Forrester Research(FORR)2022-11-05 21:09Financial 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 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 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]