FORRESTER RESEARCH, INC. Overview
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 aForrester -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. 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 year endedDecember 31, 2021 , and we have also provided recast CV amounts dating back to the fourth 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 delivered. 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):
13
--------------------------------------------------------------------------------
As of Absolute Percentage
December 31, Increase Increase
2022 2021 (Decrease) (Decrease)
Contract value $ 353.4 $ 343.0 $ 10.4 3 %
Client retention 74 % 78 % (4) points -
Wallet retention 94 % 102 % (8) points -
Number of clients 2,778 3,005 (227 ) (8 %)
Contract value increased 3% during 2022 and this represents an 11-point decrease
from the 14% growth in contract value that we generated during 2021. The decline
in our CV growth rate was primarily due to a significant decline in our
retention metrics and client count during 2022. The decrease in our retention
rates and number of clients is primarily attributable 1) macroeconomic
conditions affecting our client base including a) funding and budget pressure on
our smaller technology clients and b) the uncertain economic conditions caused
by high inflation, increasing interest rates, geopolitical turbulence, and the
threat of recession, and 2) the ongoing transition of our client base to our
Forrester Decisions product platform that was launched in August 2021 . As of
December 31, 2022 , approximately 32% of our CV was composed of our Forrester
Decisions products, and we anticipate achieving approximately two-thirds of our
CV in Forrester Decisions products by the end of 2023. The ongoing macroeconomic
conditions and product transition are anticipated to pressure our key metrics
through the first half of 2023.
Critical Accounting Estimates
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 inthe 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. We consider the following accounting estimates to be those that require the most subjective judgment or that involve uncertainty that could have a material impact on our financial statements. If actual results differ significantly from management's estimates and projections, there could be a material effect on our financial statements.
•
Revenue Recognition. We generate 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 execute contracts that govern the terms and conditions of each arrangement. Revenues are recognized when an approved contract with a customer exists, the fees, payment terms, and rights regarding the products or services to be transferred can be identified, it is probable we will collect substantially all of the consideration for the products and services expected to be provided, and we have transferred control of the products and services to the customer. We continually evaluate customers' ability and intention to pay by reviewing factors including the customer's payment history, our ability to mitigate credit risk, and experience selling to similarly situated customers. Although write-offs of customer receivables have not been significant during the last three years ($0.7 million ,$0.3 million , and$0.9 million during 2022, 2021, and 2020, respectively), if our customers' financial condition were to deteriorate unexpectedly, we could experience a significant increase in our expense. Our contracts may include either a single promise (referred to as a performance obligation) to transfer a product or service or a combination of multiple promises to transfer products or services. We evaluate the existence of multiple performance obligations within our products and services by using judgment to determine if: (1) the customer can benefit from each contractual promise on its own or together with other readily available resources; and (2) the transfer of each contractual promise is separately identifiable from other promises in a contract. When both criteria are met, each promise is accounted for as a separate performance obligation. Revenues from contracts that contain multiple products or services are allocated among the separate performance obligations on a relative basis according to their standalone selling prices. We obtain the standalone selling prices of our products and services based upon an analysis of standalone sales of these products and services. When there is an insufficient history of standalone sales, we use judgment to estimate the standalone selling price, taking into consideration available market conditions, factors used to set list prices, pricing of similar products, and internal pricing objectives. Standalone selling prices are typically analyzed and updated on an annual basis, or as business conditions change. 14 -------------------------------------------------------------------------------- Consulting project revenues are recognized over time as the services are provided, based on an input method that calculates the total hours expended compared to the estimated hours required to satisfy the performance obligation. This method requires the use of judgement in determining the required number of hours to complete the project. We are required to estimate the amount of prepaid performance obligations that will expire unused and recognize revenue for that estimate over the same period the related rights are exercised by our customers. This assessment requires judgment, including estimating the percentage of prepaid rights that will go unexercised and anticipating the impact that future changes to products, pricing, and customer engagement will have on actual expirations. We update the estimates used to recognize unexercised rights on a quarterly basis.
