Forrester Research, Inc 10-Q for FY2024 Q3
Forrester Research, Inc. (FORR)
About this 10-Q
Forrester Research, Inc filed this 10-Q on November 8, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $102.53M
- down 9.6% from $113.43M a year earlier
- Net loss
- $5.8M
- compared with net income of $2.48M a year earlier
- Diluted EPS
- -$0.30
- compared with $0.13 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. |
FOR THE QUARTERLY PERIOD ENDED
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. |
COMMISSION FILE NUMBER:
(Exact name of registrant as specified in its charter)
|
||
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification Number) |
|
(Zip Code) |
|
(Address of principal executive offices) |
|
|
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
|
Trading Symbol(s) |
|
Name of Each Exchange on Which Registered |
|
|
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
☐ |
|
|
☒ |
|
Non-accelerated filer |
|
☐ |
|
Smaller reporting company |
|
|
Emerging growth company |
|
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 4, 2024,
FORRESTER RESEARCH, INC.
INDEX TO FORM 10-Q
|
|
Page |
PART I |
FINANCIAL INFORMATION |
|
Item 1. |
3 |
|
|
Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 |
3 |
|
4 |
|
|
5 |
|
|
Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 |
6 |
|
7 |
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 |
Item 3. |
31 |
|
Item 4. |
31 |
|
|
|
|
PART II |
OTHER INFORMATION |
|
Item 1. |
32 |
|
Item 1A. |
32 |
|
Item 2. |
32 |
|
Item 3. |
32 |
|
Item 4. |
32 |
|
Item 5. |
32 |
|
Item 6. |
33 |
|
|
|
|
34 |
||
|
|
|
PART I.
ITEM 1. FINANCIAL STATEMENTS
FORRESTER RESEARCH, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data, unaudited)
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Marketable investments |
|
|
|
|
|
|
||
Accounts receivable, net of allowance for expected credit losses of $ |
|
|
|
|
|
|
||
Deferred commissions |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current Liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses and other current liabilities |
|
|
|
|
|
|
||
Deferred revenue |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Non-current operating lease liabilities |
|
|
|
|
|
|
||
Other non-current liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Stockholders' Equity: |
|
|
|
|
|
|
||
Preferred stock, $ |
|
|
|
|
|
|
||
Authorized - |
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Authorized - |
|
|
|
|
|
|
||
Issued - |
|
|
|
|
|
|
||
Outstanding - |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Treasury stock - |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total stockholders’ equity |
|
|
|
|
|
|
||
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
3
FORRESTER RESEARCH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Consulting |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Events |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of services and fulfillment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from sale of divested operation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) before income taxes |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Basic income (loss) per common share |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Diluted income (loss) per common share |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Basic weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
4
FORRESTER RESEARCH, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, unaudited)
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
September 30, |
|
|
September 30, |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net income (loss) |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net change in market value of investments |
|
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive income (loss) |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Comprehensive income (loss) |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
5
FORRESTER RESEARCH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
|
Nine Months Ended |
|
|||||
|
September 30, |
|
|||||
|
2024 |
|
|
2023 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
||
Net income (loss) |
$ |
( |
) |
|
$ |
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
||
Impairment of property and equipment |
|
|
|
|
|
||
Amortization of intangible assets |
|
|
|
|
|
||
Deferred income taxes |
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
||
Operating lease right-of-use assets amortization and impairments |
|
|
|
|
|
||
Loss from sale of divested operation |
|
|
|
|
|
||
Other, net |
|
|
|
|
|
||
Changes in assets and liabilities: |
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
||
Deferred commissions |
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
( |
) |
|
|
( |
) |
Accounts payable |
|
( |
) |
|
|
|
|
Accrued expenses and other liabilities |
|
( |
) |
|
|
( |
) |
Deferred revenue |
|
( |
) |
|
|
( |
) |
Operating lease liabilities |
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) operating activities |
|
( |
) |
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
||
Purchases of property and equipment |
|
( |
) |
|
|
( |
) |
Purchases of marketable investments |
|
( |
) |
|
|
( |
) |
Proceeds from maturities of marketable investments |
|
|
|
|
|
||
Proceeds from sales of marketable investments |
|
|
|
|
|
||
Proceeds from sale of divested operation |
|
|
|
|
|
||
Other investing activity |
|
( |
) |
|
|
|
|
Net cash provided by investing activities |
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
||
Payments on borrowings |
|
|
|
|
( |
) |
|
Repurchases of common stock |
|
( |
) |
|
|
( |
) |
Debt issuance costs |
|
|
|
|
( |
) |
|
Proceeds from issuance of common stock under employee equity incentive plans |
|
|
|
|
|
||
Taxes paid related to net share settlements of stock-based compensation awards |
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
|
|
|
||
Net change in cash, cash equivalents and restricted cash |
|
( |
) |
|
|
( |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
||
Cash, cash equivalents and restricted cash, end of period |
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
||
Cash paid for interest |
$ |
|
|
$ |
|
||
Cash paid for income taxes |
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
6
FORRESTER RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 — Interim Consolidated Financial Statements
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. It is recommended that these financial statements be read in conjunction with the consolidated financial statements and related notes that appear in the Forrester Research, Inc. (“Forrester”) Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the financial position, results of operations, comprehensive income (loss), and cash flows as of the dates and for the periods presented have been included. The results of operations for the three and nine months ended September 30, 2024 may not be indicative of the results for the year ending December 31, 2024, or any other period.
