Forrester Research, Inc. (Nasdaq: FORR), a leading provider of research and analysis on emerging technologies, today announced its financial results for the second quarter ended June 30, 2002, in line with its previous financial guidance.
Second-Quarter Financial Performance
- Total revenues were $25.4 million, compared with $46.4 million for the second quarter of last year.
- On a GAAP-reported basis, which includes a write-down of approximately $0.5 million related to the impairment of certain non-marketable investments and an effective tax rate of 8 percent, Forrester reported second-quarter net income of $3.5 million, or $0.15 per diluted share.
- Excluding this charge and using a pro forma effective tax rate of 30 percent, pro forma net income was $3.0 million, or $0.13 per diluted share, for the second quarter of fiscal year 2002. This compares with net income of $5.7 million, or $0.24 per diluted share for the same period last year.
Six-Month Period Ended June 30, 2002 Financial Performance
- Total revenues for the six months ended June 30, 2002 were $51.5 million, compared with $90.1 million for the same period a year ago.
- On a GAAP-reported basis, which includes the $9.1 million charge related to the January 2002 work force reduction, a write-down of $2.7 million related to the impairment of certain non-marketable investments, and an effective tax rate of 8%, Forrester reported a net loss of $2.6 million, or $0.11 per diluted share for the six months ended June 30, 2002.
- Excluding these charges and using a pro forma effective tax rate of 30 percent, pro forma net income was $6.3 million, or $0.26 per diluted share for the six months ended June 30, 2002. This compares with net income of $10.5 million, or $0.44 per diluted share for the same period last year.
“The ongoing conservative fiscal management of our company was a key factor in meeting our second-quarter financial guidance,” said George F. Colony, chairman of the board and chief executive officer. “Technology change continues at a slow pace, and corporate technology spending remains tight as companies leverage their existing assets. In spite of today’s marketplace, our balance sheet is strong, we have a long history of profitability, and our business model remains viable as we continue to help companies use technology to achieve their business goals.”
Key Second-Quarter Highlights
WholeView™ Research Gains Traction
Since introducing WholeView Research in January, Forrester’s most recent client satisfaction survey demonstrates that overall client satisfaction is up significantly. The survey results reaffirmed Forrester’s decision to offer WholeView, which provides companies with unified guidance on customer trends, business strategy, and technology investments. Client satisfaction with Forrester analyst interactions also improved as clients are taking advantage of Forrester’s Unlimited Analyst Access and the Client Resource Center as part of Forrester’s new enhanced service offerings this year.
New Strategic Services Launched
Forrester’s Strategic Services provide highly customized guidance to meet clients’ specific project needs. During the second quarter, Forrester introduced the following two Strategic Services:
- Technology Strategy Development Program — This program helps senior executives with very large strategic technology decisions such as organizational structure, competitive landscapes, and IT infrastructure.
- Technographics Data® & Services — Clients receive unlimited access to a Forrester data specialist who creates customized data using Technographics research. Technographics is comprehensive quantitative research for determining how technology is considered, bought, and used by consumers and businesses.
Forrester plans to launch additional Strategic Services in the second half of 2002.
Events Provide Increased Client Value
Forrester conducted four successful Events in the second quarter. The Design Summit in Los Angeles was standing room only. The Leadership Forum, Europe, in Amsterdam provided a sell-out crowd with Forrester’s latest findings on European technology spending trends. The Telecom Summit in Washington, D.C., also well-received, covered the impending displacement of traditional telecom applications. The Finance Forum in New York City attained high ratings for its speakers and content.
“Market conditions continue to be difficult,” said Colony. “Nevertheless, Forrester possesses critical assets that will enable it to grow again when the technology economy rebounds. These include a differentiated and rich research product offering with WholeView; a well-trained, seasoned, and high-IQ work force; a brand that stands for objectivity; and ethical and solid business practices. We will continue to offer exciting new research and services to our clients while we remain fiscally prudent.”
Forrester anticipates that the slowdown in technology spending will continue as uncertainty in the overall economy persists. To ensure financial stability in the current economic climate, Forrester continues to reduce its cost structure. Forrester today eliminated 21 positions, or 5 percent of its work force worldwide. Forrester will take a third-quarter charge related to this reduction in the range of $1.0 million to $2.0 million and anticipates annualized savings in the range of $2.5 million to $3.0 million. Forrester also announced, in conjunction with the decentralization of its strategic planning function, the departure of Stanley H. Dolberg, Vice President, Strategy, effective today.
Forrester reaffirmed its financial outlook for 2002 when it released its first-quarter results on April 24, 2002. Since then, the overall economic environment has weakened. As a result, Forrester is updating its previously issued 2002 guidance as follows:
- 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.
- 2002 estimates exclude full-year expected charges related to work force reductions of $10.1 million to $11.1 million, as well as write-downs from impairments of non-marketable securities.
- Total revenues of approximately $20.0 million to $22.5 million.
- Operating margin of approximately 8 percent to 10 percent.
- Diluted earnings per share of approximately $0.08 to $0.10.
- Third-quarter estimates exclude an expected charge of $1.0 million to $2.0 million related to the work force reduction.
- 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.
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, statements about the potential success of product offerings and the anticipated cost savings related to the workforce 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 workforce reduction, the actual amount of the savings related to the workforce 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.