•
Goodwill , Intangible Assets, and Other Long-Lived Assets. As ofDecember 31, 2022 , we had$291.7 million of goodwill and intangible assets with finite lives recorded in our Consolidated Balance Sheets. When acquiring a business, as of the acquisition date, we determine the estimated fair values of the assets acquired and liabilities assumed, which may include a significant amount of intangible assets and goodwill.Goodwill is required to be assessed for impairment at least annually or whenever events or circumstances indicate that there may be an impairment. An impairment assessment requires evaluating the potential impairment at the reporting unit level using either a qualitative assessment, to determine if it is more likely than not that the fair value of any reporting unit is less than its carrying amount, or a quantitative analysis, to determine and compare the fair value of each reporting unit to its carrying value, or a combination of both. Judgement is required in determining the use of a qualitative or quantitative assessment, as well as in determining each reporting unit's estimated fair value as it requires us to make estimates of market conditions and operational performance, including projected financial results, discount rates, control premium, and valuation multiples for key financial metrics. Absent an event that indicates a specific impairment may exist, we have selectedNovember 30th as the date to perform the annual goodwill impairment test. We completed the annual goodwill impairment testing as ofNovember 30, 2022 utilizing a qualitative assessment to determine if it was more likely than not that the fair values of each of our reporting units was less than their respective carrying values and concluded that no impairments existed. Future events could cause us to conclude that impairment indicators exist and that goodwill is impaired. Any resulting impairment loss could have a material adverse impact on our results of operations. Intangible assets with finite lives as ofDecember 31, 2022 consist of acquired customer relationships, acquired technology, and acquired trademarks and were valued according to the future cash flows they were estimated to produce or the estimated costs to replace the assets. These assigned values are amortized on a basis which best matches the periods in which the economic benefits are expected to be realized. Tangible assets with finite lives consist of property and equipment, which are depreciated over their estimated useful lives. Other long-lived assets consist primarily of operating lease right-of-use assets as described under Leases in the critical accounting policies and estimates footnote found in Note 1 - Summary of Significant Accounting Policies. We continually evaluate whether events or circumstances have occurred that indicate the estimated remaining useful life of any of our intangible assets, tangible assets, or operating lease right-of-use assets may warrant revision, or that the carrying value of these assets may be impaired. To compute whether these assets have been impaired, we estimate the undiscounted future cash flows for the estimated remaining useful life of the assets and compare that to the carrying value. To the extent that the future cash flows are less than the carrying value, the assets are written down to their estimated fair value. During 2022, we recorded$3.7 million of right-of-use asset impairments and$1.3 million of leasehold improvement impairments related to closing one floor of our offices located at150 Spear Street ,San Francisco, California . During 2020, we recorded$2.3 million of right-of-use asset impairments and$1.1 million of leasehold improvement impairments related to a facility lease we no longer used as a result of the integration of an acquired entity from 2019.
•
Income Taxes. We recognize deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between book and tax bases of assets and liabilities, operating loss carryforwards (from acquisitions) andU.S. capital losses (throughDecember 31, 2021 ). Such amounts are adjusted as appropriate to reflect changes in the tax rates expected to be in effect when the temporary differences reverse. We record a valuation allowance to reduce our deferred taxes to an amount we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a net deferred income tax asset. Judgment is required in considering the relative impact of negative and positive evidence. In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. As ofDecember 31, 2022 and 2021, we maintained a valuation allowance of$1.0 million and$1.1 million , respectively, primarily relating to foreign net operating loss carryforwards from an acquisition and as ofDecember 31, 2021 , also fromU.S. capital losses from our investment in technology-related private equity funds. During 2020, we recognized an income tax benefit in the amount of$1.0 million 15 -------------------------------------------------------------------------------- from the utilization of a capital loss carryforward, and the reversal of the related valuation allowance, due to a sale of an investment within the private equity fund.
Results of Operations for the years ended
The following table sets forth our Consolidated Statements of Income as a percentage of total revenues for the years noted.
