Forrester Research, Inc. (Nasdaq: FORR), a leading provider of research and analysis on emerging technologies, today announced its financial results for the third quarter ended September 30, 2002, in line with its previous financial guidance.

Third-Quarter Financial Performance

  • Total revenues were $21.9 million, compared with $34.4 million for the third quarter of last year.
  • On a GAAP-reported basis, which includes a $3.1 million charge related to the July 2002 reorganization and workforce reduction, a write-down of approximately $859,000 related to the impairments of certain non-marketable investments, and an effective tax rate of 8 percent, Forrester reported a third-quarter net loss of $307,000, or $0.01 per diluted share.
  • Excluding the charge and impairments, and using a pro forma effective tax rate of 30 percent, pro forma net income was $2.5 million, or $0.11 per diluted share, for the third quarter of 2002. This compares with pro forma net income of $4.8 million, or $0.20 per diluted share, which also excludes reorganization and impairment charges as well as the gain from the sale of Internet AdWatch, for the same period last year.

Nine-Month Period Ended September 30, 2002 Financial Performance

  • Total revenues for the nine months ended September 30, 2002 were $73.4 million, compared with $124.5 million for the same period a year ago.
  • On a GAAP-reported basis, which includes total charges of $12.2 million related to the reorganizations and work force reductions, a write-down of $3.6 million related to the impairment of certain non-marketable investments, and an effective tax rate of 8 percent, Forrester reported a net loss of $2.9 million, or $0.12 per diluted share for the nine months ended September 30, 2002.
  • Excluding these charges and impairments, and using a pro forma effective tax rate of 30 percent, pro forma net income was $8.8 million, or $0.37 per diluted share for the nine months ended September 30, 2002. This compares with pro forma net income of $15.3 million, or $0.64 per diluted share, which also excludes reorganization and impairment charges as well as the gain from the sale of Internet AdWatch, for the same period last year.

“Corporate technology spending continued to be weak during the third quarter, affecting demand for Forrester’s products and services. As has been true throughout the tech recession, Forrester has carefully managed its business,” said George F. Colony, chairman of the board and chief executive officer. “Both our North American and overseas businesses felt the effects of the sluggish economy during the quarter. In spite of the sustained slowdown, Forrester continues to help its clients align IT, business strategy, and marketing to get the highest return from technology investments.”

Key Third-Quarter Highlights

New Products

Forrester continued to enhance its product offerings during the third quarter with:

  • The Forrester Wave™ — A research graphic, supported by an interactive spreadsheet, of Forrester’s call on vendors, marketplaces, and technology-driven services. The Forrester Wave helps businesses decipher confusing technology vendor offerings before purchase and clarifies the competitive landscape based on three dimensions: current offering, strategy, and market presence. The Forrester Wave clearly exposes the methodology behind the rankings, making it the most valuable analytical tool in the vendor selection space.
  • Business Process Management TechRankings™ — Forrester’s ninth TechRankings category helps companies understand the differences among competing Business Process Management solutions. TechRankings evaluates enterprise software products through rigorous scenario-based product testing, in-depth research and user interviews, and objective analysis.
  • Forrester’ Click and Buy Program — This online purchasing program offers all of Forrester’s research for sale on an individual basis. Click and Buy is geared toward project-based clients — an additional target market for Forrester.

Events

Forrester conducted two Summits during the third quarter, both addressing new topics. The TechRankings Summit in Salt Lake City provided insight about portal selection and how to drive usage in order to save costs. The TV Summit in New York City analyzed how networks, advertisers, cable and satellite operators, and producers will adapt to on-demand TV. Ratings of the TechRankings and TV Summits were excellent: 92 percent and 100 percent, respectively, of attendees said they would attend a Forrester Event in the future.

Business Outlook

“According to our latest research, double-digit expansion of tech sector revenues will not return until at least 2004,” said Colony. “Forrester’s performance will continue to be affected by this technology slowdown for the remainder of the year and into 2003. Despite the near-term challenges, we are well-positioned for the recovery as we continue to emphasize product innovation and expense control.”

Financial Guidance

Forrester is reaffirming its previously issued guidance for the fourth quarter of and full-year 2002, which excludes the work force reduction and impairment charges, assumes a pro forma effective tax rate of 30 percent, and continues to assume no significant improvement in technology spending.

Fourth-Quarter 2002

  • Total revenues of approximately $22.0 million to $25.0 million.
  • Operating margin of approximately 10 percent to 12 percent.
  • Diluted earnings per share of approximately $0.10 to $0.12.

Year 2002

  • Total revenues of approximately $95.0 million to $100.0 million.
  • Operating margin of approximately 9 percent to 11 percent.
  • Diluted earnings per share of approximately $0.45 to $0.50.

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 2002, statements about the potential success of product offerings and the anticipated cost savings related to the work force reduction. 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 need to retain professional staff, possible variations in Forrester’s quarterly operating results, Forrester’s dependence on renewals of its membership-based research services and on key personnel, the actual amount of the charge for the reorganization and work force reduction, the actual amount of the savings related to the work force reduction, and risks associated with Forrester’s ability to offer new products and services. 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.