FORRESTER RESEARCH, INC.

(FORR)
  Report
Delayed Nasdaq  -  05/20 04:00:01 pm EDT
49.12 USD   +0.53%
05/19GLOBAL ACCESSIBILITY AWARENESS DAY 2022 : Forrester Partners With Work Without Limits To Increase Employment Opportunities For Job Candidates With Disabilities
PR
05/17NextPoint Financial Appoints Jean Birch New Chair of the Board
MT
05/16FORRESTER RESEARCH, INC. : Entry into a Material Definitive Agreement, Change in Directors or Principal Officers, Financial Statements and Exhibits (form 8-K)
AQ
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector news

FORRESTER RESEARCH, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

11/05/2021 | 08:03am EDT

Overview


This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Words such
as "expects," "believes," "anticipates," "intends," "plans," "estimates," or
similar expressions are intended to identify these forward-looking statements.
Reference is made in particular to our statements about possible acquisitions,
future dividends, future share repurchases, future growth rates, results from
operations and tax rates, the launch of Forrester Decisions, future compliance
with financial covenants under our credit facility, future interest expense,
anticipated increases in, and productivity of, our sales force and headcount,
the adequacy of our cash, and cash flows to satisfy our working capital and
capital expenditures, and the anticipated impact of accounting standards. These
statements are based on our current plans and expectations and involve risks and
uncertainties. Important factors that could cause actual future activities and
results to differ include, among others, our ability to retain and enrich
subscriptions to, and licenses of, our Research products and services, our
ability to fulfill existing or generate new consulting engagements and advisory
services, our ability to generate and increase demand for the Events we host,
technology spending, our ability to mitigate the adverse impact from the
widespread outbreak of COVID-19 which could disrupt or restrict our ability to
sell or fulfill, or reduce demand for, our products, services, and events, the
risks and challenges inherent in international business activities including any
impact of Brexit, our ability to offer new products and services, our dependence
on key personnel, our ability to attract and retain qualified professional
staff, our ability to respond to business and economic conditions and market
trends, the impact of our outstanding debt, competition and industry
consolidation, possible variations in our quarterly operating results,
concentration of our stock ownership, the possibility of network disruptions and
security breaches, our ability to enforce and protect our intellectual property
rights, compliance with privacy laws, taxation risks, and any weakness
identified in our system of internal controls. These risks are described more
completely in our Annual Report on Form 10-K for the year ended December 31,
2020. We undertake no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events, or otherwise.

The COVID-19 pandemic significantly affected us beginning in March 2020
primarily through lower contract bookings and a reduction in revenues from the
conversion of our events from in-person events to virtual events. While the
duration and severity of the pandemic is uncertain, we did experience a rebound
in contract bookings beginning in the fourth quarter of 2020 and continuing
through the third quarter of 2021. We expect that trend to continue through the
remainder of 2021. Our events business continues to be negatively affected by
the pandemic. All events in 2021 have been or will be held as virtual events.

The extent to which the COVID-19 pandemic ultimately impacts our business,
financial condition, results of operations, cash flows, and liquidity may differ
from our current estimates due to inherent uncertainties regarding the duration
and further spread of the outbreak, its severity, actions taken to contain the
virus or treat its impact, and how quickly and to what extent normal economic
and operating conditions can resume.

We derive revenues from subscriptions to our Research products and services,
licensing electronic "reprints" of our Research, performing consulting projects
and advisory services, and hosting Events. We offer contracts for our Research
products that are typically renewable annually and payable in advance.
Subscription products are recognized as revenue ratably over the term of the
contract. Accordingly, a substantial portion of our billings are initially
recorded as deferred revenue. Reprints include an obligation to deliver a
customer-selected research document and certain usage data provided through an
on-line platform, which represents two performance obligations. We recognize
revenue for the performance obligation for the data portion of the reprint
ratably over the license term. We recognize revenue for the performance
obligation for the research document at the time of providing access to the
document. Billings for licensing of reprints are initially recorded as deferred
revenue. Clients purchase consulting projects and advisory services
independently and/or to supplement their access to our subscription-based
products. Consulting project revenues, which are based upon fixed-fee
agreements, are recognized as the services are provided. Advisory service
revenues, such as speeches and advisory days, are recognized when the service is
complete or the customer receives the agreed upon deliverable. Billings
attributable to consulting projects and advisory services are initially recorded
as deferred revenue. Events revenues consist of ticket and sponsorship sales for
a Forrester-hosted event. Billings for Events are also initially recorded as
deferred revenue and are recognized as revenue upon completion of each Event.

