Forrester Research, Inc. (Nasdaq: FORR), a leading provider of research and analysis on emerging technologies, today announced its third-quarter financial results and a stock buyback program.
For the third quarter of 2001, revenues were $34.4 million, compared with $40.1 million in the third quarter of 2000. Pro forma net income for the third quarter of 2001 was $4.7 million, compared with net income of $5.9 million for the same period last year. Pro forma diluted earnings per share for the third quarter of 2001 were $0.20, compared with diluted earnings per share of $0.24 for the third quarter of 2000. Third-quarter 2001 pro forma net income and pro forma EPS exclude a one-time charge of $3.1 million related to the workforce reduction announced in July.
For the third quarter of 2001, the agreement value of Forrester’s core research and advisory services was $133.0 million, compared with $167.5 million in the third quarter of 2000. Deferred revenue for the third quarter of 2001 was $62.6 million, compared with $89.4 million in the third quarter of 2000.
For the nine-month period ended September 30, 2001, Forrester reported revenues of $124.5 million, compared with $109.2 million for the same period one year ago. Pro forma net income for the first nine months of 2001, excluding the one-time charge mentioned above, was $15.2 million, compared with net income of $14.3 million for the same period last year. Pro forma diluted earnings per share were $0.63 in the nine months ended September 30, 2001, compared with $0.58 per diluted share in the comparable period of 2000.
“Our diligent focus on cost control enabled us to meet our bottom-line guidance for the third quarter,” said George F. Colony, chairman of the board and chief executive officer. “Due to travel restrictions and the effects of the worsening economy, however, we experienced a revenue decline from advisory services and the postponement of our Marketing Forum during the month of September.”
In a separate release issued this morning, Forrester also announced that its board of directors has authorized the repurchase of up to $50.0 million of its common stock.
New And Enhanced Offerings Focus On Clients’ Immediate Needs
“A tough economy notwithstanding, Forrester continued to innovate and launch new products in the third quarter,” said Colony. “These new offerings are enabling our clients to use technology change to operate more effectively in this economy and grow their businesses for the long term.”
During the third quarter, Forrester published a new Business Technographics® Benchmark report, launched its sixth and seventh eBusiness TechRankings™ categories, and introduced the Critical Issue Advisory Program and the Vendor Advisory Program:
- Business Technographics Benchmark North America — This report features one of the largest surveys of Global 3,500 US technology buyers and examines how their budgets and spending have changed this year.
- Marketing Automation Application and Enterprise Portal Server TechRankings — The Marketing Automation Application category evaluates software products that enable companies to deliver the right marketing message to the right prospect or customer at the right time. The Enterprise Portal Server category analyzes software that gives a firm’s employees a single customized interface to their online resources. TechRankings helps clients choose the best enterprise software through rigorous laboratory-based product testing, in-depth research, user interviews, and objective analysis of global vendor offerings.
- Critical Issue Advisory Program — This offering is a series of advisory-led research packages that focus on businesses’ most pressing technology-related decisions. Programs include “Budgeting For eBusiness” and “Balancing Security & Privacy.”
- Vendor Advisory Program — Geared to vendors’ short-term needs, this program combines research and strategy calls with Forrester analysts to help vendors as they prepare to launch their products.
“Anticipating that technology capital spending will not increase in the near term, we are taking the necessary actions to continue to operate Forrester profitably, while also introducing the most innovative research products on the market,” stated Colony. “To position Forrester to better achieve these objectives, we are continuing the reorganization we started in July. At that time we organized our sales force to address the need for increased specialization in a more complex market. Building upon that first phase, we have now reorganized into four operating groups: Global, North America, Europe, and Asia. They are each being led by a managing director with extensive industry experience. The operating groups, working with the overall corporate group, will enable us to be closer to our clients and better able to drive innovation on a timely basis.”
Forrester’s third-quarter net income including the one-time reorganization charge of $3.1 million was $2.7 million, or $0.11 per diluted share. Forrester’s net income for the nine-month period ended September 30, 2001, was $13.2 million, or $0.55 per diluted share.
Forrester expects an active fourth quarter for its Events business. The Healthcare Forum, which had been scheduled for early October, is taking place this month as a series of three conference calls because of travel restrictions. “The first Healthcare conference call was very well-received by clients,” Colony said. “We recently held our Retail Forum Europe in Paris, an Event designed to help European marketers leverage their offline strengths online. In November, the Executive Strategy Forum in Boston will focus on our work around the X Internet. Also in the fourth quarter, we will hold the Financial Services Forum Europe in London.”
“We remain confident that Forrester is positioned for growth when technology investment begins to rebound,” Colony continued. “That said, based on lower renewal rates and a decrease in deferred revenue in the third quarter, we are revising our guidance for the fourth quarter and full-year 2001.”
- Total revenues of approximately $33.0 million to $35.0 million.
- Operating margin of approximately 15% to 17%.
- Diluted earnings per share of approximately $0.20 to $0.22.
- Total revenues of approximately $158.0 million to $160.0 million.
- Operating margin of approximately 14% to 15%.
- Diluted earnings per share of approximately $0.82 to $0.84.
- 2001 estimates are exclusive of the third-quarter one-time charge of $3.1 million related to the workforce reduction.