Presentation of Restricted Cash
The following table summarizes the end-of-period cash and cash equivalents from the Company's Consolidated Balance Sheets and the total cash, cash equivalents and restricted cash as presented on the accompanying Consolidated Statements of Cash Flows (in thousands).
|
Nine Months Ended September 30, |
|
|||||
|
2024 |
|
|
2023 |
|
||
Cash and cash equivalents shown in balance sheets |
$ |
|
|
$ |
|
||
(1): |
|
|
|
|
|
||
Cash, cash equivalents and restricted cash shown in statement of cash flows |
$ |
|
|
$ |
|
||
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. The new standard enhances the disclosures of reportable segment information, primarily in regards to significant segment expenses. The new standard will be effective for the Company for the annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The adoption of the standard will result in expanded disclosure of expenses for each reporting unit in the Company's segment footnote.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The new standard enhances income tax disclosure requirements by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. The new standard will be effective for the Company on January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of adoption of the standard on its consolidated financial statements.
7
Note 2 — Divestiture
In August 2024, the Company completed the sale of a non-core product line, FeedbackNow, for approximately $
Note 3 — Marketable Investments
The following table summarizes the Company’s marketable investments (in thousands):
|
|
As of September 30, 2024 |
|
|||||||||||||
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
||||
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Market |
|
||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
||||
Corporate obligations |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
As of December 31, 2023 |
|
|||||||||||||
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
||||
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Market |
|
||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
||||
Corporate obligations |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Federal agency obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Realized gains and losses on investments are included in earnings and are determined using the specific identification method. Sales of marketable investments during 2024 primarily represent redemptions from non-U.S. based money market funds, and there were
The following table summarizes the maturity periods of the marketable investments in the Company’s portfolio as of September 30, 2024 (in thousands).
|
|
FY 2024 |
|
|
FY 2025 |
|
|
FY 2026 |
|
|
FY 2027 |
|
|
Total |
|
|||||
Corporate obligations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
The following table shows the gross unrealized losses and market value of the Company’s available-for-sale securities with unrealized losses that are not deemed to be other-than-temporary, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):
|
|
As of September 30, 2024 |
|
|||||||||||||
|
|
Less Than 12 Months |
|
|
12 Months or Greater |
|
||||||||||
|
|
Market |
|
|
Unrealized |
|
|
Market |
|
|
Unrealized |
|
||||
|
|
Value |
|
|
Losses |
|
|
Value |
|
|
Losses |
|
||||
Corporate obligations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
8
|
|
As of December 31, 2023 |
|
|||||||||||||
|
|
Less Than 12 Months |
|
|
12 Months or Greater |
|
||||||||||
|
|
Market |
|
|
Unrealized |
|
|
Market |
|
|
Unrealized |
|
||||
|
|
Value |
|
|
Losses |
|
|
Value |
|
|
Losses |
|
||||
Corporate obligations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Federal agency obligations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 4 — Goodwill and Other Intangible Assets
Goodwill
Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair values of the tangible and identifiable intangible net assets acquired. Goodwill is not amortized; however, it is required to be tested for impairment annually, which requires assessment of the potential impairment at the reporting unit level. Reporting units are determined based on the components of the Company's operating segments that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by segment management. Testing for impairment is also required on an interim basis if an event or circumstance indicates it is more likely than not an impairment loss has been incurred.
