Forrester Research, Inc. (Nasdaq: FORR) today announced its first-quarter ended March 31, 2006 financial results.

First-Quarter Financial Performance

  • Total revenues were $41.2 million, compared with $33.8 million for the first quarter of last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 50.1 percent, Forrester reported first-quarter net income of $1.5 million or $0.07 per diluted share, compared with net income of $2.7 million, or $0.13 per diluted share, for the same period last year.
  • On a pro forma basis, net income was $3.3 million or $0.15 per diluted share, for the first quarter of 2006, which excludes amortization of $652,000 of acquisition-related intangible assets, non-cash stock-based compensation of $1.7 million, and $199,000 of realized gains on non-marketable investments, and reflects a pro forma effective tax rate of 37 percent. This compares with pro forma net income of $2.6 million, or $0.12 per diluted share, for the same period in 2005, which excludes amortization of $1.1 million of acquisition-related intangible assets and $1.7 million of realized gains on sales of securities, and reflects a pro forma effective tax rate of 35 percent.

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

“Forrester’s first-quarter results exceeded expectations,” said George F. Colony, chairman of the board and chief executive officer. “Total revenues and pro forma earnings per share grew 22 percent and 25 percent, respectively, and ahead of the high end of our guidance. We made significant progress in growing the syndicated products, as research services revenues increased 16 percent. Deferred revenue, the best leading indicator of our business, improved by 20 percent over the first quarter of 2005. We are pleased with our fast start to 2006 and to be raising full-year guidance at this time.”

Forrester is providing second-quarter 2006 financial guidance as follows:

Second-Quarter 2006 (GAAP):

  • Total revenues of approximately $45.5 million to $47.5 million.
  • Operating margin of approximately 7 percent to 9 percent.
  • Other income of approximately $900,000.
  • An effective tax rate of approximately 51 percent.
  • Diluted earnings per share of approximately $0.11 to $0.14.

Second-Quarter 2006 (Pro Forma):

Pro forma financial guidance for the second-quarter of 2006 excludes amortization of acquisition-related intangible assets of approximately $500,000 and non-cash stock-based compensation expense of approximately $2.0 million to $2.5 million, and does not include any estimate of gains or impairment charges related to non-marketable investments.

  • Pro forma operating margin of approximately 13 percent to 14 percent.
  • Pro forma effective tax rate of 37 percent.
  • Pro forma diluted earnings per share of approximately $0.19 to $0.21.

Forrester is revising full-year 2006 guidance as follows:

Full-Year 2006 (GAAP):

GAAP financial guidance includes an estimate of $8.0 million to $10.0 million in non-cash stock-based compensation expense related to the adoption of SFAS 123R, Share-Based Payment, and its related estimated impact on the effective tax rate.

  • Total revenues of approximately $178.0 million to $183.0 million.
  • Operating margin of approximately 7 percent to 9 percent.
  • Other income of approximately $3.6 million.
  • An effective tax rate of approximately 51 percent.
  • Diluted earnings per share of approximately $0.45 to $0.56.

Full-Year 2006 (Pro Forma):

Pro forma financial guidance for full-year 2006 excludes amortization of acquisition-related intangible assets of approximately $2.1 million and non-cash stock-based compensation expense of approximately $8.0 million to $10.0 million, and excludes gains or impairment charges related to non-marketable investments.

  • Pro forma operating margin of approximately 14 percent to 15 percent.
  • Pro forma diluted earnings per share of approximately $0.83 to $0.89.
  • An effective tax rate of 37 percent.