Press Releases

FOR IMMEDIATE RELEASE

Forrester Research Reports Fourth-Quarter And Full-Year 2008 Financial Results

Cambridge, Mass., February 11, 2009 . . .

Forrester Research, Inc. (Nasdaq: FORR) today announced its financial results for the fourth quarter ended December 31, 2008 and full-year 2008.

Fourth-Quarter Financial Performance

  • Total revenues were $62.9 million, compared with $58.4 million for the fourth quarter of last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 23 percent, Forrester reported net income of $9.2 million or $0.39 per diluted share, compared with net income of $5.6 million, which reflects an effective tax rate of 50 percent or $0.24 per diluted share, for the same period last year.
  • On a pro forma basis, which reflects a pro forma effective tax rate of 39 percent, net income was $9.0 million or $0.38 per diluted share for the fourth quarter of 2008. Pro forma net income excludes stock-based compensation of $1.4 million, amortization of acquisition-related intangibles of approximately $1.0 million, net impairments of non-marketable investments of $663,000, and a net reimbursement of professional fees related to the stock option investigation and restatement of the Company's historical financial statements of $208,000. For the fourth quarter of 2007, pro forma net income was $8.7 million or $0.37 per diluted share, which excludes stock-based compensation of $2.6 million, amortization of acquisition-related intangible assets of $254,000, gains from short-term investments and non-marketable investments of $671,000, and expenses related to the stock option investigation and restatement of the Company's historical financial statements of $954,000 and which reflects a pro forma effective tax rate of 39 percent.

Year Ended December 31, 2008 Financial Performance

  • Total revenues were $240.9 million, compared with $212.1 million last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 35 percent, Forrester reported net income of $29.2 million or $1.24 per diluted share for 2008, compared with net income of $18.9 million or $0.80 per diluted share for the same period last year, which reflects an effective tax rate of 37 percent.
  • On a pro forma basis, net income was $31.1 million or $1.32 per diluted share for 2008, which reflects a pro forma effective tax rate of 39 percent and which also excludes stock-based compensation of $5.4 million, amortization of acquisition-related intangible assets of $1.4 million, a net gain of $1.5 million on the sale of short-term investments, and expenses related to the stock option investigation and restatement of the Company's financial statements of $877,000. For 2007, pro forma net income was $27.6 million or $1.16 per diluted share, which reflects a pro forma effective tax rate of 39 percent and which excludes stock-based compensation of $8.3 million, amortization of acquisition-related intangible assets of $1.2 million, net impairments from non-marketable investments of $1.0 million, and expenses related to the stock option investigation and restatement of the Company's historical financial statements of $4.6 million.

"The recession caused a slowdown in our business toward the end of 2008," said George F. Colony, Forrester's chairman of the board and chief executive officer. "The market conditions, however, did not prevent us from remaining profitable and achieving our EPS targets for the year. This is due in part to our role-based strategy, which resulted in a relatively strong retention of clients despite the tough economy."

A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.

Fiscal Year 2009

Forrester recently announced a reduction of approximately 50 jobs or an estimated 5 percent of its workforce worldwide in response to the ailing economy. The company anticipates that it will incur pretax expenses of approximately $2.5 to $3 million in the first quarter of 2009, related principally to cash severance and related benefits costs. The company is also evaluating associated facilities-related costs.

"We are grateful for the contributions of all of our employees over the past year," said George F. Colony, Forrester's chairman of the board and chief executive officer. "We have made this difficult decision in response to challenging global economic conditions. Forrester has lived through tough economic times before. We are confident that with our role-based strategy and our current offerings, we are well poised to successfully deliver what our clients need today and in the long term."

Forrester is providing first quarter 2009 financial guidance as follows:

First-Quarter 2009 (GAAP)

  • Total revenues of approximately $52 million to $56 million.
  • Operating margin of approximately 0 percent to 5 percent.
  • Other income of approximately $800,000.
  • An effective tax rate of approximately 40 percent.
  • Diluted weighted average shares outstanding of approximately 23.4 million.
  • Diluted earnings per share of approximately $0.02 to $0.06.

First-Quarter 2009 (Pro Forma):

Pro forma financial guidance for the first quarter of 2009 excludes stock-based compensation expense of approximately $1.0 million to $1.3 million, amortization of acquisition-related intangible assets of approximately $600,000, costs associated with the reduction in workforce of $2.5 million to $3.0 million and any associated facilities-related costs, costs related to the stock option investigation and restatement of the Company's historical financial statements, and any gains or impairment charges related to marketable and non-marketable investments.

  • Pro forma operating margin of approximately 10 percent to 13 percent.
  • Pro forma effective tax rate of 40 percent.
  • Pro forma diluted earnings per share of approximately $0.15 to $0.19.

Forrester is providing full-year 2009 guidance as follows:

Full-Year 2009 (GAAP):

  • Total revenues of approximately $215 million to $235 million.
  • Operating margin of approximately 10 percent to 13 percent.
  • Other income of approximately $3.0 million.
  • An effective tax rate of 40 percent.
  • Diluted earnings per share of approximately $0.64 to $0.84.

Full-Year 2009 (Pro Forma):

Pro forma financial guidance for full-year 2009 excludes stock-based compensation expense of $4.5 million to $5.5 million, amortization of acquisition-related intangible assets of approximately $1.7 million, costs associated with the reduction in workforce of $2.5 million to $3.0 million and any associated facilities-related costs, costs related to the stock option investigation and restatement of the Company's historical financial statements, and any gains or impairment charges related to marketable and non-marketable investments.

  • Pro forma operating margin of approximately 15 percent to 17 percent.
  • Pro forma diluted earnings per share of approximately $0.88 to $1.11.
  • An effective tax rate of 40 percent.

About Forrester Research

Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, consumer insight, consulting, events, and peer-to-peer executive programs. For more than 25 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, Forrester's financial and operating targets for the first quarter of and full-year 2009. These statements are based on Forrester's current plans and expectations and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual future activities and results to differ include, among others, Forrester's ability to respond to business and economic conditions, particularly in light of the continuing global economic downturn, technology spending, market trends, competition, industry consolidation, the ability to attract and retain professional staff, possible variations in Forrester's quarterly operating results, risks associated with Forrester's ability to offer new products and services, and Forrester's dependence on renewals of its membership-based research services and on key personnel. Forrester undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information, please refer to Forrester's reports and filings with the Securities and Exchange Commission.

The consolidated statements of income, consolidated balance sheets, and consolidated statements of cash flows are attached.

®2009, Forrester Research, Inc. All rights reserved.

Contact:

Karyl Levinson
Vice President, Corporate Communications
Forrester Research, Inc.
+ 1 617.613.6262
press@forrester.com

Michael A. Doyle
Chief Financial Officer
Forrester Research, Inc.
+ 1 617.613.6181
investor@forrester.com

Download Q4 2008 Income Statement (PDF).

Download Q4 2008 Balance Sheet (PDF).

Download Q4 2008 Cash Flows (PDF).

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