Forrester Research Reports 2020 Third-Quarter Financial Results
Cambridge, Mass., October 29, 2020 . . . Forrester Research, Inc. (NASDAQ: FORR) today announced its 2020 third-quarter financial results.
Third-Quarter Financial Performance
Total revenues were $108.6 million for the third quarter of 2020, consistent with the third quarter of 2019. Adjusted revenues, which exclude the fair value adjustment to deferred revenue from the acquisition of SiriusDecisions, were $108.7 million for the third quarter of 2020, compared with $110.3 million for the third quarter of 2019.
“Businesses are relying on Forrester for guidance on how to deal with the pandemic and ramp up their own critical digital offerings,” said George F. Colony, Forrester’s chairman and chief executive officer. “As a result, demand for our research and consulting services increased in the third quarter; we exceeded the upper end of revenue guidance by $4.7 million and exceeded adjusted EPS by $0.12.”
“Propelled by strong Q3 results and a healthy Q4 pipeline, we are increasing our full-year 2020 guidance for both revenue and EPS,” continued Colony. “We are honored by the trust and confidence our clients have placed in Forrester to help them navigate challenging times and build customer-obsessed growth strategies.”
On a GAAP basis, net loss was $3.8 million, or $0.20 per diluted share, for the third quarter of 2020, compared with a net loss of $2.7 million, or $0.15 per diluted share, for the same period in 2019.
On an adjusted basis, net income was $4.6 million, or $0.24 per diluted share, for the third quarter of 2020, which reflects an adjusted effective tax rate of 31%. Adjusted net income excludes stock-based compensation of $2.7 million, amortization of acquisition-related intangible assets of $4.7 million, acquisition-related deferred revenue fair value adjustment of $0.1 million, acquisition and integration costs of $0.3 million, and lease incentive costs of $0.2 million. This compares with an adjusted net income of $6.5 million, or $0.34 per diluted share, for the same period in 2019, which reflects an adjusted tax rate of 31%. Adjusted net income for the third quarter of 2019 excludes stock-based compensation of $3.1 million, amortization of acquisition-related intangible assets of $5.7 million, acquisition-related deferred revenue fair value adjustment of $1.7 million, and acquisition and integration costs of $2.4 million.
Forrester is providing fourth-quarter 2020 financial guidance as follows:
Fourth-Quarter 2020 (GAAP):
- Total revenues of approximately $108.0 million to $116.0 million.
- Operating margin of approximately 3.5% to 5.5%.
- Interest expense of approximately $1.2 million.
- An effective tax rate of approximately 25%.
- Income per share of approximately $0.11 to $0.18.
Fourth-Quarter 2020 (Adjusted):
Adjusted financial guidance for the fourth quarter of 2020 excludes stock-based compensation expense of $2.4 million to $2.6 million, amortization of acquisition-related intangible assets of approximately $4.7 million, integration costs of $0.7 million to $1.2 million, lease incentive credit of approximately $3.4 million, and any investment gains or losses.
- Adjusted operating margin of approximately 8.0% to 10.0%.
- Adjusted effective tax rate of 31%.
- Adjusted diluted earnings per share of approximately $0.27 to $0.34.
Our full-year 2020 guidance is as follows:
Full-Year 2020 (GAAP):
- Total revenues of approximately $436.6 million to $444.6 million.
- Operating margin of approximately 3.5% to 4.5%.
- Interest expense of approximately $5.3 million.
- An effective tax rate of approximately 26%.
- Income per share of approximately $0.51 to $0.58.
Full-Year 2020 (Adjusted):
Adjusted financial guidance for full-year 2020 excludes the reduction in revenue from the fair value adjustment of pre-acquisition deferred revenue of approximately $0.4 million, stock-based compensation expense of $10.4 million to $10.6 million, amortization of acquisition-related intangible assets of approximately $18.8 million, integration costs of $4.5 million to $5.0 million, lease incentive credit of approximately $3.2 million, and any investment gains or losses.
- Adjusted revenues of approximately $437.0 million to $445.0 million.
- Adjusted operating margin of approximately 10.5% to 11.5%.
- Adjusted effective tax rate of 31%.
- Adjusted diluted earnings per share of approximately $1.53 to $1.60.
About Forrester Research
Forrester (NASDAQ: FORR) is one of the most influential research and advisory firms in the world. We help organizations grow through customer obsession. Forrester’s unique insights are grounded in annual surveys of more than 690,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of our most innovative clients. Through proprietary research, data and analytics, custom consulting, exclusive peer groups, certifications, and events, we are revolutionizing how businesses grow in the age of the customer; learn more at 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, the anticipated impact of COVID-19 on Forrester’s operating results, Forrester’s financial guidance for the fourth quarter of and full-year 2020, 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, the impact of health epidemics, including COVID-19, on Forrester’s business; 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; the exit of the United Kingdom from the European Union; Forrester’s ability to offer new products and services; Forrester’s dependence on key personnel; Forrester’s ability to attract and retain professional staff; Forrester’s ability to anticipate and respond to market trends; Forrester’s ability to successfully integrate businesses that it acquires; the impact of Forrester’s outstanding debt obligations; the possibility of network disruptions and security breaches; competition and industry consolidation; any failure to enforce and protect Forrester’s intellectual property rights; privacy laws; possible variations in Forrester’s quarterly operating results; taxation risks; concentration of ownership of Forrester; and any weakness in Forrester’s system of internal controls. 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.
The consolidated statements of operations and the table of key financial data are attached.