Forrester Research Reports Second-Quarter Financial Results

Forrester Research, Inc. (Nasdaq: FORR) today announced its second-quarter-ended June 30, 2011 financial results.

Second-Quarter Financial Performance
  • Total revenues were $73.5 million, compared with $64.7 million for the second quarter of last year.
  • On a GAAP basis, net income was $5.5 million, or $0.24 per diluted share, for the second quarter of 2011, compared with net income of $6.9 million, or $0.30 per diluted share, for the same period last year.
  • On a pro forma basis, net income was $7.5 million, or $0.32 per diluted share, for the second quarter of 2011, which reflects a pro forma effective tax rate of 40%. Pro forma net income excludes stock-based compensation of $0.2 million, amortization of $0.5 million of acquisition-related intangible assets, $1.5 million of duplicate lease costs, and $0.5 million of acquisition and integration costs. This compares with pro forma net income of $8.2 million, or $0.35 per diluted share, for the same period in 2010, which reflects a pro forma tax rate of 40%. Pro forma net income for the second quarter of 2010 excludes stock-based compensation of $1.4 million and amortization of $0.9 million of acquisition-related intangible assets.

“The company has performed well in the first half of the year, positioning us to have a strong full year,” said George F. Colony, Forrester's chairman of the board and chief executive officer. “Our second-quarter metrics including deferred revenue increased considerably versus prior year, and our renewal rates remain very strong, while our operating margin and earnings per share exceeded our guidance. Integration of our second-quarter acquisition, Springboard Research, is well on track expanding our coverage and presence in Asia.”

Six-Month-Period-Ended June 30, 2011 Financial Performance
  • Total revenues were $139.2 million, compared with $123.8 million for the same period last year.
  • On a GAAP basis, net income was $8.4 million, or $0.36 per diluted share, for the six months ended June 30, 2011, compared with net income of $12.7 million, or $0.55 per diluted share, for the same period last year.
  • On a pro forma basis, net income was $12.3 million, or $0.53 per diluted share, for the six months ended June 30, 2011, which reflects a pro forma effective tax rate of 40%. Pro forma net income excludes stock-based compensation of $1.7 million, amortization of $1.2 million of acquisition-related intangible assets, $3.0 million of duplicate lease costs, $0.9 million of acquisition and integration costs, and net investment gains of $0.6 million. This compares with pro forma net income of $14.5 million, or $0.63 per diluted share, for the same period in 2010, which reflects a pro forma tax rate of 40%. Pro forma net income for the six months ended June 30, 2010, excludes stock-based compensation of $2.5 million, amortization of $1.8 million of acquisition-related intangible assets, $0.3 million of acquisition-related credits, and net investment gains of $0.5 million.

A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.

Forrester is providing third-quarter 2011 financial guidance as follows:

Third-Quarter 2011 (GAAP):
  • Total revenues of approximately $69.0 million to $72.0 million.
  • Operating margin of approximately 9.0% to 11.0%.
  • Other income, net of zero.
  • An effective tax rate of 40%.
  • Diluted earnings per share of approximately $0.16 to $0.20.

Third-Quarter 2011 (Pro Forma):

Pro forma financial guidance for the third quarter of 2011 excludes stock-based compensation expense of $1.2 million to $1.3 million, amortization of acquisition-related intangible assets of approximately $0.7 million, duplicate lease costs of approximately $0.9 million, integration costs of approximately $0.2million to $0.3 million and any investment gains or losses.
  • Pro forma operating margin of approximately 13.5% to 15.5%.
  • Pro forma effective tax rate of 40%.
  • Pro forma diluted earnings per share of approximately $0.24 to $0.28.

Our full-year 2011 guidance is as follows:

Full-Year 2011 (GAAP):
  • Total revenues of approximately $285 million to $291 million.
  • Operating margin of approximately 11.5% to 12.5%.
  • Other income, net of zero.
  • An effective tax rate of 40%.
  • Diluted earnings per share of approximately $0.87 to $0.93.

Full-Year 2011 (Pro Forma):

Pro forma financial guidance for full-year 2011 excludes stock-based compensation expense of $4.0 million to $4.3 million, amortization of acquisition-related intangible assets of approximately $2.6 million, duplicate lease costs of approximately $3.9 million, acquisition and integration costs of $1.1 million to $1.3 million, and any investment gains or losses.
  • Pro forma operating margin of approximately 15.5% to 16.5%.
  • Pro forma effective tax rate of 40%.
  • Pro forma diluted earnings per share of approximately $1.18 to $1.24.

