Forrester Research(US:FORR)2026-02-12 22:32Financial Data and Key Metrics Changes - In Q4 2025, revenue declined by 6% year-over-year to $101.1 million, while full-year revenue decreased by 8% to $396.9 million compared to $432.5 million in 2024 [20][28] - Free cash flow for 2025 was approximately $18 million, with client retention reaching 87%, up from the start of 2025 [10][29] - Net income for Q4 decreased by 53% to $3.2 million, with earnings per share at $0.17, while full-year net income decreased by 21% to $22.2 million [28][31] Business Line Data and Key Metrics Changes - Research segment revenue for Q4 was $76.6 million, down 4% year-over-year, and $295.6 million for the full year, a decline of 7% [25] - Consulting revenue for Q4 was $21.8 million, down 16%, and $88.2 million for the full year, a decline of 9% [26] - Events revenue for Q4 was $2.7 million, a decline of 1%, and for the full year, it decreased by 29% to $13.1 million [26] Market Data and Key Metrics Changes - Client count increased in Q4 for the first time since Q4 2021, reflecting a positive trend in client engagement [10] - The percentage of contract value (CV) from multi-year deals increased to 72% at year-end, up from 69% in Q4 2024 [10] Company Strategy and Development Direction - The company is focusing on four initiatives for 2026: improving retention lifecycle execution, introducing more product options, fostering a culture of growth in sales, and producing actionable research [11][12] - A restructuring plan affecting 8% of employees was announced to align costs with revenue and focus on expanding research contract value [16][22] - The strategy consulting business will be exited due to ongoing instability and competition, while advisory services will continue [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are navigating a new paradigm shaped by AI, with increasing complexity in decision-making and technology challenges [6][7] - The company expressed optimism about returning to CV growth in 2026, driven by improvements in client retention and the success of the new AI Access product [11][19] - Management acknowledged ongoing macro uncertainties and the impact of the U.S. government's consulting pullback on performance [20][31] Other Important Information - The company plans to enhance its AI capabilities and expand its product offerings, including a rebranding of its flagship AI tool to Forrester AI [13][19] - The new event strategy will focus on smaller, localized events to better meet client needs [17][53] Q&A Session Summary Question: Can you elaborate on the consulting restructure and expected revenue impact? - The revenue impact from sunsetting strategy consulting is approximately $6 million, with a backlog of about $8 million to service throughout 2026 [36] Question: What are the reasons for lower wallet retention? - Management indicated that volatility in the U.S. government sector and uncertainties in the U.S. business are contributing factors [38][39] Question: Can you discuss the product pipeline for the year? - The company is looking to provide more ways for clients to engage and embed Forrester's offerings into their daily work [47][48] Question: How is AI Access performing versus expectations? - AI Access exceeded expectations in Q4, with a strong pipeline and positive client engagement [72][78] Question: Will there be changes in the sales process with new leadership? - The sales strategy will be reorganized around six industries, focusing on high-potential accounts and improving retention lifecycle execution [68][71]