Forrester Research(US:FORR)2023-02-09 23:39Financial 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]