fulfill consulting engagements, technology spending, international business risks, and the use of generative AI[4][22] - Other risks include dependence on key personnel, ability to attract staff, response to economic conditions, debt obligations, competition, quarterly operating result variations, network disruptions, intellectual property protection, privacy laws, and taxation[22] Contact Information This section provides contact details for investor relations and corporate communications Investor and Media Contacts Contact details for investor relations and corporate communications are provided for inquiries - Investor Relations contact: Ed Bryce Morris, Vice President, Corporate Development & Investor Relations[9] - Corporate Communications contact: Shweta Agarwal, VP, Corporate Communications[23] Notes and Disclosures This section includes important notes and disclosures, such as the reconciliation of non-GAAP financial measures and copyright information Non-GAAP Financial Measures Reconciliation Forrester provides adjusted financial results to offer consistent and comparable information, excluding specific non-GAAP items and using an assumed 29% tax rate - Adjusted financial results are provided to offer consistent and comparable information for understanding ongoing business[19] - Exclusions for adjusted metrics include amortization of acquisition-related intangible assets, stock-based compensation, restructuring costs, legal settlements, and net gains/losses from investments, and their related tax effects[19] - An assumed tax rate of 29% is used for adjusted net income calculations in 2024 and 2023[19] Reconciliation of GAAP Net Income to Adjusted Net Income (Q2 2024 vs Q2 2023, in thousands) | Item | Q2 2024 | Q2 2023 | | :--- | :------ | :------ | | Net income (loss) - GAAP | $6,292 | $5,304 | | Amortization of intangible assets | $2,513 | $3,068 | | Restructuring costs | $82 | $10,532 | | Stock-based compensation | $4,025 | $3,860 | | Tax effects of items above | $(1,288) | $(4,597) | | Adjustment to tax expense for adjusted tax rate | $1,288 | $(39) | | Adjusted net income | $12,912 | $18,128 | Copyright This section states the copyright for the document - © 2024, Forrester Research, Inc. All rights reserved[18]