Forrester Research(FORR) - 2021 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited statements show increased assets and equity, with net income rising to $16.8 million Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $129,332 | $90,257 | | Total current assets | $238,119 | $217,160 | | Goodwill | $245,212 | $247,211 | | Total assets | $654,792 | $644,218 | | Liabilities & Equity | | | | Deferred revenue | $194,164 | $179,968 | | Total current liabilities | $276,847 | $269,745 | | Long-term debt, net | $86,364 | $95,299 | | Total liabilities | $453,640 | $458,452 | | Total stockholders' equity | $201,152 | $185,766 | Consolidated Statements of Operations Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $118,136 | $108,577 | $360,587 | $328,463 | | Income from operations | $6,539 | $174 | $27,158 | $12,126 | | Net income (loss) | $4,522 | $(3,760) | $16,821 | $7,564 | | Diluted EPS | $0.23 | $(0.20) | $0.87 | $0.40 | Consolidated Statements of Cash Flows Consolidated Cash Flow Highlights for Nine Months Ended Sep 30 (in thousands) | Cash Flow Category | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $84,992 | $29,199 | | Net cash used in investing activities | $(26,850) | $(2,944) | | Net cash used in financing activities | $(15,528) | $(21,457) | | Net change in cash, cash equivalents and restricted cash | $41,150 | $4,218 | Notes to Consolidated Financial Statements Notes detail revenue reclassification, debt facilities, lease obligations, and stock repurchases - Effective Q1 2021, the company reclassified $4.5 million in advisory revenues from the Consulting segment to the Research segment with no impact on total revenues[22] - The company has a $200.0 million credit agreement from 2019, including a $125.0 million term loan and a $75.0 million revolving credit facility, both maturing in January 2024[41][45] - As of September 30, 2021, the company had future minimum lease payments under non-cancelable operating leases totaling $94.3 million[53] - The company expects to recognize approximately $370.4 million of revenue over the next 24 months from remaining performance obligations[63] - During the nine months ended September 30, 2021, the company repurchased approximately 0.2 million shares of common stock for $10.6 million[95] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses a rebound in contract bookings, revenue growth, and improved key business metrics Overview and Key Metrics - The company experienced a rebound in contract bookings through Q3 2021, though the events business remains affected by the pandemic with all 2021 events held virtually[104] Key Business Metrics as of September 30 | Metric | 2021 | 2020 | % Increase | | :--- | :--- | :--- | :--- | | Contract value (in millions) | $331.0 | $295.6 | 12% | | Client retention | 78% | 71% | 10% | | Wallet retention | 99% | 86% | 15% | | Number of clients | 2,964 | 2,750 | 8% | Results of Operations Total revenues increased 10% for the nine-month period, driven by strong growth in Consulting and Research Revenue Performance (Nine Months Ended Sep 30) | Revenue Stream | 2021 (in millions) | 2020 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Research | $235.8 | $223.7 | 5% | | Consulting | $116.9 | $98.5 | 19% | | Events | $7.8 | $6.3 | 25% | | Total Revenues | $360.6 | $328.5 | 10% | - Cost of services and fulfillment for the nine months of 2021 increased by $16.1 million (12%) due to reinstated incentive programs and higher professional services costs[120] - General and administrative expenses for the nine months of 2021 increased by $6.0 million (17%), mainly from higher compensation and professional services costs[125] - Integration costs decreased by $3.5 million as the integration of SiriusDecisions was substantially completed in 2020[129] Segment Results All segments reported revenue growth, with the Consulting segment showing a robust 30% increase Segment Performance (Nine Months Ended Sep 30, 2021 vs 2020) | Segment | Total Revenue Change | Expense Change | | :--- | :--- | :--- | | Research | +5% | +8% | | Consulting | +30% | +28% | | Events | +25% | +11% | - Consulting segment revenue growth of 30% for the nine months was driven by strong demand for content marketing and strategy consulting offerings[143] Liquidity and Capital Resources The company's liquidity strengthened significantly, with cash from operations increasing to $85.0 million - Cash from operating activities increased by $55.8 million to $85.0 million for the nine months ended Sep 30, 2021, due to increased contract bookings and strong collections[147] - During the first nine months of 2021, the company used cash for $10.6 million in common stock repurchases and $9.4 million in term loan repayments[149] - As of September 30, 2021, the company had cash and cash equivalents of $129.3 million, of which $65.7 million was held outside the U.S[155] Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in its market risk assessment since year-end 2020 - There were no material changes in the company's market risk disclosures from the year-end 2020 Form 10-K[158] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[159] - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2021[160] PART II OTHER INFORMATION Legal Proceedings The company may be subject to legal proceedings and claims in the ordinary course of business - The company may be subject to legal proceedings and claims arising in the ordinary course of business[163] Risk Factors Risk factors previously disclosed in the Annual Report on Form 10-K remain applicable - The risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2020 remain applicable to the business[164] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 171,005 shares in Q3 2021 and increased its repurchase authorization Common Stock Repurchases (Quarter Ended Sep 30, 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2021 | 50,420 | $46.14 | | August 2021 | 81,000 | $46.25 | | September 2021 | 39,585 | $47.99 | | Total | 171,005 | | - In October 2021, the Board of Directors increased the stock repurchase authorization by an additional $50.0 million[165] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL data - The report includes standard exhibits such as officer certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents[171]