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FORRESTER RESEARCH, INC.

(FORR)
  Report
Delayed Nasdaq  -  04:00 2022-10-05 pm EDT
38.17 USD   -0.24%
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FORRESTER RESEARCH, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

08/05/2022 | 09:04am 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 changing stakeholder
expectations, product development, holding hybrid events, possible acquisitions,
future dividends, future share repurchases, future growth rates, operating
income and cash from operations, future deferred revenue, 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,
any adverse economic conditions that result in a reduction in technology
spending or demand for our products and services, 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, 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,
2021. We undertake no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events, or otherwise.

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. All events during 2021 were held as virtual
events, however, we intend to hold our events during 2022 as hybrid events,
consisting of both in-person and virtual experiences. All events in the first
half of 2022 were held as hybrid events, including two of our flagship events,
B2B Summit North America and CX North America.

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 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.

                                       22
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Our key metrics focus on our contract value ("CV") products. 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 calculate CV at the foreign currency rates used for internal planning
purposes each year. For comparative purposes, we have recast historical CV at
the current year foreign currency rates. We have included the recast CV metric
below for the six months ended June 30, 2021, and we have also provided recast
CV amounts dating back to the second quarter of 2020, 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 products 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
                         June 30,            Increase         Increase
                     2022        2021       (Decrease)       (Decrease)
Contract value      $ 349.4     $ 317.7     $      31.7               10 %
Client retention         76 %        77 %            (1 )             (1 %)
Wallet retention         99 %        96 %             3                3 %
Number of clients     2,928       2,940             (12 )             (- %)


Contract value increased 10% at June 30, 2022 compared to the prior year period.
The increase in contract value was primarily due to an increase in contract
bookings due to strong demand for our contract value products. Client retention
decreased by 1 percentage point and wallet retention increased by 3 percentage
points at June 30, 2022 compared to the prior year period. The increase in
wallet retention was primarily due to the enrichment of existing clients when
they renewed their contracts. Compared to March 31, 2022, wallet retention and
client retention decreased by 4 percentage points and 1 percentage point,
respectively. The decrease was primarily due to elongated sales cycles, lower
conversion rates and sales capacity restraints.

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 estimates,
including but not limited to, those related to our revenue recognition,
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
estimates are described in our Annual Report on Form 10-K for the year ended
December 31, 2021.

                                       23
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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          Six Months Ended
                                           June 30,                   June 30,
                                       2022          2021         2022         2021
Revenues:
Research revenues                         60.3 %       63.0 %        64.1 %      64.3 %
Consulting revenues                       26.5         31.8          28.4        32.8
Events revenues                           13.2          5.2           7.5         2.9
Total revenues                           100.0        100.0         100.0       100.0
Operating expenses:
Cost of services and fulfillment          41.1         40.6          41.8        41.1
Selling and marketing                     30.3         33.1          32.6        33.8
General and administrative                10.7         11.1          11.5        11.3
Depreciation                               1.6          1.8           1.7         2.0
Amortization of intangible assets          2.3          3.1           2.5         3.2
Integration costs                            -          0.1             -         0.1
Income from operations                    14.0         10.2           9.9         8.5
Interest expense                          (0.4 )       (0.8 )        (0.4 )      (0.9 )
Other income (expense), net                0.1         (0.2 )        (0.1 )      (0.3 )
Gain on investments, net                     -            -           0.2           -
Income before income taxes                13.7          9.2           9.6         7.3
Income tax expense                         4.3          2.7           3.0         2.2
Net income                                 9.4 %        6.5 %         6.6 %       5.1 %



Three and Six Months Ended June 30, 2022 and 2021

Revenues

                                          Three Months Ended             Absolute         Percentage
                                               June 30,                  Increase          Increase
                                         2022              2021         (Decrease)        (Decrease)
                                         (dollars in millions)
Total revenues                       $       148.2      $    128.7     $        19.6                15 %
Research revenues                    $        89.4      $     81.0     $         8.4                10 %
Consulting revenues                  $        39.3      $     41.0     $        (1.7 )              (4 %)
Events revenues                      $        19.5      $      6.7     $        12.8               191 %
Revenues attributable to customers
outside of
  the U.S.                           $        29.8      $     28.0     $         1.8                 6 %
Percentage of revenue attributable
to customers
  outside of the U.S.                           20 %            22 %              (2 )              (9 %)