Our primary operating expenses consist of cost of services and fulfillment,
selling and marketing expenses, and general and administrative expenses. Cost of
services and fulfillment represents the costs associated with the production and
delivery of our products and services, including salaries, bonuses, employee
benefits, and stock-based compensation expense for all personnel that produce
and deliver our products and services, including all associated editorial,
travel, and support services. Selling and marketing expenses include salaries,
sales commissions, bonuses, employee benefits, stock-based compensation expense,
travel expenses, promotional costs, and other costs incurred in marketing and
selling our products and services. General and administrative expenses include
the costs of the technology, operations, finance, and human resources groups and
our other administrative functions, including salaries, bonuses, employee
benefits, and stock-based compensation expense. Overhead costs such as
facilities, net of sublease income, and annual fees for cloud-based information
technology systems are allocated to these categories according to the number of
employees in each group.



                                       23
--------------------------------------------------------------------------------


Effective from the first quarter of 2021, we have modified our key metrics to
focus on our contract value ("CV") products (as described below) in comparison
to our prior metrics which included measures of our broader product portfolio.
For 2021, we have focused on increasing our CV product bookings and have
modified our compensation programs and metrics accordingly. We are focusing on
CV products as these products are our most profitable products and historically
our contracts for CV products have renewed at high rates (as measured by our
client retention and wallet retention metrics). Our CV products make up
essentially all of our research revenues.

We have included the historical calculation of the metrics below, dating back to the first quarter of 2019, on the investor relations section of our website.


Contract value, client retention, wallet retention, and number of clients are
metrics that we believe are important to understanding our research business. We
define these metrics as follows:

?
Contract value (CV) - is defined as the value attributable to all of our
recurring research-related contracts. Contract value is calculated as the
annualized value of all contracts in effect at a specific point in time, without
regard to how much revenue has already been recognized. Contract value primarily
consists of subscription-based contracts for which revenue is recognized on a
ratable basis, except for the entitlements embedded in our subscription
products, such as event tickets and advisory sessions, for which the revenue is
recognized when the item is utilized. Contract value also includes our reprint
products, as these products are used throughout the year by our clients and are
typically renewed.
?
Client retention - represents the percentage of client companies (defined as all
clients that buy a CV product) at the prior year measurement date that have
active contracts at the current year measurement date.
?
Wallet retention - represents a measure of the CV we have retained with clients
over a twelve-month period. Wallet retention is calculated on a percentage basis
by dividing the annualized contract value of our current clients, who were also
clients a year ago, by the total annualized contract value from a year ago.
?
Clients - is calculated at the enterprise level as all clients that have an
active CV contract.

Client retention and wallet retention are not necessarily indicative of the rate of future retention of our revenue base. A summary of our key metrics is as follows (dollars in millions):

                           As of             Absolute        Percentage
                       September 30,         Increase         Increase
                     2021        2020       (Decrease)       (Decrease)
Contract value      $ 331.0     $ 295.6     $      35.4               12 %
Client retention         78 %        71 %             7               10 %
Wallet retention         99 %        86 %            13               15 %
Number of clients     2,964       2,750             214                8 %


Contract value increased 12% at September 30, 2021 compared to the prior year
period. Client retention and wallet retention increased 10% and 15%,
respectively, at September 30, 2021 compared to the prior year period. These
metrics were at their lows during the second and third quarters of 2020 as
contract bookings declined during 2020 due to the pandemic. We have seen an
improvement in these metrics from their lows in the middle of 2020 as contract
bookings expanded during the second half of 2020 and the first three quarters of
2021.

Management's discussion and analysis of financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles in the
United States of America ("GAAP"). The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an ongoing basis, we evaluate our policies and
estimates, including but not limited to, those related to our revenue
recognition, leases, goodwill, intangible and other long-lived assets, and
income taxes. Management bases its estimates on historical experience, data
available at the time the estimates are made and various assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. Our critical
accounting policies and estimates are described in our Annual Report on Form
10-K for the year ended December 31, 2020.



