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

Financial Data and Key Metrics Changes - The company generated $89.9 million in revenue, a decrease of 10% compared to $100.1 million in the prior year period [19] - Net income decreased by 28% to $2 million, with earnings per share at $0.11 compared to $0.14 in the prior year [23] - Operating income decreased by 27% to $2.5 million, representing 2.8% of revenue, down from 3.4% in the previous year [22] - Free cash flow was positive at $26.1 million, reflecting prudent cash management [17] Business Line Data and Key Metrics Changes - Research revenues decreased by 11%, with subscription research products down 6% [20] - Consulting business revenues were $21.4 million, down 7% compared to the prior year, while Advisory showed single-digit growth [21] - Events business revenues were insignificant as no events were held during the quarter [21] Market Data and Key Metrics Changes - Economic uncertainty has led to budget tightening and spending pauses, particularly in verticals like discrete manufacturing and retail [10] - The government sector, which constitutes less than 6% of total contract value, experienced minimal contract cancellations, but future renewals are expected to remain tight [9][19] Company Strategy and Development Direction - The company is focusing on optimizing its go-to-market strategy to align with its product platform, Forrester Decisions [6] - A new wave of research was launched to help companies manage through volatility, covering various topics including B2C and B2B marketing, technology, and cybersecurity [10] - The company aims to leverage its strengths in AI and cybersecurity to penetrate government accounts [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the first quarter did not meet expectations due to economic instability but expressed confidence in the company's ability to assist clients during volatile times [15][27] - The guidance for 2025 remains unchanged, with expected revenue between $400 million and $415 million, reflecting a decline of 4% to 8% compared to 2024 [26] Other Important Information - The company recorded a goodwill impairment charge of approximately $84 million due to a decline in stock price [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 [33][36] Question: Sales pipeline and performance - Sales pipelines are improving, with a 33% increase per account executive, although sales cycles are prolonged by about 10-12 days [43][53] Question: Client retention and sector challenges - The decline in total clients is primarily among smaller clients, with a focus on selling team solutions to improve retention [65][66]