Years Ended
December 31,
2022 2021
Revenues:
Research revenues 65.9 % 65.8 %
Consulting revenues 28.4 31.6
Events revenues 5.7 2.6
Total revenues 100.0 100.0Operating expenses: Cost of services and fulfillment 41.6 40.8 Selling and marketing
33.8 34.6
General and administrative 12.6 11.7
Depreciation 1.7 1.9
Amortization of intangible assets 2.5 3.1
Integration costs - 0.1
Restructuring costs 1.7 -
Income from operations 6.1 7.8
Interest expense (0.5 ) (0.9 )
Other income (expense), net - (0.2 )
Gains on investments, net 0.1 -
Income before income taxes 5.7 6.7
Income tax expense 1.6 1.7
Net income 4.1 % 5.0 %
16
--------------------------------------------------------------------------------
2022 compared to 2021
Revenues
Absolute Percentage
Increase Increase
2022 2021 (Decrease) (Decrease)
(dollars in millions)
Total revenues $ 537.8 $ 494.3 $ 43.5 9 %
Research revenues $ 354.5 $ 325.3 $ 29.1 9 %
Consulting revenues $ 152.6 $ 156.1 $ (3.5 ) (2 %)
Events revenues $ 30.7 $ 12.9 $ 17.9 139 %
Revenues attributable to customers
outside of the U.S. $ 111.7 $ 112.7 $ (1.0 ) (1 %)
Percentage of revenue attributable to
customers
outside of the U.S. 21 % 23 % (2) points -
Total revenues increased 9% during 2022 compared to 2021, and increased by 10%
when excluding the effect of changes in foreign currencies. Revenues from
customers outside of the U.S. decreased 1% during 2022 compared to the prior
year, and increased by 5% 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 9% during 2022 compared to 2021, and increased by 10% when
excluding the effect of changes in foreign currencies. The increase in revenues
was primarily due to the combined effect of strong CV growth of 14% during 2021
and lower CV growth of 3% during 2022. Due to the ongoing macroeconomic
conditions and the Forrester Decisions product transition (as discussed under
our key metrics above), we anticipate our CV growth rate to further decline in
the range of flat to low single digits through the first half of 2023.
Consulting revenues decreased 2% during 2022 compared to 2021, and decreased by
1% when excluding the effect of changes in foreign currencies. The decrease in
revenues was primarily due to a decrease in delivery of advisory services by our
research analysts as they shifted more of their efforts to developing and
delivering our CV products, which have been partially offset by an increase in
delivery of consulting services by our consulting organization.
Events revenues increased 139% during 2022 compared to 2021, and increased by
142% when excluding the effect of changes in foreign currencies. The increase in
revenues was primarily due an increase in both sponsorship revenues and paid
ticket attendance, primarily due to the return of in-person attendance at our
events. All of our events during 2022 were held as hybrid events, consisting of
both in-person and virtual experiences, while all of our events during 2021 were
held as virtual events.
Refer to the "Segment Results" section below for a discussion of revenue and expenses by segment.
Cost of Services and Fulfillment
Absolute Percentage
Increase Increase
2022 2021 (Decrease) (Decrease)
Cost of services and fulfillment
(dollars in millions) $ 223.8 $ 201.8 $ 22.0 11 %
Cost of services and fulfillment as a
percentage of
total revenues 42 % 41 % 1 point -
Service and fulfillment employees (at
end of period) 920 822 98 12 %
Cost of services and fulfillment expenses increased 11% in 2022 compared to
2021, and increased by 13% when excluding the effect of changes in foreign
currencies. The increase was primarily due to (1) a $8.9 million increase in
event expenses due to the return of in-person attendance at our events, (2) a
$7.4 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 $2.4 million increase in stock compensation
expense, (4) a $1.7 million increase in travel and entertainment expenses due to
the return of in-person attendance at our events and increased general business
travel, and (5) a $0.8 million increase in professional services costs primarily
due to an increase in contractor costs.
17
--------------------------------------------------------------------------------
Selling and Marketing
Absolute Percentage
Increase Increase
2022 2021 (Decrease) (Decrease)
Selling and marketing expenses
(dollars in millions) $ 181.9 $ 170.9 $ 11.0 6 %
Selling and marketing expenses as a
percentage of
total revenues 34 % 35 % (1) point -
Selling and marketing employees (at
end of period) 804 720 84 12 %
Selling and marketing expenses increased 6% in 2022 compared to 2021, and
increased by 8% when excluding the effect of changes in foreign currencies. The
increase was primarily due to (1) a $9.4 million increase in compensation and
benefit costs due to an increase in headcount, commissions expense, benefit
costs, and merit increases, which were partially offset by lower incentive bonus
costs, (2) a $1.1 million increase in stock compensation expense, and (3) a $0.9
million decrease in allocated facilities costs.