The Company performed its annual impairment testing as of November 30, 2023 utilizing a quantitative assessment to determine if the fair values of each of its reporting units was less than their respective carrying values and concluded that
The change in the carrying amount of goodwill for the nine months ended September 30, 2024 is summarized as follows (in thousands):
|
Total |
|
|
Balance at December 31, 2023 |
$ |
|
|
Dispositions (1) |
|
( |
) |
Translation adjustments |
|
|
|
Balance at September 30, 2024 |
$ |
|
|
Finite-Lived Intangible Assets
The carrying values of finite-lived intangible assets are as follows (in thousands):
|
September 30, 2024 |
|
|||||||||
|
Gross |
|
|
|
|
|
Net |
|
|||
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|||
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|||
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
|||
Customer relationships |
$ |
|
|
$ |
|
|
$ |
|
|||
Technology |
|
|
|
|
|
|
|
|
|||
Trademarks |
|
|
|
|
|
|
|
|
|||
Total |
$ |
|
|
$ |
|
|
$ |
|
|||
|
December 31, 2023 |
|
|||||||||
|
Gross |
|
|
|
|
|
Net |
|
|||
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|||
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|||
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
|||
Customer relationships |
$ |
|
|
$ |
|
|
$ |
|
|||
Technology |
|
|
|
|
|
|
|
|
|||
Trademarks |
|
|
|
|
|
|
|
|
|||
Total |
$ |
|
|
$ |
|
|
$ |
|
|||
9
Estimated intangible asset amortization expense for each of the five succeeding years is as follows (in thousands):
2024 (remainder) |
$ |
|
|
2025 |
|
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
Total |
$ |
|
Note 5 — Debt
The Company has a credit facility that provides up to $
The credit facility 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. The Company was in full compliance with the covenants as of September 30, 2024.
The Company may voluntarily prepay revolving loans under the credit facility at any time and from time to time, without premium or penalty. No interim amortization payments are required to be made under the credit facility.
The credit facility provided that once LIBOR ceased to exist in 2023, the benchmark rate for the loans outstanding automatically transferred from LIBOR to the Secured Overnight Financing Rate (SOFR). In April 2023, the Company executed a second amendment to the credit facility to facilitate the conversion from LIBOR to SOFR and to set the base interest rate at SOFR plus 10 basis points.
Up to $
Outstanding Borrowings
The following table summarizes the Company’s total outstanding borrowings as of the dates indicated (in thousands):
Description: |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Credit facility |
|
$ |
|
|
$ |
|
||
The contractual annualized interest rate as of September 30, 2024 was
The Company had $
All obligations under the credit facility are unconditionally guaranteed by each of the Company’s existing and future, direct and indirect, material wholly-owned domestic subsidiaries, other than certain excluded subsidiaries, and are collateralized by a first priority lien on substantially all tangible and intangible assets, including intellectual property, and all of the capital stock of the Company's subsidiaries (limited to
10
Note 6 — Leases
All of the Company’s leases are operating leases, the majority of which are for office space. Operating lease right-of-use (“ROU”) assets and non-current operating lease liabilities are included as individual line items in the Consolidated Balance Sheets, while short-term operating lease liabilities are recorded within accrued expenses and other current liabilities. Leases with an initial term of twelve months or less are not recorded in the Consolidated Balance Sheets and are not material.
The components of lease expense were as follows (in thousands):
|
|
For the Three Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating lease cost |
|
$ |
|
|
$ |
|
||
Short-term lease cost |
|
|
|
|
|
|
||
Variable lease cost |
|
|
|
|
|
|
||
Sublease income |
|
|
( |
) |
|
|
( |
) |
Total lease cost |
|
$ |
|
|
$ |
|
||
|
|
For the Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating lease cost |
|
$ |
|
|
$ |
|
||
Short-term lease cost |
|
|
|
|
|
|
||
Variable lease cost |
|
|
|
|
|
|
||
Sublease income |
|
|
( |
) |
|
|
( |
) |
Total lease cost |
|
$ |
|
|
$ |
|
||
Additional lease information is summarized in the following table (in thousands, except lease term and discount rate):
|
|
For the Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash paid for amounts included in the measurement of operating |
|
$ |
|
|
$ |
|
||
Operating lease ROU assets obtained in exchange for lease |
|
$ |
|
|
$ |
|
||
Weighted-average remaining lease term - operating leases (years) |
|
|
|
|
|
|
||
Weighted-average discount rate - operating leases |
|
|
% |
|
|
% |
||
Future minimum lease payments under non-cancelable leases and estimated future sublease cash receipts from non-cancelable arrangements as of September 30, 2024 are as follows (in thousands):
|
|
Operating Lease |
|
|
Sublease |
|
||
|
|
Payments |
|
|
Cash Receipts |
|
||
2024 (remainder) |
|
$ |
|
|
$ |
|
||
2025 |
|
|
|
|
|
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
Total lease payments and estimated sublease cash receipts |
|
|
|
|
$ |
|
||
Less imputed interest |
|
|
( |
) |
|
|
|
|
Present value of lease liabilities |
|
$ |
|
|
|
|
||
Lease balances as of September 30, 2024 are as follows (in thousands):
Operating lease ROU assets |
|
$ |
|
|
|
|
|
|
|
(1) |
|
$ |
|
|
Non-current operating lease liabilities |
|
|
|
|
Total operating lease liabilities |
|
$ |
|
|
11
The Company’s leases do not contain residual value guarantees, material restrictions, or covenants.
