Forrester Research, Inc. (Nasdaq: FORR) today announced financial results for the third quarter ended September 30, 2022, and raised its guidance for the balance of the year. Results were driven by contract value (CV) growth of 7% and revenue growth of 8%. On a GAAP basis, earnings per share (EPS) was $0.28, and on an adjusted basis, EPS was $0.57
Year-over-year total contract value increased by 7% to $353 million
Company raises guidance for balance of year
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CAMBRIDGE, Mass., Nov. 2, 2022 /PRNewswire/ -- Forrester Research, Inc. (Nasdaq: FORR) today announced financial results for the third quarter ended September 30, 2022, and raised its guidance for the balance of the year. Results were driven by contract value (CV) growth of 7% and revenue growth of 8%. On a GAAP basis, earnings per share (EPS) was $0.28, and on an adjusted basis, EPS was $0.57.
Commenting on the announcement, CEO and Chairman George Colony stated, "We delivered solid financial results in the third quarter. We are on track to have one-third of our CV in the Forrester Decisions platform by year-end, and we remain focused on creating shareholder value for the long term. With today's announcement, we are raising our guidance for the balance of the year, given the results we have posted today and our ongoing ability to manage costs. With that said, we continue to monitor the evolving macro environment and remain focused on our key metrics, which may continue to show volatility in the coming quarters, given our accelerated approach to convert clients to Forrester Decisions."
Third-Quarter Consolidated Results
Total revenues for the third quarter of 2022 were $127.7 million, compared with $118.1 million for the comparable quarter in 2021.
On a GAAP basis, net income was $5.4 million, or $0.28 per diluted share, for the third quarter of 2022, compared with $4.5 million, or $0.23 per diluted share, for the same period in 2021.
On an adjusted basis, net income was $10.9 million, or $0.57 per diluted share, for the third quarter of 2022, reflecting an adjusted effective tax rate of 30%. Adjusted net income excludes stock-based compensation of $3.9 million and amortization of acquisition-related intangible assets of $3.4 million. This compares with an adjusted net income of $7.9 million, or $0.41 per diluted share, for the same period in 2021, which reflects an adjusted tax rate of 31%. Adjusted net income for the third quarter of 2021 excludes stock-based compensation of $2.5 million and amortization of acquisition-related intangible assets of $3.7 million.
Forrester is providing fourth-quarter and full-year 2022 financial guidance as follows:
Fourth Quarter 2022 (GAAP):
Fourth Quarter 2022 (Adjusted):
Adjusted financial guidance for the fourth quarter of 2022 excludes stock-based compensation expense of $3.5 million to $3.7 million, amortization of acquisition-related intangible assets of approximately $3.1 million, and any investment gains or losses.
Total revenues of approximately $535 million to $545 million
Operating margin of approximately 7.0% to 8.0%
Interest expense of approximately $2.5 million
An effective tax rate of approximately 32%
Earnings per share of approximately $1.25 to $1.35
Full Year 2022 (Adjusted):
Adjusted financial guidance for full-year 2022 excludes stock-based compensation expense of $14.5 million to $14.7 million, amortization of acquisition-related intangible assets of approximately $13.2 million, and any investment gains or losses.
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 70 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 fourth quarter of and full-year 2022 and statements about the performance of Forrester Decisions, Forrester's ability to manage costs, 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.
Tyson Seely
Vice President, Investor Relations
Forrester Research, Inc.
+1 617-613-6805
tseely@forrester.com
Shweta Agarwal
Senior Director, Public Relations
Forrester Research, Inc.
+1 617-613-6805
sagarwal@forrester.com
© 2022, Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc.
Consolidated Statements of Income
(Unaudited, in thousands, except per share data)
Cost of services and fulfillment
General and administrative
Amortization of intangible assets
Other income (expense), net
Income before income taxes
Basic income per common share
Diluted income per common share
Basic weighted average shares outstanding
Diluted weighted average shares outstanding
Income from operations - GAAP
Amortization of intangible assets
Stock-based compensation included in the
following expense categories:
Cost of services and fulfillment
General and administrative
Adjusted income from operations
Amortization of intangible assets
Tax effects of items above (2)
Adjustment to tax expense for adjusted tax rate (3)
Diluted weighted average shares outstanding
Forrester believes that adjusted financial results provide investors with consistent and comparable information to
aid in the understanding of Forrester's ongoing business, and are also used by Forrester in making compensation
decisions. Our adjusted presentation excludes amortization of acquisition-related intangible assets, stock-based
compensation, integration costs, and net gains from investments, as well as their related tax effects. We also
utilized an assumed tax rate of 30% in 2022 and 31% in 2021, which excludes items such as any release of
reserves for uncertain tax positions established in prior years, the settlement of prior year tax audits, and the effect of
any adjustments related to the filing of prior year tax returns. The adjusted data does not purport to be prepared in
accordance with Accounting Principles Generally Accepted in the United States.
The tax effect of adjusting items is based on the accounting treatment and rate for the jurisdiction of each item.
To compute adjusted net income, we apply an adjusted effective tax rate of 30% in 2022 and 31% in 2021.
(Unaudited, dollars in thousands)
Cash, cash equivalents and marketable investments
Net cash provided by operating activities
Purchases of property and equipment
Repurchases of common stock
September 30, 2021 contract value has been recast based on 2022 foreign currency rates.
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