                                           Six Months Ended              Absolute         Percentage
                                               June 30,                  Increase          Increase
                                         2022              2021         (Decrease)        (Decrease)
                                         (dollars in millions)
Total revenues                       $      273.2       $    242.5     $        30.8                13 %
Research revenues                    $      175.2       $    156.0     $        19.3                12 %
Consulting revenues                  $       77.7       $     79.5     $        (1.8 )              (2 %)
Events revenues                      $       20.3       $      7.0     $        13.3               191 %
Revenues attributable to customers
outside of
  the U.S.                           $       57.3       $     54.8     $         2.5                 5 %
Percentage of revenue attributable
to customers
  outside of the U.S.                          21 %             23 %              (2 )              (9 %)




                                       24
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Total revenues increased 15% and 13% during the three and six months ended June
30, 2022, respectively, compared to the prior year periods, and increased by 17%
and 14% when excluding the effect of changes in foreign currencies. Revenues
from customers outside the U.S. increased 6% and 5% during the three and six
months ended June 30, 2022, respectively, due to an increase in revenues in the
United Kingdom, Asia Pacific region, and Canada partially offset by a decrease
in revenues in Europe. Revenues from customers outside the U.S. increased by
approximately 13% and 10% when excluding the effect of 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 10% and 12% during the three and six months ended June 30,
2022, respectively, compared to the prior year periods, and increased by 12% and
13% when excluding the effect of changes in foreign currencies. The increase in
revenues was primarily due to increased contract value, which was driven by
strong demand for our products and an increase in our wallet retention rate
compared to the prior year period.

Consulting revenues decreased 4% and 2% during the three and six months ended
June 30, 2022, respectively, compared to the prior year periods, and decreased
by 3% and 1% when excluding the effect of changes in foreign currencies. The
decrease in revenues during the three and six months ended June 30, 2022 was
primarily due to decreased delivery of advisory services by our research
analysts as they shifted more of their efforts to developing and delivering our
CV products.

Events revenues increased 191% during both the three and six months ended June
30, 2022 compared to the prior year periods. The increase in revenues during the
three and six months ended June 30, 2022 was primarily due to an increase in
sponsorship revenues, as well as paid ticket attendance, primarily due to the
return of in-person attendance at our events.

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
                                               June 30,                  Increase          Increase
                                        2022              2021          (Decrease)        (Decrease)
Cost of services and fulfillment
(dollars in millions)                $     61.0       $       52.3     $         8.7                17 %
Cost of services and fulfillment
as a percentage of
  total revenues                           41.1 %             40.6 %             0.5                 1 %

Service and fulfillment employees

  (at end of period)                        879                764               115                15 %



                                          Six Months Ended            Absolute          Percentage
                                              June 30,                Increase           Increase
                                        2022            2021         (Decrease)         (Decrease)
Cost of services and fulfillment
(dollars in millions)                $     114.2     $     99.7     $        14.5                 15 %
Cost of services and fulfillment
as a percentage of
  total revenues                            41.8 %         41.1 %             0.7                  2 %


Cost of services and fulfillment expenses increased 17% during the three months
ended June 30, 2022 compared to the prior year period, and increased by 19% when
excluding the effect of changes in foreign currencies. The increase was
primarily due to (1) a $6.9 million increase in event expenses due to the return
of in-person attendance at our events, (2) a $0.8 million increase in stock
compensation expense, (3) a $0.6 million increase in travel and entertainment
expenses due to the return of in-person attendance at our events and increased
general business travel, and (4) a $0.6 million increase in professional
services costs primarily due to increases in contractor costs.

