Forrester Research Reports 2016 Third-Quarter Financial Results; Increases Share Repurchase Authorization By $25 Million
Cambridge, Mass., October 26, 2016 . . . Forrester Research, Inc. (Nasdaq: FORR) today announced its 2016 third-quarter financial results. The company also announced that its board of directors authorized a $25 million increase in the company’s stock repurchase program, bringing the total available repurchase authorization to approximately $62 million.
Third-Quarter Financial Performance
Total revenues were $77.4 million for the third quarter of 2016, compared with $74.8 million for the third quarter of 2015. Research revenues increased 1%, and advisory services and events revenues increased 10%, compared with the third quarter of 2015.
On a GAAP basis, net income was $3.1 million, or $0.17 per diluted share, for the third quarter of 2016, compared with net income of $4.5 million, or $0.25 per diluted share, for the same period in 2015.
On a pro forma basis, net income was $6.0 million, or $0.32 per diluted share, for the third quarter of 2016, which reflects a pro forma effective tax rate of 40%. Pro forma net income excludes stock-based compensation of $2.0 million, amortization of acquisition-related intangible assets of $0.2 million, and net investment losses of $1.1 million. This compares with pro forma net income of $5.5 million, or $0.30 per diluted share, for the same period in 2015, which reflects a pro forma tax rate of 38%. Pro forma net income for the third quarter of 2015 excludes stock-based compensation of $2.2 million, amortization of acquisition-related intangible assets of $0.2 million, reorganization costs of $0.9 million, and net investment gains of $0.2 million.
“We are pleased with our ongoing transition to the age of the customer strategy, but this voyage continues to be less predictable than we would like,” said George F. Colony, Forrester’s chairman and chief executive officer. “In Q3, the company’s EPS and margin exceeded guidance, while revenue fell short. Just as timing in nonsyndicated solutions helped us overperform in Q2, this factor attenuated revenue in Q3. We remain positive on short- and long-term growth as we ramp our sales teams and continue to refine our products to help clients thrive in the era of empowered customers.”
Forrester is providing fourth-quarter 2016 financial guidance as follows:
Fourth-Quarter 2016 (GAAP):
- Total revenues of approximately $80.5 million to $84.5 million.
- Operating margin of approximately 5.5% to 7.5%.
- Other income (expense), net of zero.
- An effective tax rate of 40%.
- Diluted earnings per share of approximately $0.15 to $0.20.
Fourth-Quarter 2016 (Pro Forma):
Pro forma financial guidance for the fourth quarter of 2016 excludes stock-based compensation expense of $2.0 million to $2.4 million, amortization of acquisition-related intangible assets of approximately $0.2 million, and any investment gains or losses.
- Pro forma operating margin of approximately 8.5% to 10.5%.
- Pro forma effective tax rate of 40%.
- Pro forma diluted earnings per share of approximately $0.22 to $0.27.
Our full-year 2016 guidance is as follows:
Full-Year 2016 (GAAP):
- Total revenues of approximately $323.0 million to $327.0 million.
- Operating margin of approximately 8.0% to 9.0%.
- Other income, net of $0.4 million.
- An effective tax rate of 43%.
- Diluted earnings per share of approximately $0.80 to $0.85.
Full-Year 2016 (Pro Forma):
Pro forma financial guidance for full-year 2016 excludes stock-based compensation expense of $7.7 million to $8.1 million, reorganization costs of approximately $1.0 million, amortization of acquisition-related intangible assets of approximately $0.8 million, and any investment gains or losses.
- Pro forma operating margin of approximately 11.0% to 12.0%.
- Pro forma effective tax rate of 40%.
- Pro forma diluted earnings per share of approximately $1.19 to $1.24.
Quarterly Dividend
Forrester also announced today that its board of directors has approved a quarterly cash dividend of $0.18 per share, payable December 21, 2016, to shareholders of record on December 7, 2016.
About Forrester Research
Forrester Research is one of the most influential research and advisory firms in the world. We work with business and technology leaders to develop customer-obsessed strategies that drive growth. Forrester’s unique insights are grounded in annual surveys of more than 500,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of our most innovative clients. Through proprietary research, data, custom consulting, exclusive executive peer groups, and events, the Forrester experience is about a singular and powerful purpose: to challenge the thinking of our clients to help them lead change in their organizations. For more information, visit 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 fourth quarter of and full-year 2016, 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, demand for advisory and consulting services, technology spending, Forrester’s ability to respond to business and economic conditions and market trends, Forrester’s ability to develop and offer new products and services, 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, Forrester’s ability to realize the anticipated benefits from recent internal reorganizations, the possibility of network disruptions and security breaches, Forrester’s ability to enforce and protect its intellectual property, the amount and timing of the repurchase of Forrester stock, and possible variations in Forrester’s quarterly operating results. 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.