Forrester Research Reports 2022 Fourth-Quarter And Full-Year Financial Results
Transition to the new Forrester Decisions platform on track
Cambridge, Mass., February 9, 2023 . . . Forrester Research, Inc. (Nasdaq: FORR) today announced its 2022 fourth-quarter and full-year financial results.
Commenting on the results, George F. Colony, Forrester’s CEO and chairman stated, “In 2022, we posted strong growth on both the top and bottom lines, with revenue increasing 9% and adjusted EPS increasing 18%. We are also pleased to report that Forrester Decisions now constitutes approximately one-third of our contract value. Forrester Decisions’ fast growth and strong client and wallet retention established the product as the research power platform that can lead the company’s effort to double CV in the next five years.
“That said, our product transition remains complex, as evidenced in our 2022 results and in our 2023 guidance. Our key metrics, including both overall client and wallet retention, will remain under pressure in the coming quarters given the churn in our legacy business as well as the uncertainty posed by the macroeconomic environment. We finished the year with CV increasing 3% and both client and wallet retention down from the previous quarter. These metrics are likely to remain under pressure in the coming quarters, specifically in the first half of 2023.
“To summarize, while we anticipate continued headwinds in the first half of 2023, we have the right team in place to lead us through this pivotal moment and create a platform from which we can accelerate growth in 2024 and beyond.”
Fourth-Quarter Financial Performance
Total revenues were $136.9 million for the fourth quarter of 2022, compared with $133.7 million for the fourth quarter of 2021.
On a GAAP basis, net loss was $1.6 million, or $0.09 per diluted share, for the fourth quarter of 2022, compared with net income of $8.0 million, or $0.41 per diluted share, for the same period in 2021.
On an adjusted basis, net income was $8.5 million, or $0.45 per diluted share, for the fourth quarter of 2022, which reflects an adjusted effective tax rate of 30%. Adjusted net income excludes stock-based compensation of $3.5 million, amortization of acquisition-related intangible assets of $3.1 million, restructuring costs of $9.3 million, and losses on investments of $0.1 million. This compares with an adjusted net income of $11.3 million, or $0.59 per diluted share, for the same period in 2021, which reflects an adjusted tax rate of 31%. Adjusted net income for the fourth quarter of 2021 excludes stock-based compensation of $2.7 million and amortization of acquisition-related intangible assets of $3.6 million.
Year Ended December 31, 2022, Financial Performance
Total revenues were $537.8 million, compared with $494.3 million for the same period in 2021.
On a GAAP basis, net income was $21.8 million, or $1.14 per diluted share, for 2022, compared with net income of $24.8 million, or $1.28 per diluted share, for 2021.
On an adjusted basis, net income was $47.2 million, or $2.46 per diluted share, for 2022, which reflects an adjusted effective tax rate of 30%. Adjusted net income excludes stock-based compensation of $14.5 million, amortization of acquisition-related intangible assets of $13.2 million, restructuring costs of $9.3 million, and gains on investments of $0.3 million. This compares with an adjusted net income of $40.5 million, or $2.09 per diluted share, for 2021, which reflects an adjusted tax rate of 31%. Adjusted net income for 2021 excludes stock-based compensation of $10.1 million, amortization of acquisition-related intangible assets of $15.1 million, and integration costs of $0.3 million.
Additional details regarding key metrics can be found in the investor presentation on the Company’s Investor website.
A reconciliation of GAAP results to adjusted results may be found in the attached financial tables.
Forrester is providing full-year 2023 financial guidance as follows:
Full-Year 2023 (GAAP):
- Total revenues of approximately $518.0 million to $538.0 million, or a decline of 4% to flat versus the prior year
- Operating margin of approximately 6.0% to 7.0%
- Interest expense of approximately $2.5 million
- An effective tax rate of 31%
- Diluted earnings per share of approximately $1.02 to $1.22
Full-Year 2023 (Adjusted):
Adjusted financial guidance for full-year 2023 excludes stock-based compensation expense of $18.0 million to $19.0 million, amortization of acquisition-related intangible assets of approximately $12.0 million, restructuring costs of $1.5 million to $2.0 million, and any investment gains or losses.
- Adjusted operating margin of approximately 12.0% to 13.0%
- Adjusted effective tax rate of 29%
- Adjusted diluted earnings per share of approximately $2.25 to $2.45
Forrester (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We help leaders across technology, marketing, customer experience, digital, product, and sales functions use customer obsession to accelerate growth. Through Forrester’s proprietary research, consulting, and events, leaders from around the globe are empowered to be bold at work — to navigate change and put their customers at the center of their leadership, strategy, and operations. Our unique insights are grounded in annual surveys of more than 700,000 consumers, business leaders, and technology leaders worldwide; rigorous and objective research methodologies, including Forrester Wave™ evaluations; over 100 million real-time feedback votes; and the shared wisdom of our clients. To learn more, 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 full-year 2023 and statements about the performance of Forrester Decisions, Forrester’s ability to double contract value, and 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; Forrester’s ability to fulfill existing or generate new consulting engagements and advisory services; technology spending; the risks and challenges inherent in international business activities; the impact of health epidemics, including COVID-19, on Forrester’s business; 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 respond to business and economic conditions and market trends; the impact of Forrester’s outstanding debt obligations; competition and industry consolidation; possible variations in Forrester’s quarterly operating results; concentration of ownership of Forrester; the possibility of network disruptions and security breaches; any failure to enforce and protect Forrester’s intellectual property rights; compliance with privacy laws; taxation risks; any weakness in Forrester’s system of internal controls; and the amount and timing of the repurchase of Forrester stock. 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.
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