Cost of services and fulfillment expenses increased 15% during the six months
ended June 30, 2022 compared to the prior year period, and increased by 16% when
excluding the effect of changes in foreign currencies. The increase was
primarily due to (1) a $6.9 million increase in event expenses due to the return
of in-person attendance at our events,(2) a $3.0 million increase in
compensation and benefit costs due to an increase in headcount, benefit costs,
and merit increases, which were partially offset by lower incentive bonus costs,
(3) a $1.7 million increase in professional services costs primarily due to
increases in survey and contractor costs, (4) a $1.3 million increase in stock
compensation expense, (5) a $0.8 million increase in computer software costs,
and (6) a $0.6 million increase in travel and entertainment expenses due to the
return of in-person attendance at our events and increased general business
travel.

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

Selling and Marketing

                                         Three Months Ended             Absolute          Percentage
                                              June 30,                  Increase           Increase
                                       2022              2021          (Decrease)         (Decrease)
Selling and marketing expenses
(dollars in millions)               $     45.0       $       42.6     $         2.4                  6 %
Selling and marketing expenses as
a percentage of
  total revenues                          30.3 %             33.1 %            (2.8 )               (8 %)
Selling and marketing employees
(at end of period)                         780                720                60                  8 %



                                         Six Months Ended             Absolute          Percentage
                                             June 30,                 Increase           Increase
                                       2022             2021         (Decrease)         (Decrease)
Selling and marketing expenses
(dollars in millions)               $      89.0      $     81.8     $         7.2                   9 %
Selling and marketing expenses as
a percentage of
  total revenues                           32.6 %          33.8 %            (1.2 )                (4 %)


Selling and marketing expenses increased 6% during the three months ended June
30, 2022 compared to the prior year period, and increased by 7% when excluding
the effect of changes in foreign currencies. The increase was primarily due to
(1) a $2.4 million increase in compensation and benefit costs due to an increase
in headcount, commissions expense, and merit increases.

Selling and marketing expenses increased 9% during the six months ended June 30,
2022 compared to the prior year period, and increased by 10% when excluding the
effect of changes in foreign currencies. The increase was primarily due to (1) a
$6.0 million increase in compensation and benefit costs due to an increase in
headcount, commissions expense, benefit costs, and merit increases and (2) a
$0.5 million increase in stock compensation expense.

General and Administrative

                                          Three Months Ended             Absolute          Percentage
                                               June 30,                  Increase           Increase
                                        2022              2021          (Decrease)         (Decrease)
General and administrative
expenses (dollars in
  millions)                          $     15.9       $       14.3     $         1.6                 11 %
General and administrative
expenses as a percentage
  of total revenues                        10.7 %             11.1 %            (0.4 )               (4 %)
General and administrative
employees (at end of
  period)                                   286                235                51                 22 %



                                          Six Months Ended             Absolute          Percentage
                                              June 30,                 Increase           Increase
                                        2022             2021         (Decrease)         (Decrease)
General and administrative
expenses (dollars in
  millions)                          $      31.4      $     27.5     $         3.9                 14 %
General and administrative
expenses as a percentage
  of total revenues                         11.5 %          11.3 %             0.2                  2 %


General and administrative expenses increased 11% during the three months ended
June 30, 2022 compared to the prior year period, and increased by 13% when
excluding the effect of changes in foreign currencies. The increase was
primarily due to a $0.8 million increase in compensation and benefit costs due
to an increase in headcount and merit increases, which were partially offset by
lower incentive bonus costs.

General and administrative expenses increased 14% during the six months ended
June 30, 2022 compared to the prior year period, and increased by 16% when
excluding the effect of changes in foreign currencies. The increase was
primarily due to (1) a $2.2 million increase in compensation and benefit costs
due to an increase in headcount and merit increases, which were partially offset
by lower incentive bonus costs and (2) a $0.5 million increase in professional
services costs.

                                       26
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Depreciation

Depreciation expense remained essentially consistent during the three and six months ended June 30, 2022 compared to the prior year periods.