                                       24

--------------------------------------------------------------------------------

Results of Operations

The following table sets forth our statement of income as a percentage of total revenues for the periods indicated:



                                      Three Months Ended           Nine Months Ended
                                         September 30,               September 30,
                                       2021          2020           2021         2020
Revenues:
Research revenues                         67.6 %       68.6 %          65.4 %      68.1 %
Consulting revenues                       31.7         30.4            32.4        30.0
Events revenues                            0.7          1.0             2.2         1.9
Total revenues                           100.0        100.0           100.0       100.0
Operating expenses:
Cost of services and fulfillment          42.2         42.5            41.5        40.6
Selling and marketing                     35.0         38.9            34.2        37.0
General and administrative                12.2         11.5            11.6        10.9
Depreciation                               2.0          2.3             1.9         2.3
Amortization of intangible assets          3.1          4.3             3.2         4.3
Integration costs                            -          0.3             0.1         1.2
Income from operations                     5.5          0.2             7.5         3.7
Interest expense                          (0.9 )       (1.2 )          (0.9 )      (1.2 )
Other expense, net                        (0.1 )       (0.3 )          (0.2 )      (0.1 )
Gain on investments, net                     -            -               -         0.7
Income (loss) before income taxes          4.5         (1.3 )           6.4         3.1
Income tax expense                         0.7          2.2             1.7         0.8
Net income (loss)                          3.8 %       (3.5 %)          4.7 %       2.3 %



Three and Nine Months Ended September 30, 2021 and 2020

Revenues



                                        Three Months Ended             Absolute        Percentage
                                          September 30,                Increase         Increase
                                       2021             2020          (Decrease)       (Decrease)
                                      (dollars in millions)
Total revenues                     $       118.1      $   108.6      $        9.6                9 %
Research revenues                  $        79.9      $    74.4      $        5.4                7 %
Consulting revenues                $        37.4      $    33.0      $        4.4               13 %
Events revenues                    $         0.9      $     1.1      $       (0.3 )            (23 %)
Revenues attributable to
customers outside of
  the U.S.                         $        27.6      $    22.4      $        5.2               23 %
Percentage of revenue
attributable to customers
  outside of the U.S.                         23 %           21 %               2               10 %
Number of events                               2              2                 -               -( %)




                                        Nine Months Ended              Absolute        Percentage
                                          September 30,                Increase         Increase
                                       2021             2020          (Decrease)       (Decrease)
                                      (dollars in millions)
Total revenues                     $       360.6      $   328.5      $       32.1               10 %
Research revenues                  $       235.8      $   223.7      $       12.1                5 %
Consulting revenues                $       116.9      $    98.5      $       18.4               19 %
Events revenues                    $         7.8      $     6.3      $        1.6               25 %
Revenues attributable to
customers outside of
  the U.S.                         $        82.5      $    65.8      $       16.7               25 %
Percentage of revenue
attributable to customers
  outside of the U.S.                         23 %           20 %               3               15 %
Number of events                               5              5                 -               -( %)






                                       25
--------------------------------------------------------------------------------


Total revenues increased 9% and 10% during the three and nine months ended
September 30, 2021, respectively, compared to the prior year periods, with 1% of
the increase due to changes in foreign currency. Revenues from customers outside
the U.S. increased 23% and 25% during the three and nine months ended September
30, 2021, respectively, due to an increase in revenues in Europe, the United
Kingdom, Asia Pacific region, and Canada. Approximately 2% and 6% of the
increase for the three and nine months ended September 30, 2021, respectively,
was due to changes in foreign currencies.

Research revenues are recognized as revenue primarily on a ratable basis over
the term of the contracts, which are generally twelve-month periods. Research
revenues increased 7% and 5% during the three and nine months ended September
30, 2021, respectively, compared to the prior year periods, with 1% of the
increase in each period due to changes in foreign currency. The increase in
revenues was primarily due to increased contract value during these periods.

Consulting revenues increased 13% and 19% during the three and nine months ended
September 30, 2021, respectively, compared to the prior year periods, with 1% of
the increase in each period due to changes in foreign currency. The increase in
revenues during the three and nine months ended September 30, 2021 was primarily
due to continued strong demand for our content marketing and strategy consulting
offerings.

Events revenues decreased 23% and increased 25% during the three and nine months
ended September 30, 2021, respectively, compared to the prior year periods. For
the nine months ended September 30, 2021, 2% of the increase is due to changes
in foreign currency. The decrease in revenues during the three months ended
September 30, 2021 was primarily due to lower sponsorship revenues and hosting
smaller events in the three months ended September 30, 2021 compared to the
prior period. The increase in revenues during the nine months ended September
30, 2021 was primarily due to higher sponsorship revenues.

