Forrester Research, Inc. (Nasdaq: FORR) today announced its 2013 fourth-quarter and full-year financial results. 

Fourth-Quarter Financial Performance

Total revenues were $77.5 million for the fourth quarter of 2013, compared with $75.2 million for the fourth quarter of 2012. Research revenues decreased 1%, and advisory services and other revenue increased 13%, compared with the fourth quarter of 2012. 

On a GAAP basis, net income was $2.0 million, or $0.10 per diluted share, for the fourth quarter of 2013, compared with net income of $4.5 million, or $0.20 per diluted share, for the same period in 2012.

On a pro forma basis, net income was $4.0 million, or $0.20 per diluted share, for the fourth quarter of 2013, which reflects a pro forma effective tax rate of 39%. Pro forma net income excludes stock-based compensation of $1.5 million, amortization of $0.6 million of acquisition-related intangible assets, and net investment losses of $2.3 million. This compares with pro forma net income of $6.7 million, or $0.30 per diluted share, for the same period in 2012, which reflects a pro forma tax rate of 39%. Pro forma net income for the fourth quarter of 2012 excludes stock-based compensation of $1.5 million, amortization of $0.7 million of acquisition-related intangible assets, acquisition-related costs of $0.6 million related to M&A activity Forrester did not pursue, and net investment losses of $0.8 million.

“Forrester met revenue and exceeded operating income and EPS guidance for the fourth quarter and full-year 2013,” said George F. Colony, Forrester’s chairman and chief executive officer. “At the close of the year, we saw some early, encouraging signals from the operational improvements we made, which we expect will lead to improved performance as we progress through 2014.”

“Strategically, we see an opportunity emerging as our clients struggle to keep up with the evolving demands of digitally empowered customers. As companies increase their focus and spending on technologies to win, serve, and retain customers, we will focus our products and commit resources to help the market navigate this disruption. This is where Forrester’s greatest value, differentiation, and opportunity lie.”

Year Ended December 31, 2013, Financial Performance

Total revenues were $297.7 million, compared with $293.0 million for the same period in 2012.

On a GAAP basis, net income was $12.8 million, or $0.60 per diluted share, for 2013, compared with net income of $26.0 million, or $1.13 per diluted share, for 2012. Net income for the 2012 period includes a $5.5 million deferred tax benefit resulting from the settlement of a tax audit at one of the company’s foreign subsidiaries.

On a pro forma basis, net income was $19.9 million, or $0.93 per diluted share, for 2013, which reflects a pro forma effective tax rate of 39%. Pro forma net income excludes stock-based compensation of $6.1 million, amortization of $2.2 million of acquisition-related intangible assets, reorganization costs of $1.9 million, and net investment losses of $2.4 million. This compares with pro forma net income of $25.6 million, or $1.11 per diluted share, for 2012, which reflects a pro forma tax rate of 39%. Pro forma net income for 2012 excludes stock-based compensation of $5.4 million, amortization of $2.4 million of acquisition-related intangible assets, $1.4 million of reorganization costs, acquisition-related costs of $0.6 million, and net investment gains of $0.1 million. 

A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.

Forrester is providing first-quarter 2014 financial guidance as follows:

First-Quarter 2014 (GAAP):

  • Total revenues of approximately $70.5 million to $73.5 million.
  • Operating margin of approximately 2.5% to 4.5%.
  • Other income, net of zero.
  • An effective tax rate of 38%.
  • Diluted earnings per share of approximately $0.05 to $0.09.

First-Quarter 2014 (Pro Forma):

Pro forma financial guidance for the first quarter of 2014 excludes stock-based compensation expense of $1.7 million to $1.9 million, amortization of acquisition-related intangible assets of approximately $0.5 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 5.5% to 7.5%.
  • Pro forma effective tax rate of 38%.
  • Pro forma diluted earnings per share of approximately $0.12 to $0.16.

Our full-year 2014 guidance is as follows:

Full-Year 2014 (GAAP):

  • Total revenues of approximately $304.0 million to $312.0 million.
  • Operating margin of approximately 6.5% to 7.5%.
  • Other income, net of zero.
  • An effective tax rate of 38%.
  • Diluted earnings per share of approximately $0.62 to $0.69.

Full-Year 2014 (Pro Forma):

Pro forma financial guidance for full-year 2014 excludes stock-based compensation expense of $7.5 million to $8.0 million, amortization of acquisition-related intangible assets of approximately $2.2 million, and any investment gains or losses.

  • Pro forma operating margin of approximately 9.5% to 10.5%.
  • Pro forma effective tax rate of 38%.
  • Pro forma diluted earnings per share of approximately $0.93 to $1.00.

Quarterly Dividend

Forrester also announced today that its board of directors has authorized a 7% increase to its regular quarterly cash dividend from $0.15 per share to $0.16 per share. The next dividend of $0.16 per share is payable March 19, 2014, to shareholders of record on March 5, 2014.

About Forrester Research

Forrester Research (Nasdaq: FORR) is a global research and advisory firm serving professionals in 13 key roles across three distinct client segments. Our clients face progressively complex business and technology decisions every day. To help them understand, strategize, and act upon opportunities brought by change, Forrester provides proprietary research, consumer and business data, custom consulting, events and online communities, and peer-to-peer executive programs. We guide leaders in business technology, marketing and strategy, and the technology industry through independent fact-based insight, ensuring their business success today and tomorrow. For more information, visit www.forrester.com.

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 guidance for the first quarter of and full-year 2014, statements about the success of operational improvements, and statements about Forrester’s future financial performance and financial condition. 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 retain and enrich memberships for its research products and services, technology spending, Forrester’s ability to respond to business and economic conditions and market trends, the risks and challenges inherent in international business activities, competition and industry consolidation, the ability to attract and retain professional staff, Forrester’s dependence on key personnel, the possibility of network disruptions and security breaches, and possible variations in Forrester’s quarterly operating results. Financial guidance regarding shares outstanding and per-share amounts is based on certain assumptions that are subject to change, including as a result of the number of shares repurchased by Forrester under its announced share repurchase program. Dividend declarations are at the discretion of Forrester’s board of directors, and plans for future dividends may be revised by the board at any time. 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.