Amortization of Intangible Assets


Amortization expense decreased by $0.6 million and $1.2 million during the three
and six months ended June 30, 2022, respectively, compared to the prior year
periods primarily due to certain technology intangible assets becoming fully
amortized in 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 $0.5
million and $1.0 million during the three and six months ended June 30, 2022,
respectively, compared to the prior year periods due to lower average
outstanding borrowings.

Other Income (Expense), Net


Other income (expense), net primarily consists of gains (losses) on foreign
currency, gains (losses) on foreign currency forward contracts, and interest
income. Other income, net increased $0.3 million during the three months ended
June 30, 2022 compared to the prior year period. Other expense, net decreased
$0.5 million during the six months ended June 30, 2022 compared to the prior
year period. The decrease for the three and six months ended June 30, 2022 was
primarily due to a decrease 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 increased $0.4 million during the six months ended June 30,
2022 compared to the prior year period. The increase was due to an increase in
investment gains generated by the underlying funds.

Income Tax Expense

                                          Three Months Ended             Absolute         Percentage
                                               June 30,                  Increase          Increase
                                        2022              2021          (Decrease)        (Decrease)
Provision for income taxes
(dollars in millions)                $       6.4       $       3.5     $        2.9                 84 %
Effective tax rate                          31.6 %            29.4 %            2.2                  7 %



                                         Six Months Ended             Absolute          Percentage
                                             June 30,                 Increase           Increase
                                       2022             2021         (Decrease)         (Decrease)
Provision for income taxes
(dollars in millions)               $       8.3      $      5.5     $         2.8                 52 %
Effective tax rate                         31.5 %          30.7 %             0.8                  3 %


Income tax expense increased by $2.8 million during the six months ended June
30, 2022 compared to the prior year period primarily due to the increase in
income from operations. For the full year 2022, we anticipate that our effective
tax rate will be approximately 31%.

Segment Results


We operate in three segments: Research, Consulting, and Events. These segments,
which are also our reportable 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.

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.

                                       27
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The Events segment includes the revenues and the costs of the organization responsible for developing and hosting in-person and virtual events. As of January 1, 2022, we realigned our events sales costs from selling and marketing expense to the Events segment as they now fall under the Events management structure. The 2021 amounts have been revised to conform to the current presentation.


We evaluate reportable segment performance and allocate resources based on
segment revenues and expenses. 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 income (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 June 30, 2022
Research revenues                      $   89,447     $           -     $        -     $       89,447
Consulting revenues                        10,921            28,341              -             39,262
Events revenues                                 -                 -         19,537             19,537
Total segment revenues                    100,368            28,341         19,537            148,246
Segment expenses                          (32,897 )         (14,059 )      (11,051 )          (58,007 )
Year over year revenue change                   7 %               1 %          191 %               15 %
Year over year expense change                  12 %               9 %          181 %               26 %



                                       Research       Consulting
                                       Segment          Segment        Events Segment       Consolidated
                                                            (dollars in 

thousands)

Three Months Ended June 30, 2021
Research revenues                     $   81,002     $           -     $             -     $       81,002
Consulting revenues                       12,842            28,118                   -             40,960
Events revenues                                -                 -               6,708              6,708
Total segment revenues                    93,844            28,118               6,708            128,670
Segment expenses                         (29,417 )         (12,851 )            (3,931 )          (46,199 )



                                        Research       Consulting         Events
                                        Segment          Segment         Segment        Consolidated
                                                           (dollars in thousands)
Six Months Ended June 30, 2022
Research revenues                      $  175,227     $           -     $        -     $      175,227
Consulting revenues                        22,111            55,582              -             77,693
Events revenues                                 -                 -         20,297             20,297
Total segment revenues                    197,338            55,582         20,297            273,217
Segment expenses                          (67,077 )         (28,376 )      (12,802 )         (108,255 )
Year over year revenue change                   9 %               3 %          191 %               13 %
Year over year expense change                  12 %              13 %          133 %               19 %