During the nine months ended September 30, 2024, the Company recorded $
Note 7 – Revenue and Related Matters
Disaggregated Revenue
The Company disaggregates revenue as set forth in the following tables (in thousands):
Revenue by Geography
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
||||||||||
Revenues: (1) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contract Assets and Contract Liabilities
Accounts Receivable
Accounts receivable includes amounts billed and currently due from customers. Since the only condition for payment of the Company’s invoices is the passage of time, a receivable is recorded on the date an invoice is issued. Also included in accounts receivable are unbilled amounts resulting from revenue exceeding the amount billed to the customer, where the right to payment is unconditional. If the right to payment for services performed was conditional on something other than the passage of time, the unbilled amount would be recorded as a separate contract asset. There were
The majority of the Company’s contracts are non-cancelable. However, for contracts that are cancelable by the customer, the Company does not record a receivable when it issues an invoice. The Company records accounts receivable on these contracts only up to the amount of revenue earned but not yet collected.
In addition, since the majority of the Company’s contracts are invoiced for annual periods, and payment is expected within
Deferred Revenue
The Company refers to contract liabilities as deferred revenue in the Consolidated Balance Sheets. Payment terms in the Company’s customer contracts vary, but generally require payment in advance of fully satisfying the performance obligation(s). Deferred revenue consists of billings in excess of revenue recognized. Similar to accounts receivable, the Company does not record deferred revenue for unpaid invoices issued on a cancelable contract.
During the three months ended September 30, 2024 and 2023, the Company recognized $
Approximately $
12
Reserves for Credit Losses
The allowance for expected credit losses on accounts receivable for the nine months ended September 30, 2024 is summarized as follows (in thousands):
|
|
Total |
|
|
Balance at December 31, 2023 |
|
$ |
|
|
Provision for expected credit losses |
|
|
|
|
Write-offs |
|
|
( |
) |
Balance at September 30, 2024 |
|
$ |
|
|
When evaluating the adequacy of the allowance for expected credit losses, the Company makes judgments regarding the collectability of accounts receivable based, in part, on the Company’s historical loss rate experience, customer concentrations, management’s expectations of future losses as informed by current economic conditions, and changes in customer payment terms. If the expected financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. If the expected financial condition of the Company’s customers were to improve, the allowances may be reduced accordingly.
Cost to Obtain Contracts
The Company capitalizes commissions paid to sales representatives and related fringe benefits costs that are incremental to obtaining customer contracts. These costs are included in deferred commissions in the Consolidated Balance Sheets. The Company accounts for these costs at a portfolio level as the Company’s contracts are similar in nature and the amortization model used closely matches the amortization expense that would be recognized on a contract-by-contract basis. Costs to obtain a contract are amortized to earnings over the initial contract term, which is the same period the related revenue is recognized. Amortization expense related to deferred commissions for the three months ended September 30, 2024 and 2023 was $
Note 8 — Derivatives and Hedging
The Company enters into a limited number of foreign currency forward exchange contracts to mitigate the effects of adverse fluctuations in foreign currency exchange rates on transactions entered into in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. These contracts generally have short durations and are recorded at fair value with both realized and unrealized gains and losses recorded in other income, net in the Consolidated Statements of Operations because the Company does not designate these contracts as hedges for accounting purposes.
During the nine months ended September 30, 2024, the Company entered into eight foreign currency forward exchange contracts, all of which settled by September 30, 2024. Accordingly, as of September 30, 2024, there is no amount recorded in the Consolidated Balance Sheets for these contracts. During the nine months ended September 30, 2023, the Company entered into nine foreign currency forward exchange contracts, all of which settled by September 30, 2023. Accordingly, as of September 30, 2023, there is no amount recorded in the Consolidated Balance Sheets for these contracts.