General and Administrative
Absolute Percentage
Increase Increase
2022 2021 (Decrease) (Decrease)
General and administrative expenses
(dollars in
millions) $ 67.7 $ 58.1 $ 9.6 17 %
General and administrative expenses
as a percentage
of total revenues 13 % 12 % 1 point -
General and administrative employees
(at end
of period) 309 239 70 29 %
General and administrative expenses increased 17% in 2022 compared to 2021, and
increased by 19% when excluding the effect of changes in foreign currencies. The
increase was primarily due to (1) a $3.5 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, (2) a
$3.3 million increase in professional services costs due to an increase in legal
and contractor costs, (3) a $1.0 million increase in stock compensation expense,
and (4) a $0.9 million increase in software costs.
Depreciation
Depreciation expense was consistent in 2022 compared to 2021.
Amortization of Intangible Assets
Amortization expense decreased by
Restructuring
In the fourth quarter of 2022, we incurred restructuring costs of$9.3 million . Approximately$5.0 million of the costs related to an impairment of the right-of-use asset and leasehold improvements for the closing of one floor of our offices located at150 Spear Street ,San Francisco, California . In addition, we incurred$4.3 million of costs for severance and related benefits for the termination, inJanuary 2023 , of approximately 4% of our employees across various geographies and functions to streamline operations. Approximately all of the$4.3 million of the severance and related benefit costs incurred during 2022 are expected to be paid in 2023.
Interest Expense
Interest expense consists of interest on our borrowings and realized gains and losses on the related interest rate swap. Interest expense decreased by$1.8 million in 2022 compared to 2021 due to lower average outstanding borrowings. The benefit from lower outstanding borrowings was partially offset by an increase in the annualized interest rate on our borrowings during 2022. We expect interest expense in 2023 to be essentially consistent with 2022. 18 --------------------------------------------------------------------------------
Other Income (Expense), Net
Other income (expense), net primarily consists of gains and losses on foreign currency, gains and losses on foreign currency forward contracts, and interest income. Other income (expense), net increased by$1.5 million in 2022 compared to 2021 due to a decrease in foreign currency losses and an increase in interest income. Gains on Investments,Net Gains on investments, net primarily represents our share of equity method investment gains and losses from our technology-related investment funds. Gains on investments, net increased$0.3 million in 2022 compared to 2021 due to an increase in investment gains generated by the underlying funds. Income Tax Expense Absolute Percentage Increase Increase 2022 2021 (Decrease) (Decrease) Provision for income taxes (dollars in millions)$ 8.9 $ 8.3 $ 0.6 7 % Effective tax rate 29 % 25 % 4 points - The increase in the effective tax rate during 2022 as compared to 2021 was primarily due to increased non-deductible stock compensation, an increase in foreign subsidiary income subject toU.S. tax in 2022, and an increase in non-deductible expenses related to meals and entertainment in 2022 that did not occur in 2021. These increases were partially offset by a benefit related to a change in tax legislation during 2022.
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.
The Events segment includes the revenues and the costs of the organization
responsible for developing and hosting in-person and virtual events. As of
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, restructuring and integration costs, 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. We do not review or evaluate assets as part of segment performance.
Accordingly, we do not identify or allocate assets by reportable segment.
19
--------------------------------------------------------------------------------
Research Consulting Events
Segment Segment Segment Consolidated
Year Ended December 31, 2022 (In thousands, except percentages)
Research revenues $ 354,453 $ - $ - $ 354,453
Consulting revenues 41,559 111,028 - 152,587
Events revenues - - 30,747 30,747
Total segment revenues 396,012 111,028 30,747 537,787
Segment expenses (133,566 ) (56,889 ) (21,801 ) (212,256 )
Year over year revenue change 6 % 2 % 139 % 9 %
Year over year expense change 13 % 10 % 72 % 16 %
Research Consulting Events
Segment Segment Segment Consolidated
Year Ended December 31, 2021 (In thousands)
Research revenues $ 325,340 $ - $ - $ 325,340
Consulting revenues 47,247 108,867 - 156,114
Events revenues - - 12,861 12,861
Total segment revenues 372,587 108,867 12,861 494,315
Segment expenses (118,155 ) (51,770 ) (12,709 ) (182,634 )
Research segment revenues increased 6% during 2022 compared to 2021. Research
product revenues within this segment increased 9%, which was primarily due to
the combined effect of strong CV growth of 14% during 2021 and lower CV growth
of 3% during 2022. Consulting product revenues within this segment decreased 12%
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 13% during 2022 compared to 2021. The
increase in expenses was primarily due to (1) a
Consulting segment revenues increased 2% during 2022 compared to 2021 due to demand for our content marketing and strategy consulting offerings.
