Forrester Research, Inc. Q1 FY2026 earnings call

Four key themes covered: financial performance in Q1 2026 with improved retention metrics; impact of AI technology trends on clients (private models and rebuilding internal systems with AI computing); update on journey to be AI research company with key research releases like 'Accelerate Your AI Voyage' and 'Forrester AI Use Case Catalog'; progress on four company initiatives including execution of retention lifecycle, expanding product portfolio with Forrester AI integrations, building sales culture of growth, and offering actionable all-seasons research.

In Q1, revenue was down 5% from the prior year at $85.5 million. Research revenue was down 2%, while consulting revenues declined by 13% due to exiting strategy consulting business. Wallet retention improved to 89% (up 2 points from last quarter, 3 points from prior year), client retention to 78% (up 1 point from prior quarter, 5 points from prior year), and percentage of multi-year deals as a percentage of total CV reached 72% (up from 71% last quarter). Research revenue down 2%, consulting down 13%, cash flow strong with $19 million free cash in the quarter.

For 2026, increasing the low to midpoint range of revenue guidance. Now expects revenue to be $350 to $360 million (down 9% to 12% vs 2025). Revenue guidance increase driven by metric improvements and stronger sponsorship bookings. Expect research to be mid-single-digit decline, consulting low 20s decline, events mid-to-high teens decline. Operating margins expected 6% to 6.5% for 2026, interest expense $2.3 million, full-year tax rate 29%, EPS range $0.72 to $0.82.

Factors that could cause actual results to differ from forward-looking statements include risks and uncertainties from new information, future events, etc. Discussed factors in reports and filings with SEC that could affect actual results, like changes in AI technology adoption by clients, market competition in AI services, and execution risks of company initiatives.

Q: Even though contract value decline is expected to increase in coming quarters, what gives confidence?

A: Good bookings this year on sponsorship side, stronger B2B event in Phoenix with 10% increase in attendees, and events business metrics pointing in right direction.

Q: What's the roadmap for product portfolio expansion?

A: Two key initiatives - providing more options in how clients buy Forrester (AI access and working with senior analysts) and continuing major releases of Forrester AI and embedding it where clients work.

Q: How is sales pipeline for CV performing?

A: Consistency in growth pipeline, acceleration due to Forrester AI helping organizations adapt AI and interest in embed portfolio from large organizations like financial services, agencies, government.

Q: How is AI access performing?

A: Hit expectations, good for new business and expanding within existing accounts, 40% of reps have sold AI access.