The Company’s derivative counterparties are investment grade financial institutions. The Company does not have any collateral arrangements with these counterparties and the derivative contracts do not contain credit risk-related contingent features.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
Amount recorded in: |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||
Note 9 — Fair Value Measurements
The carrying amounts reflected in the Consolidated Balance Sheets for cash, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term maturities. The Company’s financial instruments also include its outstanding variable-rate borrowings (refer to Note 5 – Debt). The Company believes that the carrying amount of its variable-rate borrowings reasonably approximate their fair values because the rates of interest on those borrowings reflect current market rates of interest.
13
Additionally, the Company measures certain financial assets and liabilities at fair value on a recurring basis including cash equivalents and marketable investments. The fair values of these financial assets and liabilities have been classified as Level 1, 2, or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements:
Level 1 — Fair value based on quoted prices in active markets for identical assets or liabilities.
Level 2 — Fair value based on inputs other than Level 1 inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Fair value based on unobservable inputs that are supported by little or no market activity and such inputs are significant to the fair value of the assets or liabilities.
The following table represents the Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):
|
|
As of September 30, 2024 |
|
|||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Total |
|
|||
Assets: |
|
|
|
|
|
|
|
|
|
|||
Money market funds (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Marketable investments (3) |
|
|
|
|
|
|
|
|
|
|||
Total Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
As of December 31, 2023 |
|
|||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Total |
|
|||
Assets: |
|
|
|
|
|
|
|
|
|
|||
Money market funds (2) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Marketable investments (3) |
|
|
|
|
|
|
|
|
|
|||
Total Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
During the nine months ended September 30, 2024, the Company did not transfer assets or liabilities between levels of the fair value hierarchy. Additionally, there have been no changes to the valuation techniques for Level 2 assets and liabilities.
Note 10 — Income Taxes
Forrester provides for income taxes on an interim basis according to management’s estimate of the effective tax rate expected to be applicable for the full fiscal year. Certain items such as changes in tax rates, tax benefits or expense related to settlements of share-based awards, tax effects of foreign currency gains or losses, and the tax effect from the divestment of operations are treated as discrete items and are recorded in the period in which they arise.
Income tax expense for the nine months ended September 30, 2024 was $
The increase in the effective tax rate during the 2024 period was primarily due to increased tax expense from the sale of the FeedbackNow product line of $
14
Note 11 — Accumulated Other Comprehensive Loss (“AOCL”)
The components of accumulated other comprehensive loss are as follows (net of tax, in thousands):
|
|
Marketable |
|
|
Translation |
|
|
|
|
|
|||
|
|
Investments |
|
|
Adjustment |
|
|
Total AOCL |
|
|
|||
Balance at June 30, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Foreign currency translation (1) |
|
|
|
|
|
|
|
|
|
|
|||
Reclassification adjustment for write-off of foreign currency translation loss (2) |
|
|
|
|
|
|
|
|
|
|
|||
Unrealized gain, net of tax of $( |
|
|
|
|
|
|
|
|
|
|
|||
Balance at September 30, 2024 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
Marketable |
|
|
Translation |
|
|
|
|
|
|||
|
|
Investments |
|
|
Adjustment |
|
|
Total AOCL |
|
|
|||
Balance at June 30, 2023 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Foreign currency translation (1) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
Unrealized gain, net of tax of $( |
|
|
|
|
|
|
|
|
|
|
|||
Balance at September 30, 2023 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
Marketable |
|
|
Translation |
|
|
|
|
|||
|
|
Investments |
|
|
Adjustment |
|
|
Total AOCL |
|
|||
Balance at December 31, 2023 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign currency translation (1) |
|
|
|
|
|
|
|
|
|
|||
Reclassification adjustment for write-off of foreign currency translation loss (2) |
|
|
|
|
|
|
|
|
|
|||
Unrealized gain, net of tax of $( |
|
|
|
|
|
|
|
|
|
|||
Balance at September 30, 2024 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
Marketable |
|
|
Translation |
|
|
|
|
|||
|
|
Investments |
|
|
Adjustment |
|
|
Total AOCL |
|
|||
Balance at December 31, 2022 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign currency translation (1) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Unrealized gain, net of tax of $( |
|
|
|
|
|
|
|
|
|
|||
Balance at September 30, 2023 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Note 12 — Net Income (Loss) Per Common Share
Basic net income (loss) per common share is computed by dividing net income (loss) by the basic weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the diluted weighted average number of common shares and common equivalent shares outstanding during the period. The weighted average number of common equivalent shares outstanding has been determined in accordance with the treasury-stock method. Common equivalent shares consist of common stock issuable on the exercise of outstanding stock options and the vesting of restricted stock units.