Refer to the "Segments Results" section below for a discussion of revenues and expenses by segment.

Cost of Services and Fulfillment



                                       Three Months Ended             Absolute        Percentage
                                          September 30,               Increase         Increase
                                      2021             2020          (Decrease)       (Decrease)
Cost of services and fulfillment
(dollars in millions)              $     49.8       $     46.1      $        3.7                8 %
Cost of services and fulfillment
as a percentage of
  total revenues                         42.2 %           42.5 %            (0.3 )             (1 %)
Service and fulfillment
employees
  (at end of period)                      796              794                 2               -( %)




                                        Nine Months Ended            Absolute        Percentage
                                          September 30,              Increase         Increase
                                       2021           2020          (Decrease)       (Decrease)
Cost of services and fulfillment
(dollars in millions)               $    149.6      $   133.4      $       16.1               12 %
Cost of services and fulfillment
as a percentage of
  total revenues                          41.5 %         40.6 %             0.9                2 %




Cost of services and fulfillment expenses increased 8% during the three months
ended September 30, 2021 compared to the prior year period, with 1% of the
increase due to changes in foreign currencies. The increase was primarily due to
(1) a $3.0 million increase in professional services costs primarily due to
increases in outsourced services related to revenue delivery and contractor
costs, and (2) a $0.7 million increase in event costs primarily due to hotel
cancellation fees incurred as a result of switching from in-person to virtual
events.



Cost of services and fulfillment expenses increased 12% during the nine months
ended September 30, 2021 compared to the prior year period, with 2% of the
increase due to changes in foreign currencies. The increase was primarily due to
(1) a $10.4 million increase in compensation and benefit costs due to
reinstating incentive bonus programs and other benefits that were eliminated as
part of the cost-reduction measures implemented in 2020 as a result of the
impact of the COVID-19 pandemic and merit increases, partially offset by a
decrease in headcount in the first half of the year compared to the prior year
period, (2) a $6.4 million increase in professional services costs primarily due
to increases in outsourced services related to revenue delivery, contractor and
survey costs, and (3) a $0.6 million increase in event costs primarily due to
hotel cancellation fees incurred as a result of switching from in-person to
virtual events. These increases were partially offset by a $1.5 million decrease
in travel and entertainment expenses due to reduced travel as a result of the
COVID-19 pandemic.



                                       26
--------------------------------------------------------------------------------

Selling and Marketing



                                       Three Months Ended             Absolute        Percentage
                                          September 30,               Increase         Increase
                                      2021             2020          (Decrease)       (Decrease)
Selling and marketing expenses
(dollars in millions)              $     41.3       $     42.2      $       (0.9 )             (2 %)
Selling and marketing expenses
as a percentage of
  total revenues                         35.0 %           38.9 %            (3.9 )            (10 %)
Selling and marketing employees
(at end of period)                        728              795               (67 )             (8 %)




                                       Nine Months Ended            Absolute        Percentage
                                         September 30,              Increase         Increase
                                      2021           2020          (Decrease)       (Decrease)
Selling and marketing expenses
(dollars in millions)              $    123.2      $   121.6      $        1.6                1 %
Selling and marketing expenses
as a percentage of
  total revenues                         34.2 %         37.0 %            (2.8 )             (8 %)

Selling and marketing expenses decreased 2% during the three months ended September 30, 2021 compared to the prior year period, and decreased 3% when excluding the effect of changes in foreign currencies. The decrease was primarily due to a $1.2 million decrease in compensation and benefit costs due to a decrease in headcount, partially offset by an increase in incentive bonuses.


Selling and marketing expenses increased 1% during the nine months ended
September 30, 2021 compared to the prior year period, and were essentially flat
when excluding the effect of changes in foreign currencies. The increase was
primarily due to (1) a $2.9 million increase in compensation and benefit costs
due to reinstating incentive bonus programs and other benefits that were
eliminated as part of the cost-reduction measures implemented in 2020 as a
result of the impact of the COVID-19 pandemic, merit increases and an increase
in commissions expense, partially offset by a decrease in headcount, and (2) a
$1.0 million increase in professional services costs primarily due to an
increase in advertising expense. These increases were partially offset by a $1.5
million decrease in travel and entertainment expenses due to reduced travel as a
result of the COVID-19 pandemic.

