FORRESTER RESEARCH, INC. Q3 FY2024 earnings call

• Forrester Decisions Migration: On track with 78% of contract value in Q3, projecting over 80% by year-end. Launched FD service for data, AI, and analytics leaders. Izola, the generative AI research portal, is now the third most used feature of the FD platform.
• Go-to-Market Strategy: Driven by 4 elements: selling to C-level executives, standardized sales activities, FAST sales methodology, and retention life cycle.
• Client Board: 26th year of the Board, with clients representing transition to Forrester Decisions and providing positive feedback on value and continuous guidance.
• Divestiture: Divested FeedbackNow product line, received $6 million cash and $9 million note, and recast historical metrics for comparability.

Research: Revenues decreased 4% compared to Q3 2023, with subscription research products down 1% and reprint/other smaller/discontinued products also declining. Consulting: Posted revenues of $23.4 million, down 17% y/y, but saw signs of stabilization in bookings, particularly in strategy consulting. Events: Generated $2.1 million in revenue, a 54% decline y/y due to merging events and pushing some to Q4. Forrester Decisions: 78% of contract value in Q3, projecting over 80% by year-end. Launched FD service for data, AI, and analytics leaders. Izola, the generative AI research portal, saw a 40% q/q increase in prompts.

• Full-year contract value expected to be flat to marginally down, vs previous estimate of flat to slightly up.
• Revenue expected to be in the range of $425 million to $435 million for 2024.
• Operating margins expected to be in the range of 8.5% to 9.5%.
• Earnings per share in the range of $1.37 to $1.57.
• CV expected to stabilize and grow in 2025, with consulting and events bookings improving from lows.

• Macroeconomic uncertainties affecting CV and revenue.
• Challenges in executing sales motions across the organization.
• Softness in event sponsorship and attendance.
• Litigation and severance payments impacting cash flows.

Q: On end market health and CV bookings below plan, any execution issues?

A: Nate Swan said some weakness in a group with slight changes, and they're on track with Q4 bookings.

Q: Client budgets for 2025?

A: Carrie Johnson said tech budgets increasing in 2025, playing to Forrester's strategy.

Q: Measuring traction of go-to-market motions?

A: Nate Swan said they look at pipelines, retention, and execution of retention life cycle.

Q: Guidance for 2025 revenue growth?

A: Chris Finn said no significant material growth expected in 2025 just yet, but CV expected to stabilize and grow as they ramp.

Q: When will client count start to go up?

A: Nate Swan said less impact from smaller clients, expecting less impact in 2025 and emerging tech team performing well.

Q: Sales team status?

A: Nate Swan said sales organization spent time on training, sales methodology, and retention life cycle, with ongoing support.

Q: Decline in clients this quarter?

A: Chris Finn said it was a combination of small clients and restatement of client numbers due to divestiture of FeedbackNow.

Q: Common pushback from clients on expanding FD seats?

A: Nate Swan said budget is a challenge, but demonstrating value and connecting to client initiatives helps.