Forrester Research, Inc. (Nasdaq: FORR), a leading provider of research and analysis on emerging technologies, today announced its financial results for the three months ended March 31, 2001. For the first quarter of 2001, revenues increased 42% to $43.6 million from $30.8 million in the first quarter of 2000. Net income for the first quarter of 2001 rose 40% to $4.9 million, compared with net income of $3.5 million for the same period last year. Diluted earnings per share for the first quarter of 2001 increased to $0.20, compared with earnings of $0.15 per share for the first quarter of 2000.
“Forrester performed well in a challenging first-quarter environment,” said George F. Colony, chairman of the board and chief executive officer. “We continued on our growth path in North America and overseas, strengthened our brand, and widened our market coverage.”
For the first quarter of 2001, the agreement value of Forrester’s core research and advisory services increased 32% to $170.3 million from $128.7 million in the first quarter of 2000. Deferred revenue for the first quarter of 2001 grew 22% to $93.3 million at March 31, 2001, from $76.8 million in the first quarter of 2000.
“Despite a difficult business climate, we posted achievements in new products, services, and Events, as we continued to help clients navigate technology change in the shifting economy,” Colony said. “Change is Forrester’s energy source — our clients are looking for guidance and advice in these transitional times. Our research is showing clients how to use eBusiness to lower their costs, retain and win customers, drive revenue, and hit profit targets.”
Forrester’s key product launch in the first quarter was its new Business Technographics offering. Business Technographics® helps vendor clients target the right corporate customers by revealing the attitudes and behaviors of businesses as buying entities. “Business Technographics is designed ideally for the economic times, providing the vendor community with actionable advice, data, and insights into the technology-buying patterns of the largest companies in the United States,” Colony said. “It helps our vendor clients focus their limited marketing and sales resources on the right places.”
Forrester also introduced the European edition of its TechRankings™ eTool, an interactive service that helps companies choose the best emerging eBusiness technologies. Currently there are five TechRankings categories: Application Server, Commerce Platform, Content Management, Customer Service Application, and Integration Server. Forrester plans to introduce two to three additional categories during 2001. “TechRankings is dramatically reducing the time it takes for our clients to make technology decisions while increasing the efficacy of these decisions,” remarked Colony.
Forrester’s primary Forum in the first quarter was the eBusiness Forum Europe held in Amsterdam. At the Forum, technology-thought leaders focused on practical guidelines for generating measurable returns on B2B technology investments. “Positive feedback from Forum attendees included high ratings for both quality and well-structured content,” Colony said.
As a result of unlimited, multilevel access to Forrester’s research staff, the number of client interactions accelerated in the first quarter. Unique client inquiries with the Research Inquiry team grew 90% during the first quarter of 2001 from the fourth quarter of 2000. “The Research Inquiry team has created a personal, fast-response interface to our clients,” Colony said. “When companies establish a relationship with Forrester, they are buying not only research but also ongoing and direct contact with our analysts. The growing volume of Research Inquiry team activity we experienced during the first quarter demonstrates that our clients are finding this resource to be increasingly valuable.”
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
Forrester’s expectations for 2001 financial results are as follows:
Forrester provided a financial outlook for 2001 when it released its first-quarter results on January 31, 2001. Since then, the economic environment has changed dramatically. As a result, Forrester is removing all of its January 31 guidance and issuing the following 2001 guidance.
- Total revenue growth of approximately 20% to 25% over 2000.
- Operating margin of approximately 17% to 18%.
- Growth in diluted earnings per share of approximately 20% to 30% over 2000 diluted earnings per share.
Second Quarter 2001
“As the first quarter progressed, we found that companies were becoming more cautious and more selective in their research expenditures,” Colony said. “Although this means that Forrester’s rate of growth is likely to be somewhat slower than we had previously expected, we continue to anticipate a revenue increase of 20% to 25% for the second quarter.”
For the second quarter of 2001, Forrester aims to achieve the following financial targets:
- Total revenue growth of approximately 20% to 25% over Q2 2000.
- Core revenue growth of approximately 18% to 23% over Q2 2000.
- Advisory services and other revenue growth of approximately 25% to 30% over Q2 2000.
- Operating margin of approximately 15% to 16%.
- Growth in diluted earnings per share of approximately 20% to 25% over Q2 2000 diluted earnings per share.
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. 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, the need to attract and retain professional staff, Forrester’s ability to manage growth, possible variations in Forrester’s quarterly operating results, Forrester’s dependence on renewals of its membership-based research services and on key personnel, risks associated with Forrester’s ability to anticipate market trends and offer new products and services, competition, risks associated with the integration of acquisitions, and business and economic conditions. 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.