                                       Research        Consulting
                                        Segment          Segment        Events Segment       Consolidated
                                                             (dollars in thousands)
Six Months Ended June 30, 2021
Research revenues                     $   155,970     $           -     $             -     $      155,970
Consulting revenues                        25,573            53,937                   -             79,510
Events revenues                                 -                 -               6,971              6,971
Total segment revenues                    181,543            53,937               6,971            242,451
Segment expenses                          (60,134 )         (25,176 )            (5,495 )          (90,805 )




                                       28
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Research segment revenues increased 7% and 9% during the three and six months
ended June 30, 2022, respectively, compared to the prior year periods. For the
three and six months ended June 30, 2022, research product revenues within this
segment increased 10% and 12%, respectively, which primarily resulted from
increased contract value during the period. For the three and six months ended
June 30, 2022, consulting product revenues within this segment decreased 15% and
14%, respectively, primarily due to decreased delivery of consulting and
advisory services by our research analysts as they shifted more of their efforts
to developing and delivering our CV products.

Research segment expenses increased 12% during both the three and six months
ended June 30, 2022 compared to the prior year periods. The increase in expenses
during the three months ended June 30, 2022 was primarily due to (1) a $2.5
million increase in compensation and benefit costs primarily due to an increase
headcount and merit increases and (2) a $0.4 million increase in travel and
entertainment expenses. The increase in expenses during the six months ended
June 30, 2022 was primarily due to (1) a $4.8 million increase in compensation
and benefit costs primarily due to an increase headcount, benefit costs, and
merit increases, (2) a $1.2 million increase in professional services costs due
to an increase in survey costs and contractor costs, and (3) a $0.5 million
increase in travel and entertainment expenses.

Consulting segment revenues increased 1% and 3% during the three and six months
ended June 30, 2022, respectively, compared to the prior year periods. The
increase in revenues during the three months ended June 30, 2022 was primarily
due to demand for our content marketing offering. The increase in revenues
during the six months ended June 30, 2022 was primarily due to demand for our
content marketing and strategy consulting offerings.

Consulting segment expenses increased 9% and 13% during the three and six months
ended June 30, 2022, respectively, compared to the prior year periods. The
increase in expenses during the three months ended June 30, 2022 was primarily
due to (1) a $0.8 million increase in compensation and benefit costs primarily
due to an increase headcount and merit increases and (2) a $0.5 million increase
in professional services primarily due to an increase in contractor costs. The
increase in expenses during the six months ended June 30, 2022 was primarily due
to (1) a $2.1 million increase in compensation and benefit costs primarily due
to an increase headcount, benefit costs, and merit increases and (2) a $1.3
million increase in professional services primarily due to an increase in
contractor costs.

Event segment revenues increased 191% during the three and six months ended June
30, 2022, respectively, compared to the prior year periods. The increase in
revenues was primarily due to an increase in sponsorship revenues, as well as
paid ticket attendance, primarily due to the return of in-person events.

Event segment expenses increased 181% and 133% during the three and six months
ended June 30, 2022, respectively, compared to the prior year periods. The
increase in expenses during the three and six months ended June 30, 2022 was
primarily due to a $6.9 million increase in event expenses due to the return of
in-person attendance at our events.

Liquidity and Capital Resources


We have historically financed our operations primarily through funds generated
from operations. Research revenues, which constituted approximately 64% of our
revenues during the six months ended June 30, 2022, are generally renewable
annually and are typically payable in advance. We generated cash from operating
activities of $34.8 million and $70.1 million during the six months ended June
30, 2022 and 2021, respectively. The $35.3 million decrease in cash provided
from operations for the six months ended June 30, 2022 compared to the prior
year period was primarily due to 1) a $23.4 million decrease in cash generated
from accounts receivable and deferred revenue due to an increase in deferred
revenue during the 2021 period from client billings in excess of revenue that
did not recur in the 2022 period and 2) a $17.0 million increase in cash used
for accrued expenses resulting from the payout of year end incentive
compensation.

During the six months ended June 30, 2022, we used cash in investing activities
of $3.6 million primarily for $2.7 million of purchases of property and
equipment, primarily consisting of computer software and equipment, and $1.1
million in net purchases of marketable investments. During the six months ended
June 30, 2021, we used cash in investing activities of $5.2 million for
purchases of property and equipment, primarily consisting of computer software,
leasehold improvements and equipment.