Basic and diluted weighted average common shares are as follows (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Basic weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common equivalent shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Options and restricted stock units excluded from diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
15
Note 13 — Stockholders’ Equity
The components of stockholders’ equity are as follows (in thousands):
|
Three Months Ended September 30, 2024 |
|
|||||||||||||||||||||||||||||
|
Common Stock |
|
|
|
|
|
|
|
|
Treasury Stock |
|
|
Accumulated |
|
|
|
|
||||||||||||||
|
Number |
|
|
$0.01ParValue |
|
|
Additional |
|
|
Retained |
|
|
Number |
|
|
Cost |
|
|
Other |
|
|
Total |
|
||||||||
Balance at June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Issuance of common stock under |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Repurchases of common stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Stock-based compensation expense |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net change in marketable investments, |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Foreign currency translation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance at September 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
|
Three Months Ended September 30, 2023 |
|
|||||||||||||||||||||||||||||
|
Common Stock |
|
|
|
|
|
|
|
|
Treasury Stock |
|
|
Accumulated |
|
|
|
|
||||||||||||||
|
Number |
|
|
$0.01ParValue |
|
|
Additional |
|
|
Retained |
|
|
Number |
|
|
Cost |
|
|
Other |
|
|
Total |
|
||||||||
Balance at June 30, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Issuance of common stock under |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Repurchases of common stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Stock-based compensation expense |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net change in marketable investments, |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Foreign currency translation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
|
Nine Months Ended September 30, 2024 |
|
|||||||||||||||||||||||||||||
|
Common Stock |
|
|
|
|
|
|
|
|
Treasury Stock |
|
|
Accumulated |
|
|
|
|
||||||||||||||
|
Number |
|
|
$0.01 |
|
|
Additional |
|
|
Retained |
|
|
Number |
|
|
Cost |
|
|
Other |
|
|
Total |
|
||||||||
Balance at December 31, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Issuance of common stock under |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Repurchases of common stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Stock-based compensation expense |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net change in marketable investments, |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Foreign currency translation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance at September 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
16
|
Nine Months Ended September 30, 2023 |
|
|||||||||||||||||||||||||||||
|
Common Stock |
|
|
|
|
|
|
|
|
Treasury Stock |
|
|
Accumulated |
|
|
|
|
||||||||||||||
|
Number |
|
|
$0.01 |
|
|
Additional |
|
|
Retained |
|
|
Number |
|
|
Cost |
|
|
Other |
|
|
Total |
|
||||||||
Balance at December 31, 2022 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Issuance of common stock under |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Repurchases of common stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Stock-based compensation expense |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net change in marketable investments, |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Foreign currency translation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Equity Plans
Restricted stock unit activity for the nine months ended September 30, 2024 is presented below (in thousands, except per share data):
|
|
|
|
|
Weighted- |
|
||
|
|
|
|
|
Average |
|
||
|
|
Number of |
|
|
Grant Date |
|
||
|
|
Shares |
|
|
Fair Value |
|
||
Unvested at December 31, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Unvested at September 30, 2024 |
|
|
|
|
$ |
|
||
Stock option activity for the nine months ended September 30, 2024 is presented below (in thousands, except per share data and contractual term):
|
|
|
|
|
Weighted - |
|
|
Weighted - |
|
|
|
|
||||
|
|
|
|
|
Average |
|
|
Average |
|
|
|
|
||||
|
|
|
|
|
Exercise |
|
|
Remaining |
|
|
Aggregate |
|
||||
|
|
Number |
|
|
Price Per |
|
|
Contractual |
|
|
Intrinsic |
|
||||
|
|
of Shares |
|
|
Share |
|
|
Term (in years) |
|
|
Value |
|
||||
Outstanding at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Outstanding at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested and expected to vest at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Stock-Based Compensation
Forrester recognizes the fair value of stock-based compensation over the requisite service period of the individual grantee, which generally equals the vesting period.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Cost of services and fulfillment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Selling and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
17
Forrester utilizes the Black-Scholes valuation model for estimating the fair value of options granted under the equity incentive plans and shares subject to purchase under the employee stock purchase plan, which were valued using the following assumptions:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||||||||
|
|
Employee Stock Purchase Plan |
|
|
Equity Incentive Plans |
|
|
Employee Stock Purchase Plan |
|
|
Employee Stock Purchase Plan |
|
|
Equity Incentive Plans |
|
|
Employee Stock Purchase Plan |
|
||||||
Average risk-free interest rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||||
Expected dividend yield |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||||
Expected life |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expected volatility |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||||
Weighted average fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Treasury Stock
As of September 30, 2024, Forrester’s Board of Directors had authorized an aggregate $
Note 14 — Restructuring and Related Costs
In January 2023, the Company implemented a reduction in its workforce of approximately
The following table rolls forward the activity in the restructuring accrual for the January 2023 action for the nine months ended September 30, 2024 (in thousands):
Accrual at December 31, 2023 |
$ |
|
|
Additional restructuring and related costs |
|
|
|
Non-cash charge (included above) |
|
( |
) |
Cash payments |
|
( |
) |
Accrual at September 30, 2024 |
$ |
|
In May 2023, the Company implemented a reduction in its workforce of approximately
The following table rolls forward the activity in the restructuring accrual for the May 2023 action for the nine months ended September 30, 2024 (in thousands):
18
Accrual at December 31, 2023 |
$ |
|
