Forrester Research, Inc. Q3 FY2025 earnings call

• Q3 performance: Macro environment challenging, consulting revenue down 8%, research revenue down 6%, total revenue down 8%. Wallet retention up to 86%, client retention 74%. - Go-to-market approach progress: Average time to hire reps at 55 days, sales force adopting FAST sales methodology, demand marketing engine improving. Q4 focus: Maintain consistent sales activities, improve retention life cycle, maintain $550,000 rolling pipe per quota-bearing headcount. - AI access product: Launched on Sept 9, aims to attract new clients, enrich experience, win backs. Secured large government agency deal. - Research business in AI age: Forrester will be like private research bank with proprietary assets. - Board of clients: Clients value Forrester's challenge of thinking, knowledge, backup, benchmarks. Board supportive of AI Access launch.

Total revenue for Q3 was $94.3 million, down 8% from prior year. Research revenue was $72.7 million, down 6% (excluding FeedbackNow divestiture, down 4%). Consulting revenue was $21.5 million, down 8%. Events revenue was impacted by shifting an event. Wallet retention was up 1 point to 86%, client retention held at 74%. Research revenue breakdown: subscription research products down 5%. Consulting business had uneven performance with Strategy Consulting impacted by government business but advisory growing double digits. Events business shifted an event, outlook challenged for sponsorship revenues.

• Lowered revenue guidance for 2025 to $395 million - $405 million (down 6% - 9% vs 2024) due to consulting and events headwinds. - Research business expected mid-single-digit decline, consulting high single-digit to low double-digit decline, events high 20% range decline. - Operating margins expected 7.5% - 8.5% for 2025. - Interest expense expected $2.7 million, tax rate 29%. - EPS expected $1.15 - $1.25 for full year. - Anticipate AI Access to positively impact Q4 and 2026 CV performance.

Q: Expand on thoughts on perceived disruption from AI related to research part, customer demographic for just research access, and sales pipeline in Q4.

A: Nate Swan says AI Access too early to determine demographic, but important for attracting younger demographic. Sales pipeline roughly same size year-over-year but better conversion with social contract and Forrester Agile selling technique.

Q: Large language models in customer conversations, pushbacks.

A: Nate Swan says customers bring up public models, but Forrester's data and research are unique and not backed by same sources. Carrie Fanlo adds most conversations are about putting Forrester data in protected environments.

Q: Particular verticals/industries with better success.

A: Nate Swan says U.S. federal government has massive opportunity, international markets doing well in CPG, manufacturing, financial services, end user new business team seeing opportunities in financial services, manufacturing, CPG.

Q: Effort to increase contract value per client, when to bear fruit.

A: Chris Finn says Q4 big quarter, improvement expected in first half next year as new product gains traction. Nate Swan mentions average CV per client up 5% to $162,000.

Q: Better conversion this quarter, attribution.

A: Nate Swan says emerging tech team's social contract for 9 months leading to success, using Forrester Agile selling technique.

Q: Thoughts on Carahsoft partnership, when to contribute.

A: Nate Swan says Carahsoft helps open markets in government space, relatively soon to see return as signed in mid-Q3.