Forrester Research(US:FORR)2023-10-27 00:46Financial Data and Key Metrics Changes - In Q3, overall revenue decreased by 11% to $113.4 million compared to $127.7 million in the prior year period [11] - Net income and earnings per share decreased by 21% and 23%, respectively, with net income at $8.6 million and earnings per share at $0.44 [38] - Contract value (CV) was flat in Q3, with Forrester Decisions reaching approximately $200 million, representing 57% of overall CV [24][48] Business Line Data and Key Metrics Changes - Research revenues decreased by 7% compared to Q3 2022, with subscription research products down by 1% [12] - Consulting business revenues were $28.2 million, down 24% year-over-year, attributed to clients limiting discretionary spending [15] - Events business revenues increased by 41% to $4.6 million, driven by hosting three events compared to two in the prior year [49] Market Data and Key Metrics Changes - Government clients showed strong traction, with several million-dollar deals closed with U.S. government agencies and significant contracts in APAC and EMEA [6][10] - The overall client retention rate dipped slightly to 73%, while Forrester Decisions client retention remained higher at 85% [12][13] Company Strategy and Development Direction - The company is focused on migrating approximately 2/3 of its CV to Forrester Decisions by the end of the year, with a long-term goal of 80% [53] - Enhancements to Forrester Decisions include the introduction of Izola, a generative AI tool aimed at improving client interactions and research accessibility [29][30] - The company is also simplifying its events portfolio to improve client experience and align with research content [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future despite ongoing macroeconomic headwinds, expecting revenue declines to moderate into next year [41][42] - The uncertain environment is impacting new business growth, particularly in consulting and events, but the company remains on track for its migration plan [14][47] Other Important Information - Operating expenses decreased by 10% due to a restructuring plan, with headcount down 13% compared to the same period in 2022 [50] - The company repurchased approximately $3.3 million worth of shares during the quarter, maintaining a stock repurchase authorization of approximately $71 million [39] Q&A Session Summary Question: Stabilization of CV growth - Management noted that CV growth is expected to be relatively flat in the near term, with some fluctuations [65] Question: Client retention and churn - Client churn is primarily due to shedding non-strategic accounts, with retention rates for Forrester Decisions being approximately 12 points higher than the overall business [69][70] Question: Feedback on Izola - Early feedback on Izola has been overwhelmingly positive, with clients appreciating the ability to quickly access relevant research [86] Question: Sales headcount and strategy - The company is focused on new business development and plans to add back headcount to capture more user clients [101][102] Question: Impact of generative AI - Generative AI is expected to enhance operations and improve client interactions, with Izola being a significant step forward [80][81]