About Forrester Research

Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 28 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.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 third quarter of and full-year 2011. 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, technology spending, Forrester’s ability to respond to business and economic conditions and market trends, the risks and challenges inherent in international business activities, competition and industry consolidation, the ability to attract and retain professional staff, Forrester’s dependence on key personnel, and possible variations in Forrester’s quarterly operating results. 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 income and the table of selected balance sheet and cash flow data are attached.

Forrester Research, Inc.
Consolidated Statements of Income
(Unaudited, In thousands, except per share data)
    Three months ended   Six months ended
June 30, June 30,
2011   2010   2011       2010  
   
Revenues:
Research services $ 47,341 $ 40,752 $ 91,888 $ 80,168
Advisory services and other   26,109   23,901   47,304     43,665  
Total revenues 73,450 64,653 139,192 123,833
 
Operating expenses:
Cost of services and fulfillment 28,024 24,300 53,522 46,627
Selling and marketing 26,009 20,720 51,474 40,808
General and administrative 8,330 7,720 17,248 14,924
Depreciation 945 879 1,915 1,797
Amortization of intangible assets   526   905   1,219     1,810  
Total operating expenses   63,834   54,524   125,378     105,966  
 
Income from operations 9,616 10,129 13,814 17,867
Other income (expense), net 4 1,148 (105 ) 2,223
Gains from investments, net   58   27   640     452  
 
Income before income taxes 9,678 11,304 14,349 20,542
Income tax provision   4,208   4,402   5,968     7,868  
Net Income $ 5,470 $ 6,902 $ 8,381   $ 12,674  
 
Diluted income per share $ 0.24 $ 0.30 $ 0.36   $ 0.55  
 
Diluted weighted average shares outstanding   23,203   23,135   23,227     23,006  
 
Basic income per share $ 0.24 $ 0.31 $ 0.37   $ 0.56  
 
Basic weighted average shares outstanding   22,684   22,517   22,698     22,453  
 
Pro forma data (1):
Income from operations $ 9,616 $ 10,129 $ 13,814 $ 17,867
Amortization of intangible assets 526 905 1,219 1,810
Duplicate lease costs 1,523 - 2,986 -
Acquisition and integration costs (credits) 528 - 899 (326 )
Stock-based compensation included in the following
expense categories:
Cost of services and fulfillment 32 607 647 1,056
Selling and marketing 53 227 392 471
General and administrative   158   589   642     1,002  
 
Pro forma income from operations 12,436 12,457 20,599 21,880
Other income (expense), net   4   1,148   (105 )   2,223  
Pro forma income before income taxes 12,440 13,605 20,494 24,103
Pro forma income tax provision   4,976   5,442   8,198     9,641  
Pro forma net income $ 7,464 $ 8,163 $ 12,296   $ 14,462  
 
Pro forma diluted income per share $ 0.32 $ 0.35 $ 0.53   $ 0.63  
Diluted weighted average shares outstanding   23,203   23,135   23,227     23,006  
 

(1) Forrester believes that pro forma financial results provide investors with consistent and comparable information to aid in the understanding of Forrester's ongoing business. Our pro forma presentation excludes amortization of acquisition-related intangible assets, duplicate lease costs, costs or (credits) associated with acquisition activities, stock-based compensation and net gains or losses from investments, as well as their related tax effects. The pro forma data does not purport to be prepared in accordance with Accounting Principles Generally Accepted in the United States.
Forrester Research, Inc.
Consolidated Balance Sheet and Cash Flow Data      
(Unaudited, In thousands)
     
June 30, December 31,
  2011     2010  
 
Balance sheet data:
Cash, cash equivalents and marketable investments $ 227,558 $ 216,034
Accounts receivable, net $ 47,714 $ 73,574
Deferred revenue $ 130,356 $ 131,521
 
 
Six months ended
June 30,
  2011     2010  
 
Cash flow data:
Net cash provided by operating activities $ 38,143 $ 32,350
Cash used for acquisitions $ (7,031 ) $ (1,660 )
Purchases of property and equipment $ (26,100 ) $ (2,442 )
Repurchases of common stock $ (13,395 ) $ (5,002 )

© 2011, Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc.

Copyright Business Wire 2010

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