Forrester Research Posts 83% Increase In Third-Quarter Revenues And 108% Growth In Net Income
Forrester Research, Inc. (Nasdaq: FORR), a leading provider of research and analysis on the Internet and emerging technologies, today announced revenues of $40.1 million for the third quarter ended September 30, 2000, an increase of 83% from $22.0 million in the third quarter of 1999. For the second consecutive quarter, net income more than doubled on a year-over-year basis. For the third quarter of 2000, net income was $5.9 million compared with net income of $2.9 million for the same period a year earlier. Diluted earnings per share for the third quarter of 2000 were $0.24 per share compared with $0.14 per share for the third quarter of 1999.
“Our third quarter was one of great success and reflects an acceleration of awareness and demand for our unique Internet research products,” said George F. Colony, chairman of the board and chief executive officer. “Through the introduction of new products, geographic expansion, and the establishment of a key strategic alliance we have further broadened our highly diversified customer base and continued our record of strong revenue and earnings growth.”
For the nine-month period ended September 30, 2000, Forrester reported that revenues increased 83% to $109.2 million from $59.6 million for the same period one year ago. Net income for the first nine months of 2000 was $14.3 million, a 104% increase over net income of $7.0 million for the same period last year. Diluted earnings per share increased to $0.58 per share in the nine months ended September 30, 2000, compared with $0.36 per share in the comparable period of 1999.
“During the quarter we announced eResearch 2.0, a major enhancement to eResearch 1.0, which is the Web-based delivery of our research and technology platform,” Colony said. “This upgrade enhances the functionality of our Web site by providing clients with more personalized search capabilities, modular packaging and pricing, and unlimited access to our analysts for research inquiries. Domestically, we rolled out our Automotive and Technographics® Affluent Market Focuses, while internationally we launched three European Technographics Market Focuses in the UK, France, and Germany.
“In late September we agreed to acquire German-based FORIT GmbH, the leading source of Internet research for Germany, Austria, and Switzerland,” said Colony. “These German-speaking markets are poised to be centers of hypergrowth in the European Internet economy. Providing localized research in these and other national markets across Europe is key to our strategy. Also in September, we announced a strategic alliance and minority investment with comScore Networks, the first company to track real-time purchasing activities from a base of 1 million online consumers. This relationship incorporates yet another source of best-of-breed data into our multiple-source analysis.
“We hosted two events in the third quarter, one in Europe and one in the US,” stated Colony. “The UK Retail Finance Forum explored how financial services companies must reinvent themselves for the changing Internet economy, while the US Marketing Forum addressed the expansion of new interactive channels beyond the Web and their impact on consumer behavior. These events allow us to continue to solidify existing customer relationships and provide a fertile group of new client prospects.
“We look forward to continuing our record of revenue growth in the fourth quarter,” Colony continued. “Chief among our goals is eResearch Wave III featuring eBusiness TechRankings™, which will allow users to make decisions on emerging technologies by evaluating products based on the customers’ current needs. We have also launched an office in Canada, centered in Toronto, to fill a growing demand for technology research specific to that country.
“These and other initiatives strengthen our position as the leading Internet and emerging technology research company by further differentiating our research products and increasing their value to clients in an expanding array of vertical and geographic markets,” Colony concluded.
The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially.
For the fourth quarter of 2000, the company aims to achieve the following financial targets:
- Total revenue growth of approximately 50% to 55% over Q4 1999.
- Core revenue growth of approximately 65% to 70% over Q4 1999.
- Advisory services and other revenue growth of approximately 25% to 30% over Q4 1999. One of the four Forum events that the company plans to hold in Q4 will be a new event. The company held three events in Q4 1999.
- Operating margin of approximately 19% to 21%. The company plans to continue to hire aggressively, including, if possible, to accelerate 2001 hiring, to expand geographically, and introduce new products. Expenses are dependent in part on the level of revenue.
- The company expects other income, consisting mainly of interest income, for Q4 2000 to be approximately $2.0 million to $2.2 million, assuming no unanticipated items. The company expects to pay the purchase price for its acquisition of FORIT GmbH in Q4.
- The tax rate for Q4 2000 is expected to be approximately 37.5%.
- Growth of diluted earnings per share of approximately 40% over Q4 1999 diluted earnings per share of $0.18.