Forrester Research, Inc. (Nasdaq: FORR) today announced its third quarter ended September 30, 2006 financial results.

Third-Quarter Financial Performance

  • Total revenues were $44.1 million, compared with $39.0 million for the third quarter of last year. Revenue related to the Ultimate Consumer Panel business, which was sold during the third quarter, is included as a component of income from discontinued operations for both periods.
  • On a GAAP-reported basis, Forrester reported net income of $5.3 million or $0.22 per diluted share, compared with net income of $2.6 million, or $0.12 per diluted share, for the same period last year.
  • On a pro forma basis, net income was $6.0 million, or $0.26 per diluted share, for the third quarter of 2006, which excludes non-cash stock-based compensation of $2.5 million, amortization of $474,000 of acquisition-related intangible assets, net non-marketable investment gains of $98,000, gains from the sale of the discontinued operations of $1.4 million, and income from discontinued operations of $51,000 and which reflects a pro forma effective tax rate of 37 percent. This compares with pro forma net income of $4.2 million, or $0.19 per diluted share, for the same period in 2005, which excludes non-cash stock-based compensation of $729,000, amortization of $786,000 of acquisition-related intangible assets, non-marketable investment gains of $241,000, and $82,000 of losses from discontinued operations and reflects a pro forma effective tax rate of 35 percent.

Nine-Month Period Ended September 30, 2006 Financial Performance

  • Total revenues were $132.5 million, compared with $110.7 million for the same period last year. Revenue related to the Ultimate Consumer Panel business, which was sold during the third quarter, is included as a component of income from discontinued operations for both periods.
  • On a GAAP-reported basis, Forrester reported net income of $10.7 million, or $0.47 per diluted share, for the nine months ended September 30, 2006, compared with net income of $7.8 million, or $0.36 per diluted share, for the same period last year.
  • On a pro forma basis, net income was $15.0 million, or $0.66 per diluted share, for the nine months ended September 30, 2006, which excludes non-cash stock-based compensation of $6.0 million, amortization of $1.6 million of acquisition-related intangible assets, net non-marketable investment gains of $305,000, gains from the sale of discontinued operations of $1.4 million, and income from discontinued operations of $300,000 and which reflects a pro forma effective tax rate of 37 percent. This compares with pro forma net income of $10.4 million, or $0.47 per diluted share, for the same period last year, which excludes non-cash stock-based compensation of $1.0 million, amortization of $2.7 million of acquisition-related intangible assets, and marketable and non-marketable investment gains of $2.0 million, and $314,000 of losses from discontinued operations, 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.

“Our business remains strong and we are on a path to achieve our full-year guidance,” said George F. Colony, chairman of the board and chief executive officer. “During the third quarter, we again performed well against key indicators, including client retention, operating margin, and EPS, while we continue on track to meet this year’s revenue goal for our syndicated research and Forrester Leadership Boards business.”

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

Fourth-Quarter 2006 (GAAP):

  • Total revenues of approximately $47 million to $50 million.
  • Operating margin of approximately 11 percent to 13 percent.
  • Other income of approximately $1.7 million.
  • An effective tax rate of 48 percent.
  • Diluted earnings per share of approximately $0.18 to $0.22.

Fourth-Quarter 2006 (Pro Forma):

Pro forma financial guidance for the fourth quarter of 2006 excludes amortization of acquisition-related intangible assets of approximately $0.5 million, non-cash stock-based compensation expense of $2.0 million to $2.5 million, and any gains or impairment charges related to non-marketable investments.

  • Pro forma operating margin of approximately 17 percent to 19 percent.
  • Pro forma effective tax rate of 37 percent.
  • Pro forma diluted earnings per share of approximately $0.27 to $0.29.

Forrester is providing full-year 2006 guidance as follows:

Full-Year 2006 (GAAP):

  • Total revenues of approximately $179 million to $182 million.
  • Operating margin of approximately 10 percent to 11 percent.
  • Other income of approximately $5.7 million.
  • An effective tax rate of 48 percent.
  • Diluted earnings per share of approximately $0.65 to $0.70.

Full-Year 2006 (Pro Forma):

Pro forma financial guidance for full-year 2006 excludes non-cash stock-based compensation expense of $8.0 million to $8.5 million, amortization of acquisition-related intangible assets of approximately $2.1 million, gains on sale of discontinued operations of $1.4 million, and income from discontinued operations of $0.3 million, as well as gains or impairment charges related to marketable and non-marketable investments.

  • Pro forma operating margin of approximately 15 to 16 percent.
  • Pro forma diluted earnings per share of approximately $0.93 to $0.95.
  • An effective tax rate of 37 percent.