Forrester Research, Inc. (Nasdaq: FORR) today announced its second-quarter ended June 30, 2004 financial results.

Second-Quarter Financial Performance

  • Total revenues were $34.9 million, compared with $34.0 million for the second quarter of last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 33.5 percent, Forrester reported a second-quarter net loss of $2.3 million or $0.11 per diluted share, compared with net income of $141,000, or $0.01 per diluted share, for the same period last year.
  • On a pro forma basis, which excludes amortization of $1.4 million of acquisition-related intangible assets, reorganization costs of $6.8 million related primarily to office space consolidations, and non-marketable investment gains of $57,000 and which reflects a pro forma effective tax rate of 35 percent, net income was $3.0 million, or $0.13 per diluted share, for the second quarter of 2004. This compares with pro forma net income of $2.5 million, or $0.11 per diluted share, for the same period in 2003, which excludes amortization of $2.6 million of acquisition-related intangible assets, costs of $740,000 related to the integration of Giga Information Group, Inc., and a net write-down of $272,000 related to impairments of certain non-marketable investments, and a pro forma effective tax rate of 35 percent.

Six-Month Period Ended June 30, 2004, Financial Performance

  • Total revenues were $66.7 million, compared with $58.5 million for the same period last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 33.5 percent, Forrester reported a net loss of $2.6 million, or $0.12 per diluted share for the six months ended 2004, compared to net income of $1.9 million or $0.08 per diluted share for the same period last year.
  • On a pro forma basis, which excludes amortization of $3.7 million of acquisition-related intangible assets, reorganization costs of $8.8 million related primarily to office space consolidations, non-marketable investment gains of $57,000 and which reflects a pro forma effective tax rate of 35 percent, net income was $5.5 million, or $0.24 per diluted share, for the six months ended 2004. This compares with pro forma net income of $5.0 million, or $0.22 per diluted share for the same period last year, which excludes amortization of $3.5 million of acquisition-related intangible assets, costs of $771,000 related to the integration of Giga Information Group, Inc., and a net write-down of $572,000 related to impairments of certain non-marketable investments, and 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 financial performance continued to improve in the second quarter,” said George F. Colony, chairman of the board and chief executive officer. “Our client and dollar retention rates are up, back to our target ranges. Product innovations and enhancements are gaining traction, and technology spending is increasing at a moderate pace. Overall, our second quarter results position us well for the second half of 2004.”

Forrester Debuts Two New Products

Also today, the company announced Forrester’s Ultimate Consumer PanelTM (Ultimate), an innovative, opt-in, highly secure consumer data panel. Ultimate electronically captures online and offline behavior from a representative group of more than 10,000 US households. Clients including MasterCard, Wells Fargo & Company, and Household Credit Card Services use Ultimate data and analysis to better understand current and prospective customers, tailor marketing strategies and messages, predict adoption for new products and services, and gain intelligence on their market landscapes. See separate press release at: http://www.forrester.com/ER/Press/Release/0,1769,931,FF.html

The Forrester Oval ProgramTM (executive membership offering) today introduced three new membership groups for marketing professionals. The CMO Group, Database Marketing Council, and Email Marketing Council are designed for senior marketers at business-to-consumer (B2C) companies. Clients such as Charming Shoppes, Inc.; Panasonic; and Thrifty Rental Car have joined Forrester’s Marketing Ovals to ensure their strategies are aligned with consumer behavior. Through these specialized marketing membership programs, Forrester helps marketing executives thrive in a world in which technology increasingly influences consumer behavior.

“Both of these new offerings ¿ Ultimate and the Marketing Ovals — are a natural progression for Forrester,” said Colony. “For years, we have researched technology’s impact on consumer behavior and advised marketing executives at our client companies. We are pleased that key $1 billion-plus companies have already become clients of Ultimate and the Marketing Ovals.”

Forrester is providing third-quarter and full-year 2004 guidance as follows:

Third-Quarter 2004 (GAAP):

  • Total revenues of approximately $32.0 million to $34.0 million.
  • Operating margin of approximately 8 percent to 10 percent.
  • Interest income of approximately $650,000.
  • An effective tax rate of 33.5 percent.
  • Diluted earnings per share of approximately $0.09 to $0.12.

Third-Quarter 2004 (Pro Forma):

  • Pro forma financial guidance for the third quarter of 2004 excludes amortization of acquisition-related intangible assets of approximately $1.4 million, as well as all gains and impairment charges related to non-marketable securities.
  • Pro forma operating margin of approximately 12 percent to 14 percent.
  • Pro forma effective tax rate of 35 percent, which varies from our actual effective tax rate of 33.5 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 $0.13 to $0.15.

Full-Year 2004 (GAAP):

  • Total revenues of approximately $133.0 million to $138.0 million.
  • Operating margin of approximately 0 percent to 2 percent.
  • Interest income of approximately $2.7 million to $2.8 million.
  • An effective tax rate of 33.5 percent.
  • Diluted earnings per share of approximately $0.10 to $0.14.

Full-Year 2004 (Pro Forma):

  • Pro forma financial guidance for full-year 2004 excludes amortization of acquisition-related intangible assets of approximately $6.5 million, all gains and impairment charges related to non-marketable securities, and reorganization and integration charges of approximately $8.8 million.
  • Pro forma operating margin of approximately 11 percent to 13 percent.
  • Pro forma effective tax rate of 35 percent, which varies from our actual effective tax rate of 33.5 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 $0.52 to $0.57.

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 2004, statements about the potential success of product offerings, the ability to achieve all of the anticipated benefits from the acquisition of Giga Information Group, the amount of the charge and any cost savings related to reductions in force and associated actions, 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 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, the actual amount of the charge and any cost savings related to reductions in force and associated actions, 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.