Forrester Research, Inc. (Nasdaq: FORR) today announced financial results for the first quarter ended March 31, 2003, in line with its previous financial guidance.

First-Quarter Financial Performance

  • Total revenues were $24.8 million, compared with $26.1 million for the first quarter of last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 31 percent, Forrester reported first-quarter net income of $1.8 million, or $0.08 per diluted share compared to a net loss of $6.1 million, or $0.26 per diluted share for the same period last year.
  • On a pro forma basis, which excludes amortization of acquisition-related intangible assets of $924,000 and a write-down of $300,000 related to impairments of certain non-marketable securities, and which reflects a pro forma effective tax rate of 35 percent, pro forma net income was $2.5 million, or $0.11 per diluted share, for the first quarter of 2003. The pro forma effective tax rate of 35 percent varies from our actual effective tax rate of 31 percent due to our tax-free interest income decreasing as a percentage of our pro forma pre-tax income. This compares with pro forma net income of $3.3 million, or $0.14 per diluted share for the same period last year, which excludes the reorganization charge of $9.1 million, amortization of acquisition-related intangible assets of $82,000, and impairment charges of $2.2 million.

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

Giga Integration

“Although Forrester’s first quarter was extremely busy with the acquisition and integration of Giga Information Group, we remained focused on our clients and were pleased to meet our financial guidance,” said George F. Colony, chairman of the board and chief executive officer. “Client satisfaction remains the top priority throughout this integration and clients will continue to be served by the same research and account teams in 2003. We are selling two distinct but complementary research brands — Forrester and Giga. Behind the scenes, integration is ahead of schedule, and we are already achieving economies of scale in our general and administrative functions.”

Additionally, Forrester integrated Giga’s ForSITE™ offering into the Forrester Oval Program™’s CIO Group during the first quarter. The combined board, which consists of 80 members, provides CIOs with a peer network, client-directed research, benchmark data, best practices, and short projects. Along with the CIO Group, three other technology councils from Giga now constitute the Forrester Oval Program: Applications and Development, Security, and Enterprise Architecture.

“We strongly believe the new Forrester value proposition is differentiated in the marketplace,” said Colony. “Forrester helps companies plan while Giga helps them act. Aligning these two powerful offerings will create amazing value for our clients.”

Custom Consumer Research

In addition to the enhanced services from the Giga acquisition, Forrester also launched a new research offering called Custom Consumer Research (CCR) in the first quarter. CCR helps consumer businesses develop, market, and measure the success of their products. CCR leverages Consumer Technographics®, the most comprehensive quantitative research program available for determining how technology is considered, bought, and used by consumers.

Financial Guidance

Forrester’s guidance for the second quarter of and full year 2003 is as follows:

Second-Quarter 2003 (GAAP):

  • Total revenues of approximately $33.0 million to $35.0 million.
  • Operating margin of approximately (5) percent to 1 percent.
  • Interest income of approximately $800,000 to $900,000.
  • An effective tax rate of 31 percent.
  • Diluted earnings per share of approximately ($0.03) to $0.02.

Second-Quarter 2003 (Pro Forma):
Pro forma financial guidance excludes amortization of acquisition-related intangible assets of approximately $2.6 million, impairment charges related to non-marketable securities, and second-quarter 2003 integration-related expenses estimated at $1.0 million to $2.0 million.

  • Pro forma operating margin of approximately 8 percent to 10 percent.
  • Pro forma effective tax rate of 35 percent, which varies from our actual effective tax rate of 31 percent due to our tax-free interest income decreasing as a percentage of our pro forma pre-tax income.
  • Pro forma diluted earnings per share of approximately $0.10 to $0.12.

Full-Year 2003 (GAAP):

  • Total revenues of approximately $125.0 million to $130.0 million.
  • Operating margin of approximately 1 percent to 6 percent.
  • Interest income of approximately $3.8 million to $4.2 million.
  • An effective tax rate of 31 percent.
  • Diluted earnings per share of approximately $0.20 to $0.28.

Full-Year 2003 (Pro Forma):
Pro forma financial guidance excludes amortization of acquisition-related intangible assets of approximately $8.7 million, impairment charges related to non-marketable securities, and integration-related expenses estimated at $1.0 million to $2.0 million.

  • Pro forma operating margin of approximately 10 percent to 12 percent.
  • Pro forma effective tax rate of 35 percent, which varies from our actual effective tax rate of 31 percent due to our tax-free interest income decreasing as a percentage of our pro forma pre-tax income.
  • Pro forma diluted earnings per share of approximately $0.47 to $0.53.

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 second quarter of and full-year 2003, statements about the potential success of WholeView and other product offerings, and the ability of Forrester to achieve success as the economy improves. 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 successfully integrate Giga into Forrester’s operations, Forrester’s ability to anticipate business and economic conditions, market trends, competition, 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 Research 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.