|
Additional restructuring and related costs |
|
|
|
Non-cash charge (included above) |
|
( |
) |
Cash payments |
|
( |
) |
Accrual at September 30, 2024 |
$ |
|
In February 2024, the Company implemented a reduction in its workforce of approximately
The following table rolls forward the activity in the restructuring accrual for the February 2024 action for the nine months ended September 30, 2024 (in thousands):
Accrual at December 31, 2023 |
$ |
|
|
Additional restructuring and related costs |
|
|
|
Non-cash charge (included above) |
|
( |
) |
Cash payments |
|
( |
) |
Accrual at September 30, 2024 |
$ |
|
Note 15 — Operating Segments
The Company's chief operating decision-maker (used in determining the Company's segments) is the chief executive officer and the chief financial officer. The Company operates in
The Research segment includes the revenues from all of the Company’s research products as well as consulting revenues primarily from advisory services (such as speeches and advisory days) delivered by the Company’s research organization. Research segment costs include the cost of the organizations responsible for developing and delivering these products in addition to the costs of the product management organization responsible for product pricing and packaging, and the launch of new products. During the third quarter of 2024, the Company realigned the reporting structure of its technology teams and as such certain technology costs are no longer reported within the Research segment, and are now reported within the line selling, marketing, administrative and other expenses. Prior period amounts have been recast to conform to the current presentation.
The Consulting segment includes the revenues and the related costs of the Company’s project consulting organization. The project consulting organization delivers a majority of the Company’s project consulting revenue.
The Events segment includes the revenues and the costs of the organization responsible for developing and hosting the Company's events.
The Company evaluates reportable segment performance and allocates 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 related costs, loss from sale of divested operation, interest expense, and other income. The accounting policies used by the segments are the same as those used in the consolidated financial statements.
19
The Company provides information by reportable segment in the tables below (in thousands):
|
|
Research Segment |
|
|
Consulting Segment |
|
|
Events Segment |
|
|
Consolidated |
|
||||
Three Months Ended September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Consulting revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Events revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Selling, marketing, administrative and other expenses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Restructuring and related costs |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Loss from sale of divested operation |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest expense and other income |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Loss before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
( |
) |
|||
|
|
Research Segment |
|
|
Consulting Segment |
|
|
Events Segment |
|
|
Consolidated |
|
||||
Three Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Consulting revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Events revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Selling, marketing, administrative and other expenses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Restructuring and related costs |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest expense and other income |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
Research Segment |
|
|
Consulting Segment |
|
|
Events Segment |
|
|
Consolidated |
|
||||
Nine Months Ended September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Consulting revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Events revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Selling, marketing, administrative and other expenses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Restructuring and related costs |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Loss from sale of divested operation |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest expense and other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
Research Segment |
|
|
Consulting Segment |
|
|
Events Segment |
|
|
Consolidated |
|
||||
Nine Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Consulting revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Events revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Selling, marketing, administrative and other expenses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Restructuring and related costs |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest expense and other income |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
20
Note 16 — Contingencies
From time to time, the Company may be subject to legal proceedings and civil and regulatory claims that arise in the ordinary course of its business activities. Regardless of the outcome, legal proceedings and claims can have a material adverse effect on the Company because of defense and settlement costs, diversion of management resources, and other factors. It is the Company's policy to record accruals for legal contingencies to the extent that it has concluded that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated, and to expense costs associated with loss contingencies, including any related legal fees, as they are incurred. The Company reviews its loss contingencies at least quarterly and adjusts its accruals and/or disclosures to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, or other new information, as deemed necessary. Once established, a provision may change in the future due to new developments or changes in circumstances and could increase or decrease the Company’s earnings in the period that the changes are made. Following an April 2023 mediation in a wage-related matter that resulted in a settlement agreement, the Company accrued $
21
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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, migration of our clients into our Forrester Decisions products, 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 international operations expose us to a variety of operational risks which could negatively impact us, our ability to offer new products and services, the use of Generative AI in our business and by our clients and competitors, 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, 2023. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
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 as either multi-year contracts or annual contracts, which are typically payable in advance on an annual basis. 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.