General and Administrative



                                        Three Months Ended             Absolute        Percentage
                                           September 30,               Increase         Increase
                                       2021             2020          (Decrease)       (Decrease)
General and administrative
expenses (dollars in
  millions)                         $     14.4       $     12.5      $        1.9               15 %
General and administrative
expenses as a percentage
  of total revenues                       12.2 %           11.5 %             0.7                6 %
General and administrative
employees (at end of
  period)                                  239              234                 5                2 %




                                        Nine Months Ended             Absolute        Percentage
                                          September 30,               Increase         Increase
                                       2021            2020          (Decrease)       (Decrease)
General and administrative
expenses (dollars in
  millions)                         $     41.9       $    35.9      $        6.0               17 %
General and administrative
expenses as a percentage
  of total revenues                       11.6 %          10.9 %             0.7                6 %




General and administrative expenses increased 15% during the three months ended
September 30, 2021 compared to the prior year period, with 1% of the increase
due to changes in foreign currencies. The increase was primarily due to (1) a
$1.0 million increase in compensation and benefit costs due to an increase in
incentive bonuses and merit increases, and (2) a $0.6 million increase in
professional services costs.





                                       27
--------------------------------------------------------------------------------


General and administrative expenses increased 17% during the nine months ended
September 30, 2021 compared to the prior year period, with 2% of the increase
due to changes in foreign currencies. The increase was primarily due to (1) a
$4.6 million increase in compensation and benefit costs due to reinstating
incentive bonus programs and other benefits that were eliminated as part of the
cost-reduction measures implemented in 2020 as a result of the impact of the
COVID-19 pandemic and merit increases, and (2) a $1.3 million increase in
professional services costs. These increases were partially offset by a $0.5
million decrease in stock compensation expense.

Depreciation


Depreciation expense decreased by $0.2 million and $0.5 million during the three
and nine months ended September 30, 2021, respectively, compared to the prior
year periods primarily due to software assets becoming fully depreciated.

Amortization of Intangible Assets


Amortization expense decreased by $1.0 million and $2.6 million during the three
and nine months ended September 30, 2021, respectively, compared to the prior
year periods primarily due to a certain intangible asset becoming fully
amortized in 2020.

Integration Costs


Integration costs consist of direct and incremental costs to integrate acquired
companies and in 2020 primarily consisted of certain fair value adjustments,
consulting, severance, accounting and tax professional fees, and expenses
related to unused lease facilities.

Integration costs decreased by $0.3 million and $3.5 million during the three
and nine months ended September 30, 2021, respectively, compared to the prior
year periods due to the substantial completion of the integration of
SiriusDecisions, Inc. (acquired at the beginning of 2019) during 2020.
Integration costs in 2021 relate to unused lease facilities from the
SiriusDecisions acquisition.

We do not expect to incur integration costs during the remainder of the year ending December 31, 2021.


Interest Expense

Interest expense consists of interest on our borrowings and realized gains
(losses) on the related interest rate swap. Interest expense decreased by $0.2
million and $0.9 million during the three and nine months ended September 30,
2021, respectively, compared to the prior year periods due to lower average
outstanding borrowings and a lower effective interest rate.

Other Expense, Net


Other expense, net primarily consists of gains (losses) on foreign currency,
gains (losses) on foreign currency forward contracts, and interest income. Other
expense, net decreased $0.1 million and increased $0.7 million during the three
and nine months ended September 30, 2021, respectively, compared to the prior
year periods. The increase during the nine months ended September 30, 2021, was
primarily due to an increase in foreign currency losses.

Gain on Investments, Net


Gain on investments, net primarily represents our share of equity method
investment gains and losses from our technology-related investment funds. Gain
on investments, net decreased $2.4 million during the nine months ended
September 30, 2021 compared to the prior year period. The decrease during the
nine months ended September 30, 2021, was primarily due to a decrease in
investment gains generated by the underlying funds.

Income Tax Expense

                                      Three Months Ended           Absolute        Percentage
                                         September 30,             Increase         Increase
                                      2021           2020         (Decrease)       (Decrease)
Provision for income taxes
(dollars in millions)               $     0.8      $    2.4       $      (1.6 )            (68 %)
Effective tax rate                       14.5 %      (176.7 %)          191.2              108 %




                                         Nine Months Ended            Absolute        Percentage
                                           September 30,              Increase         Increase
                                        2021            2020         (Decrease)       (Decrease)
Provision for income taxes
(dollars in millions)                $      6.2       $    2.7      $        3.6              134 %
Effective tax rate                         27.0 %         26.0 %             1.0                4 %






                                       28
--------------------------------------------------------------------------------

Income tax expense increased by $3.6 million during the nine months ended September 30, 2021 compared to the prior year period primarily due to the increase in overall U.S. profitability. For the full year 2021, we anticipate that our effective tax rate will be approximately 27%.