Consulting segment expenses increased 10% during 2022 compared to 2021. The
increase in expenses was primarily due to (1) a
Event segment revenues increased 139% during 2022 compared to 2021. The increase in revenues was due to an increase in both sponsorship revenues and paid ticket attendance, primarily due to the return of in-person events. Event segment expenses increased 72% during 2022 compared to 2021. The increase in expenses was primarily due to an increase in event expenses due to the return of in-person attendance at our events.
A detailed description and analysis of the fiscal year 2020 year-over-year
changes can be found in Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations in our Annual Report on Form 10-K
for the year ended
Liquidity and Capital Resources
We have historically financed our operations primarily through funds generated from operations. Research revenues, which constituted 66% of our revenues during 2022, are generally renewable annually and are typically payable in advance. We generated cash from operating activities of$39.4 million and$107.1 million during the years endedDecember 31, 2022 and 2021, respectively. The$67.6 million decrease in cash provided from operations during 2022 was primarily due to 1) a$50.9 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, 2) a$26.5 million increase in cash used for accrued expenses resulting from the payout of year end incentive compensation, and 3) a$14.5 million reduction in cash used for working capital (excluding accounts receivable, deferred revenue and accrued expenses). During 2022, we used cash in investing activities of$6.8 million , which consisted of$5.7 million of purchases of property and equipment, primarily consisting of computer software and equipment, and$1.4 million in net purchases of marketable investments. During 2021, we used cash in investing activities of$29.3 million , which consisted of$18.6 million in net purchases of marketable 20 --------------------------------------------------------------------------------
investments and
During 2022, we used$38.9 million of cash from financing activities 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$1.2 million of net proceeds from the issuance of common stock under our stock-based incentive plans. During 2021, we used$49.1 million of cash from financing activities primarily due to$34.4 million of repayments of our debt, which consisted of$9.4 million of required payments on our term loan and$25.0 million of discretionary payments on our revolving credit facility,$20.1 million for purchases of our common stock, as well as$3.4 million in taxes paid related to net share settlements of restricted stock units, partially offset by$9.2 million of net proceeds from the issuance of common stock under our stock-based incentive plans. As ofDecember 31, 2022 , our remaining stock repurchase authorization was approximately$75.0 million . OnDecember 21, 2021 , we and certain of our subsidiaries entered into an amendment of our existing credit facility, dated as ofJanuary 3, 2019 , withJPMorgan 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 (i) the applicable margin with respect to revolving loans to, atForrester'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 onForrester'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. 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 onDecember 21, 2026 . There was a balance of$50.0 million outstanding on the facility atDecember 31, 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, our 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 ofDecember 31, 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 8 years. Remaining lease payments within one year, within two to three years, within four to five years, and after five years fromDecember 31, 2022 are$16.5 million ,$30.1 million ,$17.7 million , and$8.7 million , respectively. 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. See Note 14 - Certain Balance Sheet Accounts in the Notes to Consolidated Financial Statements for more information on our payables and liabilities. As ofDecember 31, 2022 , we had cash, cash equivalents, and marketable investments of$123.3 million . This balance includes$81.4 million held outside of theU.S. If the cash outside of theU.S. is needed for operations in theU.S. , we would be required to accrue and payU.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 theU.S. and our current plans do not demonstrate a need to repatriate these funds for ourU.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.
As of
Recent Accounting Pronouncements
See Note 1 - Summary of Significant Accounting Policies 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.
21--------------------------------------------------------------------------------
© Edgar Online, source
