Forrester Research, Inc. (FORR)
Q1 2010 Earnings Call Transcript
April 29, 2010 11:00 am ET
Karyl Levinson – VP, Corporate Communications
Mike Doyle – CFO and Treasurer
George Colony – Chairman and CEO
Charles Rutstein – COO
Laura Lederman – William Blair & Company & LLC
Kevin Ciabattoni – Boenning & Scattergood
Mick Dobray – Robert W. Baird
Vincent Colicchio – Noble Financial
Previous Statements by FORR
» Forrester Research Q1 2009 Earnings Call Transcript
» Forrester Research Inc. Q4 2008 Earnings Call Transcript
» Forrester Research Q3 2008 Earnings Call Transcript
Good day ladies and gentlemen and welcome to the first quarter 2010 Forrester Research earnings conference call. My name is Michelle and I will be your operator for today. At this time, all participants are in listen-only mode. We will be conducting a question and answer session towards the end of today’s conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the presentation over to your host for today’s call, Ms. Karyl Levinson, Vice President of Corporate Communications. Please proceed.
Thanks very much and good morning. Thank you for joining our first quarter call. With me today are George Colony, Forrester’s Chairman of the Board and CEO, Charles Rutstein, Forrester’s Chief Operating Officer, and Mike Doyle, Forrester's Chief Financial Officer.
Mike will open the call and provide detail on our financial results for the quarter. George will follow Mike and provide a strategic update on the business and our role-based strategy. After George completes his review, we’ll open the call to Q&A.
A replay of this call will be available until May 6, 2010 and can be accessed by dialing 888-286-8010. Please reference the pass code 70546377. This call is also available via webcast and will be archived in the investor section at forrester.com.
Before we begin, I’d like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expect, believe, anticipate, intend, plan, estimate, or similar, expressions are intended to identify these forward-looking statements. These statements are based on the Company's current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements.
Some of the important factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The Company undertakes no obligation to update publicly any forward-looking statements whether as result of new information, future events or otherwise. I'll now hand the call over to Mike Doyle.
Thanks, Karyl. I will now begin my review Forrester’s first quarter financial performance, the balance sheet of March 31
, our first quarter metrics and the outlook for the second quarter and full year 2010.
Please note that the income statement numbers I'm reporting are pro forma and exclude the following items
Amortization of intangibles, stock-based compensation expense, reorganization costs in 2009, acquisition related costs and credits and net realized gains from investments.
Also, we continue to utilize an effective tax rate at 40% for pro forma purposes. The actual effective tax rate for the first quarter of 2010 is approximately 38%. For the first quarter, Forrester exceeded its quarterly guidance for pro forma operating margin and EPS and met guidance for revenue.
We’re pleased with the continued improvement in our operating performance which reflects healthy renewal activity and excellent operating discipline, resulting in strong bottom-line performance.
We continue to see signs of an improving economy both with improved customer retention and enrichment metrics and broad-based success across all segments and geographies. In addition, the integration of Strategic Oxygen acquired on December 1
is progressing as planned and had a small but positive effect on our operating results.
Now let me turn to a more detailed review of our first quarter results. Forrester's first quarter revenue increased 5% to 59.2 million from 56.4 million in the first quarter of last year. Given our deferred revenue recognition model we’re just now starting to see the revenue effects of our improving bookings performance over the last few quarters. In addition, we experience strong consulting delivery and a positive impact of foreign exchange rates.
First quarter research services revenue increased 1% to 39.4 million from 39 million last year. Research services revenue was 67% of total revenue for the quarter versus 69% in the first quarter of 2009.
First quarter advisory services and other revenue increased 14% to 19.8 million from 17.4 million in the first quarter of 2009 and represented 33% of total revenue for the quarter.
International revenues were 30% for the first quarter, up from 29% in the first quarter last year, primarily due to the impact of foreign exchange rates.
I’d now like to take you through the activity behind our revenue and review the results for each of our products starting with research.
In the first quarter, 383 new research documents were added to role view. The top three research roles are the enterprise architecture professionals with 4,311 clients, our application development and program management professionals with 3,931 clients, and our technology product management with 3,842 clients. We hosted 62 teleconferences in the first quarter with the total attendance of 3,103.
Forrester leadership boards, our peer offering for senior executives, continues to improve achieving year-over-year revenue growth of 4% in the first quarter of 2010. The seven boards focused on IT roles now have a total of 929 members. Technology Industry boards now have a total membership of 267