Segment Results


Our operations are grouped into three segments: Research, Consulting, and
Events. These segments are based on our management structure and how management
uses financial information to evaluate performance and determine how to allocate
resources. Our products and services are delivered through each segment as
described below. Additionally, the tables below include the reclassification of
revenues for the components of our CV subscription research products, as
described further in Note 1: Interim Consolidated Financial Statements in the
Notes to Consolidated Financial Statements.

The Research segment includes the revenues from all of our research products as
well as consulting revenues from advisory services (such as speeches and
advisory days) delivered by our research organization. Research segment costs
include the cost of the organizations responsible for developing and delivering
these products in addition to the cost of the product management organization
that is responsible for product pricing and packaging and the launch of new
products.

The Consulting segment includes the revenues and the related costs of our project consulting organization. The project consulting organization delivers a majority of our project consulting revenue and certain advisory services.

The Events segment includes the revenues and the costs of the organization responsible for developing and hosting in-person and virtual events.


Segment expenses include the direct expenses of each segment organization and
exclude selling and marketing expenses, general and administrative expenses,
stock-based compensation expense, depreciation expense, adjustments to incentive
bonus compensation from target amounts, amortization of intangible assets,
interest and other expense, and gains on investments. The accounting policies
used by the segments are the same as those used in the consolidated financial
statements.



                                         Research        Consulting         Events
                                         Segment           Segment          Segment        Consolidated
                                                             (dollars in thousands)
Three Months Ended September 30, 2021
Research revenues                       $   79,876      $           -      $       -      $       79,876
Consulting revenues                         10,587             26,806              -              37,393
Events revenues                                  -                  -            867                 867
Total segment revenues                      90,463             26,806            867             118,136
Segment expenses                           (28,657 )          (13,061 )       (1,966 )           (43,684 )
Year over year revenue change                    5 %               27 %          (23 %)                9 %
Year over year expense change                   -( %)              35 %           53 %                10 %




                                         Research        Consulting
                                          Segment          Segment        Events Segment       Consolidated
                                                               (dollars in thousands)
Three Months Ended September 30, 2020
Research revenues                       $    74,445     $           -     $             -     $       74,445
Consulting revenues                          11,878            21,123                   -             33,001
Events revenues                                   -                 -               1,131              1,131
Total segment revenues                       86,323            21,123               1,131            108,577
Segment expenses                            (28,645 )          (9,646 )            (1,284 )          (39,575 )




                                        Research        Consulting         Events
                                        Segment           Segment          Segment        Consolidated
                                                            (dollars in 

thousands)

Nine Months Ended September 30, 2021
Research revenues                      $  235,846      $           -      $       -      $      235,846
Consulting revenues                        36,160             80,743              -             116,903
Events revenues                                 -                  -          7,838               7,838
Total segment revenues                    272,006             80,743          7,838             360,587
Segment expenses                          (88,791 )          (38,237 )       (5,712 )          (132,740 )
Year over year revenue change                   5 %               30 %           25 %                10 %
Year over year expense change                   8 %               28 %           11 %                14 %






                                       29
--------------------------------------------------------------------------------



                                        Research        Consulting
                                         Segment          Segment        Events Segment       Consolidated
                                                              (dollars in thousands)
Nine Months Ended September 30, 2020
Research revenues                      $   223,746     $           -     $             -     $      223,746
Consulting revenues                         36,388            62,076                   -             98,464
Events revenues                                  -                 -               6,253              6,253
Total segment revenues                     260,134            62,076               6,253            328,463
Segment expenses                           (81,979 )         (29,766 )            (5,167 )         (116,912 )




Research segment revenues increased 5% during both the three and nine months
ended September 30, 2021, compared to the prior year periods. For the three and
nine months ended September 30, 2021, research product revenues within this
segment increased 7% and 5%, respectively, which primarily resulted from
increased contract value during this period. For the three and nine months ended
September 30, 2021, consulting product revenues within this segment decreased
11% and 1%, respectively. For the three months ended September 30, 2021, the
decrease was primarily due to decreased delivery of both advisory and consulting
services. For the nine months ended September 30, 2021, the decrease was
primarily due to decreased delivery of consulting services, partially offset by
increased delivery of advisory services.

