Forrester Research, Inc. (Nasdaq: FORR) today announced its second-quarter ended June 30, 2006 financial results.

Second-Quarter Financial Performance

  • Total revenues were $48.5 million, compared with $39.2 million for the second quarter of last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 46 percent, Forrester reported net income of $3.9 million or $0.17 per diluted share, compared with net income of $2.5 million, or $0.11 per diluted share for the same period last year.
  • On a pro forma basis, net income was $5.9 million or $0.26 per diluted share for the second quarter of 2006, which excludes amortization of $472,000 of acquisition-related intangible assets, non-cash stock-based compensation expense of $1.8 million, net non-marketable investment gains of $8,000, and which reflects a pro forma effective tax rate of 37 percent. This compares with pro forma net income of $3.4 million, or $0.15 per diluted share, for the same period in 2005, which excludes amortization of $833,000 of acquisition-related intangible assets, non-cash stock-based compensation expense of $290,000 and non-marketable investment gains of $112,000, and which reflects a pro forma effective tax rate of 35 percent.

Six-Month Period Ended June 30, 2006 Financial Performance

  • Total revenues were $89.7 million, compared with $73.0 million for the same period last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 48 percent, Forrester reported net income of $5.4 million, or $0.24 per diluted share for the six months ended June 30, 2006, compared with net income of $5.2 million or $0.24 per diluted share for the same period last year.
  • On a pro forma basis, net income was $9.2 million or $0.41 per diluted share, for the six months ended June 30, 2006, which excludes amortization of $1.1 million of acquisition-related intangible assets, non-cash stock-based compensation expense of $3.5 million, and non-marketable investment gains of $207,000, and which reflects a pro forma effective tax rate of 37 percent. This compares with pro forma net income of $5.9 million, or $0.27 per diluted share for the same period last year, which excludes amortization of $2.0 million of acquisition-related intangible assets, non-cash stock-based compensation expense of $290,000, and non-marketable investment gains of $1.8 million, and which reflects a pro forma effective tax rate of 35 percent.

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

“Forrester’s second quarter exceeded expectations for revenue, operating profit, and EPS due to three sold-out Events in the quarter and the strengthening of our syndicated sales in the past three quarters,” said George F. Colony, chairman of the board and chief executive officer. “As we look forward to the second half of the year, we remain cautiously optimistic about the business and are pleased with our progress, particularly with the role-focused Forrester Leadership Boards. As a result of our financial performance in the first half of the year, we are raising our guidance today for the full year.”

Forrester is providing third-quarter 2006 financial guidance as follows:

Third-Quarter 2006 (GAAP):

  • Total revenues of approximately $44.0 million to $46.0 million.
  • Operating margin of approximately 9 percent to 11 percent.
  • Other income of approximately $1.5 million.
  • An effective tax rate of approximately 50 percent.
  • Diluted weighted average shares outstanding of approximately 23.5 million.
  • Diluted earnings per share of approximately $0.13 to $0.16.

Third-Quarter 2006 (Pro Forma):

Pro forma financial guidance for the third quarter of 2006 excludes amortization of acquisition-related intangible assets of approximately $500,000, non-cash stock-based compensation expense of approximately $2.0 million to $2.5 million, and any gains or impairment charges related to non-marketable investments.

  • Pro forma operating margin of approximately 14 percent to 16 percent.
  • Pro forma effective tax rate of 37 percent.
  • Pro forma diluted earnings per share of approximately $0.21 to $0.23.

Forrester is revising full-year 2006 guidance as follows:

Full-Year 2006 (GAAP):

  • Total revenues of approximately $182 million to $187 million.
  • Operating margin of approximately 8 percent to 10 percent.
  • Other income of approximately $5 million.
  • An effective tax rate of approximately 50 percent.
  • Diluted weighted average shares outstanding of approximately 23 million.
  • Diluted earnings per share of approximately $0.48 to $0.59.

Full-Year 2006 (Pro Forma):

Pro forma financial guidance for full-year 2006 excludes amortization of acquisition-related intangible assets of approximately $2.1 million, non-cash stock-based compensation expense of approximately $7.0 million to $9.0 million, and any gains or impairment charges related to non-marketable investments.

  • Pro forma operating margin of approximately 15 percent.
  • Pro forma diluted earnings per share of approximately $0.86 to $0.92.
  • An effective tax rate of 37 percent.