Forrester Research(US:FORR)2024-02-09 03:42Financial Data and Key Metrics Changes - Forrester's overall revenue for Q4 2023 was $118.1 million, a 14% decline from $136.9 million in Q4 2022, and for the full year, revenue was $480.7 million, representing an 11% decline from $537.8 million in 2022 [30][34] - Contract value (CV) declined by 4% in 2023, with a total of $215 million or 66% of CV contracts on the Forrester Decisions platform as of January 1, 2024 [8][33] - Operating income decreased by 47% to $6.8 million in Q4 2023, compared to $12.9 million in Q4 2022, and for the full year, operating income decreased by 25% to $52.3 million [38] Business Line Data and Key Metrics Changes - Research segment CV was $332.1 million at December 31, 2023, a 4% decline from December 2022, primarily due to lower enrichment of retained accounts and additional churn [31] - Consulting business revenues were $28.3 million for Q4 2023 and $118.2 million for the full year, representing declines of 25% and 23% respectively [34] - Events business revenues were $4.6 million in Q4 2023, a 36% decline compared to Q4 2022, driven by a shift in event timing [36] Market Data and Key Metrics Changes - The overall client count decreased from the prior quarter, but Forrester Decisions client count continues to grow, with retention remaining well above overall client retention by approximately 10 points [33] - The company expects both CV and wallet retention to be under pressure in 2024 due to the final year of product transition and a challenging economic environment [33] Company Strategy and Development Direction - Forrester aims to complete the transition of two-thirds of its contract value into the Forrester Decisions platform by the end of 2024, focusing on higher-value clients [4][5] - The company is sharpening its target audience for Forrester Decisions, primarily serving C-level executives in large organizations, which is expected to enhance resilience and scalability [6][7] - The company plans to launch new Forrester Waves focused on the generative AI market in 2024, indicating a strategic pivot towards emerging technologies [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2023 was a challenging year due to internal transitions and external macroeconomic factors, but expressed confidence in the long-term benefits of these changes [2][46] - The company anticipates declining revenue in 2024 but aims to control costs to maintain margins and lay a foundation for sustainable growth in 2025 [13][41] - Management believes that 2024 will be an inflection point for Forrester as it completes its product migration and refines its go-to-market strategy [14][46] Other Important Information - The company reduced its workforce by 3% as part of its restructuring plan, which is expected to incur costs of approximately $7.3 million to $7.7 million [41] - Interest expense for Q4 2023 was $0.8 million, an increase from $0.7 million in Q4 2022, driven by higher interest rates [39] Q&A Session Summary Question: How much of the decline for this year is attributed to internal initiatives versus the macro environment? - Management indicated that while internal decisions have impacted short-term performance, the majority of the decline is attributed to external macroeconomic factors, particularly the tech recession [54][62] Question: What is the outlook for generative AI's impact on growth? - Management expressed confidence that generative AI will drive growth, as clients increasingly seek guidance on navigating this technology [65][67] Question: Is there more room for headcount cuts without jeopardizing quality? - Management stated that they believe they are through the majority of labor reductions and intend to preserve resources to support future growth [79] Question: How is the company performing in different regions? - Management noted strong performance in the government sector and indicated that international markets are showing positive signs [98]