Research segment expenses remained essentially consistent for the three months
ended September 30, 2021 and increased 8% during the nine months ended September
30, 2021, compared to the prior year periods. The increase in expenses during
the nine months ended September 30, 2021 was primarily due to (1) a $5.0 million
increase in compensation and benefit costs primarily due to an increase in
incentive bonuses and merit increases, partially offset by a decrease in
headcount in the first half of the year compared to the prior year and (2) a
$2.6 million increase in professional services costs due to an increase in
survey costs, new product development, and contractor costs. These increases
were partially offset by a $1.1 million decrease in travel and entertainment
expenses due to reduced travel as a result of the COVID-19 pandemic.

Consulting segment revenues increased 27% and 30% during the three and nine months ended September 30, 2021, respectively, compared to the prior year periods. The increase in revenues during the three and nine months ended September 30, 2021 was primarily due to continued strong demand for our content marketing and strategy consulting offerings.


Consulting segment expenses increased 35% and 28% during the three and nine
months ended September 30, 2021, respectively, compared to the prior year
periods. The increase in expenses during the three months ended September 30,
2021 was primarily due to (1) a $1.8 million increase in professional services
primarily due to an increase in outsourced services related to revenue delivery
and contractor costs and (2) a $1.5 million increase in compensation and benefit
costs primarily due to an increase in incentive bonuses and merit increases. The
increase in expenses during the nine months ended September 30, 2021 was
primarily due to (1) a $4.7 million increase in professional services primarily
due to an increase in outsourced services related to revenue delivery and
contractor costs, and (2) a $4.0 million increase in compensation and benefit
costs primarily due to reinstating incentive bonus programs and other benefits
that were eliminated as part of the cost-reduction measures implemented in 2020
as a result of the impact of the COVID-19 pandemic and merit increases,
partially offset by a decrease in headcount in the first half of the year
compared to prior year.

Event segment revenues decreased 23% and increased 25% during the three and nine
months ended September 30, 2021, respectively, compared to the prior year
periods. The decrease in revenues during the three months ended September 30,
2021 was primarily due to lower sponsorship revenues and hosting smaller events
in the three months ended September 30, 2021 compared to the prior year period.
The increase in revenues during the nine months ended September 30, 2021 was
primarily due to higher sponsorship revenues.

Event segment expenses increased 53% and 11% during the three and nine months
ended September 30, 2021, respectively, compared to the prior year periods. The
increase in expenses during the three and nine months ended September 30, 2021
was primarily due to hotel cancellation fees incurred as a result of switching
from in-person to virtual events.

Liquidity and Capital Resources


We have historically financed our operations primarily through funds generated
from operations. Research revenues, which constituted approximately 65% of our
revenues during the nine months ended September 30, 2021, are generally
renewable annually and are typically payable in advance. We generated cash from
operating activities of $85.0 million and $29.2 million during the nine months
ended September 30, 2021 and 2020, respectively. The $55.8 million increase in
cash provided from operations for the nine months ended September 30, 2021
compared to the prior year period was primarily due to a $40.5 million increase
in cash generated from accounts receivable and deferred revenue due to an
increase in contract bookings and strong collections activity and a $9.6 million
reduction in cash used for working capital (excluding accounts receivable and
deferred revenue).



                                       30
--------------------------------------------------------------------------------


During the nine months ended September 30, 2021, we used cash in investing
activities of $26.9 million primarily for $17.0 million in net purchases of
marketable investments and $9.8 million of purchases of property and equipment,
primarily consisting of computer software, leasehold improvements and equipment.
During the nine months ended September 30, 2020, we used cash in investing
activities of $2.9 million primarily for $7.3 million of purchases of property
and equipment, primarily consisting of software and leasehold improvements. This
was partially offset by a $4.3 million distribution received from an equity
method investment.

We used $15.5 million of cash from financing activities during the nine months
ended September 30, 2021 primarily due to $10.6 million for purchases of our
common stock, $9.4 million of repayments of our term loan, as well as $3.3
million in taxes paid related to net share settlements of restricted stock
units, partially offset by $7.8 million of net proceeds from the issuance of
common stock under our stock-based incentive plans. We used $21.5 million of
cash in financing activities during the nine months ended September 30, 2020
primarily due to $21.0 million of repayments of debt that included $14.0 million
of discretionary payments on our revolving credit facility and $7.0 million of
required repayments of our term loan.

