Forrester Research(FORR) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Forrester generated $89.9 million in revenue for Q1 2025, a decrease of 10% compared to $100.1 million in the prior year period [18] - The company reported a net income of $2 million and earnings per share of $0.11, down from $2.8 million and $0.14 in Q1 2024, representing a significant decline [23] - Operating income decreased by 27% to $2.5 million, or 2.8% of revenue, compared to 3.4% in the same quarter last year [22] - Free cash flow for the quarter was $26.1 million, reflecting prudent cash management [17] Business Line Data and Key Metrics Changes - Research revenues decreased by 11% year-over-year, with subscription research products down 6% [20] - Consulting revenues were $21.4 million, down 7% compared to the prior year, although the Advisory segment showed single-digit growth [21] - The events business generated insignificant revenues as no events were held during the quarter [21] Market Data and Key Metrics Changes - The company experienced a 7% decline in contract value (CV) for the quarter, with expectations of flat to slightly down CV for the year [17] - Economic uncertainty led to budget tightening and spending pauses, particularly in verticals like discrete manufacturing and retail [9] - The government sector, which constitutes less than 6% of total contract value, faced some contract cancellations, but the overall impact was minimal [19] Company Strategy and Development Direction - Forrester is focusing on optimizing its go-to-market strategy to align with its product platform, Forrester Decisions [6] - The company launched a new wave of research aimed at helping clients manage through economic volatility, covering various topics including B2C and B2B marketing, technology, and cybersecurity [10] - Forrester is expanding its research in artificial intelligence and has developed its own large language model, IZOLA, to assist clients [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that economic volatility is expected to persist throughout 2025, impacting client spending and project initiation [20] - The company remains optimistic about its ability to assist clients in navigating uncertain times, emphasizing its role as a partner in optimizing costs [26] - Guidance for 2025 remains unchanged, with expected revenue between $400 million and $415 million, reflecting a decline of 4% to 8% compared to 2024 [25] Other Important Information - A goodwill impairment charge of approximately $84 million was recorded due to a decline in stock price, which does not reflect lowered long-term expectations for the business [24] - The company has approximately $80 million of stock repurchase authorization intact and a strong balance sheet with over $134 million in cash [23] Q&A Session Summary Question: Guidance and macro uncertainty - Management maintained guidance despite macro uncertainty, citing a conservative outlook and potential opportunities in the government sector [32][34] Question: Sales pipeline and execution - Sales pipelines are improving, with a 33% increase per account executive, although sales cycles are taking longer due to increased scrutiny [42][53] Question: Sector challenges - Challenges are being observed across various sectors, particularly in manufacturing and financial services, with significant impacts noted in Asia and Europe due to tariffs [60] Question: Client retention and small clients - The decline in total clients is primarily among smaller clients, with a focus on ensuring the right product fit for retention [66][68]