Forrester Research, Inc. (Nasdaq: FORR) today announced its third-quarter ended September 30, 2005 financial results.

Third-Quarter Financial Performance

  • Total revenues were $39.0 million, compared with $33.9 million for the third quarter of last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 44 percent, Forrester reported net income of $3.2 million or $0.15 per diluted share, compared with net income of $3.2 million, or $0.14 per diluted share, for the same period last year.
  • On a pro forma basis, net income was $4.1 million or $0.19 per diluted share, for the third quarter of 2005, which excludes amortization of $786,000 of acquisition-related intangible assets, and non-marketable investment gains of $241,000 and which reflects a pro forma effective tax rate of 35 percent. This compares with pro forma net income of $3.4 million, or $0.15 per diluted share, for the same period in 2004, which excludes amortization of $1.4 million of acquisition-related intangible assets, and marketable and non-marketable investment gains of $1.0 million, and reflects a pro forma effective tax rate of 35 percent.

Nine-Month Period Ended September 30, 2005 Financial Performance

  • Total revenues were $112.1 million, compared with $100.5 million for the same period last year.
  • On a GAAP-reported basis, which reflects an effective tax rate of 41 percent, Forrester reported net income of $8.7 million, or $0.40 per diluted share for the nine months ended September 30, 2005, compared to a net income of $606,000 or $0.03 per diluted share for the same period last year.
  • On a pro forma basis, net income was $10.0 million or $0.46 per diluted share, for the nine months ended September 30, 2005, which excludes amortization of $2.7 million of acquisition-related intangible assets, marketable and non-marketable investment gains of $2.0 million and which reflects a pro forma effective tax rate of 35 percent. This compares with pro forma net income of $8.9 million, or $0.40 per diluted share for the same period last year, which excludes amortization of $5.1 million of acquisition-related intangible assets, reorganization costs of $8.8 million primarily due to office space consolidations, and marketable and non-marketable investment gains of $1.0 million, and 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 reported another strong quarter, with revenue growth of 15 percent and pro forma earnings per share growth of 27 percent,” said George F. Colony, chairman of the board and chief executive officer. “After the first three quarters, Forrester is on track to meet its 2005 financial objectives. The fourth quarter will be very busy as 40 percent of our contracts come up for renewal. We will stay focused on driving sales of our syndicated research services products, while maintaining a high level of client service.”

Forrester is providing fourth-quarter 2005 financial guidance as follows:

Fourth-Quarter 2005 (GAAP):

  • Total revenues of approximately $41.0 million to $43.0 million.
  • Operating margin of approximately 13 percent to 15 percent.
  • Other income of approximately $700,000.
  • An effective tax rate of 41 percent.
  • Diluted earnings per share of approximately $0.18 to $0.20.

Fourth-Quarter 2005 (Pro Forma):

Pro forma financial guidance for the fourth quarter of 2005 excludes amortization of acquisition-related intangible assets of approximately $800,000 and any gains or impairment charges related to non-marketable investments.

  • Pro forma operating margin of approximately 15 percent to 17 percent.
  • Pro forma effective tax rate of 35 percent.
  • Pro forma diluted earnings per share of approximately $0.20 to $0.22.

Forrester is providing full-year 2005 guidance as follows:

Full-Year 2005 (GAAP):

  • Total revenues of approximately $152.0 million to $156.0 million.
  • Operating margin of approximately 10 percent to 12 percent.
  • Other income of approximately $3.0 million.
  • An effective tax rate of 41 percent.
  • Diluted earnings per share of approximately $0.55 to $0.63.

Full-Year 2005 (Pro Forma):

Pro forma financial guidance for full-year 2005 excludes amortization of acquisition-related intangible assets of approximately $3.5 million, as well as all gains and impairment charges related to marketable and non-marketable securities.

  • Pro forma operating margin of approximately 13 percent.
  • Pro forma diluted earnings per share of approximately $0.65 to $0.69
  • An effective tax rate of 35 percent.