As of September 30, 2021, our remaining stock repurchase authorization was
approximately $49.5 million. In October 2021, our Board of Directors increased
our stock repurchase authorization by an additional $50.0 million. We plan to
repurchase our common stock as market conditions warrant.

We entered into a $200.0 million credit agreement on January 3, 2019. The credit
agreement provides for: (1) senior secured term loans in an aggregate principal
amount of $125.0 million (the "Term Loans") and, (2) a senior secured revolving
credit facility in an aggregate principal amount of $75.0 million (the
"Revolving Credit Facility" and, together with the Term Loans, the
"Facilities"). Additional information is provided in Note 4 - Debt in the Notes
to Consolidated Financial Statements. The Facilities mature on January 3, 2024.
As of September 30, 2021, we had remaining principal payments on the Facilities
totaling $100.0 million, contractually due as follows: $3.1 million in 2021,
$28.1 million within 2022 and 2023, and $68.8 million in 2024.

The Facilities contain certain customary restrictive loan covenants, including
among others, financial covenants that apply a maximum leverage ratio and
minimum fixed charge coverage ratio. The negative covenants limit, subject to
various exceptions, our ability to incur additional indebtedness, create liens
on assets, merge, consolidate, liquidate or dissolve any part of the Company,
sell assets, pay dividends or other payments in respect to capital stock, change
fiscal year, or enter into certain transactions with affiliates and
subsidiaries. We were in full compliance with the covenants as of September 30,
2021 and expect to continue to be in compliance through the next 12 months.

Additional future contractual cash obligations extending over the next 12 months
and beyond primarily consist of operating lease payments. We lease office space
under non-cancelable operating lease agreements (refer to Note 5 - Leases in the
Notes to Consolidated Financial Statements for additional information). The
remaining duration of non-cancelable office space leases ranges from less than 1
year to 10 years. As of September 30, 2021, remaining non-cancelable lease
payments are due as follows: $3.8 million in 2021, $33.1 million within 2022 and
2023, $30.4 million within 2024 and 2025, and $27.0 million beyond 2025.

In addition to the contractual cash commitments included above, we have other
payables and liabilities that may be legally enforceable but are not considered
contractual commitments.

As of September 30, 2021, we had cash and cash equivalents of $129.3 million.
This balance includes $65.7 million held outside of the U.S. If the cash outside
of the U.S. is needed for operations in the U.S., we would be required to accrue
and pay U.S. state taxes and may be required to pay withholding taxes to foreign
jurisdictions to repatriate these funds. However, our intent is to permanently
reinvest these funds outside of the U.S. and our current plans do not
demonstrate a need to repatriate these funds for our U.S. operations. We believe
that our current cash balance and cash flows from operations will satisfy
working capital, financing activities, and capital expenditure requirements for
the next twelve months.

Recent Accounting Pronouncements


Refer to Note 1 - Interim Consolidated Financial Statements in the Notes to
Consolidated Financial Statements for a full description of recent accounting
pronouncements including the expected dates of adoption and effects on results
of operations and financial condition.



                                       31

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses

All news about FORRESTER RESEARCH, INC.
05/19GLOBAL ACCESSIBILITY AWARENESS DAY 2 : Forrester Partners With Work Without Limits To Incr..
PR
05/17NextPoint Financial Appoints Jean Birch New Chair of the Board
MT
05/16FORRESTER RESEARCH, INC. : Entry into a Material Definitive Agreement, Change in Directors..
AQ
05/12INSIDER SELL : Forrester Research
MT
05/11FORRESTER RESEARCH, INC. : Submission of Matters to a Vote of Security Holders (form 8-K)
AQ
05/06FORRESTER RESEARCH, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION A..
AQ
05/05FORRESTER RESEARCH : Q1 Earnings Snapshot
AQ
05/05TRANSCRIPT : Forrester Research, Inc., Q1 2022 Earnings Call, May 05, 2022
CI
05/05Earnings Flash (FORR) FORRESTER Posts Q1 EPS $0.45
MT
05/05Earnings Flash (FORR) FORRESTER Reports Q1 Revenue $125M
MT
More news
Analyst Recommendations on FORRESTER RESEARCH, INC.
More recommendations