We used $38.3 million of cash from financing activities during the six months
ended June 30, 2022 primarily due to $25.0 million of discretionary repayments
of our revolving credit facility and $15.1 million for purchases of our common
stock, partially offset by $2.1 million of net proceeds from the issuance of
common stock under our stock-based incentive plans. We used $6.5 million of cash
in financing activities during the six months ended June 30, 2021 primarily due
to $6.3 million of repayments of our term loan and $2.7 million for purchases of
our common stock, partially offset by $3.1 million of net proceeds from the
issuance of common stock under our stock-based incentive plans. As of June 30,
2022, our remaining stock repurchase authorization was approximately $75.0
million.

                                       29
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On December 21, 2021, we and certain of our subsidiaries entered into an
amendment of our existing credit facility, dated as of January 3, 2019, with
JPMorgan Chase Bank, N.A., as administrative agent (the "Administrative Agent"),
and the lenders party thereto (the "Existing Credit Agreement" and the Existing
Credit Agreement as amended by the Amendment, the "Amended Credit Agreement").
The Existing Credit Agreement was amended to, among other things, (a) increase
the aggregate principal amount of revolving credit commitments (the "Revolving
Credit Facility") from $75.0 million to $150.0 million and eliminate the
existing term loan facility, (b) extend the scheduled maturity date of the
revolving credit commitments to December of 2026, (c) reduce the applicable
margin with respect to revolving loans to, at Forrester's option, (i) between
1.25% and 1.75% per annum for loans based on LIBOR and (ii) between 0.25% and
0.75% per annum for loans based on the applicable base rate, in each case, based
on Forrester's consolidated total leverage ratio, (d) reduce the commitment fee
applicable to undrawn revolving credit commitments to between 0.30% and 0.20%
per annum based on our consolidated total leverage ratio, (e) replace the
minimum fixed charge coverage ratio financial covenant under the Existing Credit
Agreement with a minimum consolidated interest coverage ratio of 3.50:1.00 and
(f) include a covenant limiting the amount of capital expenditures in each
fiscal year, subject to exceptions for (i) up to $25.0 million annually with
respect to our headquarters property and (ii) an additional general basket of
$20.0 million annually.

The Amended Credit Agreement permits an increase in commitments under the
Revolving Credit Facility in an aggregate principal amount up to $50.0 million,
subject to approval by the Administrative Agent and certain customary terms and
conditions. Additional information is provided in Note 4 - Debt in the Notes to
Consolidated Financial Statements. The Revolving Credit Facility matures on
December 21, 2026. There was a balance of $50.0 million outstanding on the
facility at June 30, 2022.

The Amended Credit Agreement contains certain customary restrictive loan
covenants, including among others, financial covenants that apply a maximum
leverage ratio, minimum interest coverage ratio, and maximum annual capital
expenditures. The negative covenants limit, subject to various exceptions, the
Company's ability to incur additional indebtedness, create liens on assets,
merge, consolidate, liquidate or dissolve any part of the Company, sell assets,
change fiscal year, or enter into certain transactions with affiliates and
subsidiaries. We were in full compliance with the covenants as of June 30, 2022
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 9 years. As of June 30, 2022, remaining non-cancelable lease payments
are due as follows: $8.5 million in 2022, $32.4 million within 2023 and 2024,
$26.2 million within 2025 and 2026, and $14.3 million beyond 2026.

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 June 30, 2022, we had cash, cash equivalents, and marketable investments
of $122.6 million. This balance includes $78.7 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 and to meet our known
long-term cash requirements.

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.

Critical Accounting Policies and Estimates


For information regarding our critical accounting policies and estimates, please
refer to Note 1, "Summary of Significant Accounting Policies" and Item 7,
"Critical Accounting Estimates" contained in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2021. There have been no material changes to
the critical accounting policies and estimates previously disclosed in that
report.

                                       30

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