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).
22
We calculate CV at the foreign currency rates used for internal planning purposes each year. For comparative purposes, we have recast historical CV and wallet retention at the current year foreign currency rates and using the updated methodology as described on the investor relations section of our website. In addition, due to the divestiture of the FeedbackNow product line in the third quarter of 2024, we have recast our historical metrics to exclude FeedbackNow products and clients. We have included the recast metrics below for the nine months ended September 30, 2023, and we have also provided recast metrics dating back to the third quarter of 2022, 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:
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 |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
Contract value |
|
$ |
315.2 |
|
|
$ |
331.2 |
|
|
$ |
(16.0 |
) |
|
|
(5 |
%) |
Client retention |
|
|
73 |
% |
|
|
73 |
% |
|
|
— |
|
|
|
|
|
Wallet retention |
|
|
89 |
% |
|
|
89 |
% |
|
|
— |
|
|
|
|
|
Number of clients |
|
|
2,002 |
|
|
|
2,338 |
|
|
|
(336 |
) |
|
|
(14 |
%) |
Contract value at September 30, 2024 decreased by 5% compared to the prior year period due to wallet retention being at 89% for the period (representing retention and enrichment of the prior year CV base) and new client acquisition not fully offsetting the net retention loss. Client retention and wallet retention were both flat at September 30, 2024 compared to the prior year period. However, client retention increased by 1 percentage point and wallet retention was flat, compared to the prior quarter. The decrease in the number of clients from the prior year period is primarily attributable to 1) macroeconomic conditions affecting our client base including a) funding and budget pressure on our smaller technology clients and the technology industry in general, and b) the uncertain economic conditions during the past year caused by inflation, high interest rates, and geopolitical turbulence, and 2) the ongoing transition of our client base to our Forrester Decisions product platform that was launched in August 2021. As of September 30, 2024, approximately 78% of our overall CV was in our Forrester Decisions product platform. By the end of 2024, we anticipate that over 80% of our CV will be in our Forrester Decisions product platform. The remaining CV will represent non-Forrester Decisions CV products, primarily reprints, with less than 5% in our heritage research products. The ongoing macroeconomic conditions and product transition are anticipated to continue to pressure our key metrics through 2024.
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, 2023.
23
Results of Operations
The following table sets forth our statement of operations as a percentage of total revenues for the periods indicated:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research revenues |
|
|
75.2 |
% |
|
|
71.1 |
% |
|
|
73.1 |
% |
|
|
68.7 |
% |
Consulting revenues |
|
|
22.8 |
|
|
|
24.9 |
|
|
|
22.0 |
|
|
|
24.8 |
|
Events revenues |
|
|
2.0 |
|
|
|
4.0 |
|
|
|
4.9 |
|
|
|
6.5 |
|
Total revenues |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
100.0 |
|
|
|
100.0 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of services and fulfillment |
|
|
41.1 |
|
|
|
42.3 |
|
|
|
42.5 |
|
|
|
41.9 |
|
Selling and marketing |
|
|
37.3 |
|
|
|
35.2 |
|
|
|
36.4 |
|
|
|
33.9 |
|
General and administrative |
|
|
15.4 |
|
|
|
13.3 |
|
|
|
13.6 |
|
|
|
14.2 |
|
Depreciation |
|
|
1.9 |
|
|
|
2.0 |
|
|
|
1.9 |
|
|
|
1.8 |
|
Amortization of intangible assets |
|
|
2.3 |
|
|
|
2.7 |
|
|
|
2.3 |
|
|
|
2.5 |
|
Restructuring costs |
|
|
1.0 |
|
|
|
— |
|
|
|
2.4 |
|
|
|
3.4 |
|
Loss from sale of divested operation |
|
|
1.7 |
|
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
Income (loss) from operations |
|
|
(0.7 |
) |
|
|
4.5 |
|
|
|
0.4 |
|
|
|
2.3 |
|
Interest expense |
|
|
(0.8 |
) |
|
|
(0.7 |
) |
|
|
(0.7 |
) |
|
|
(0.6 |
) |
Other income, net |
|
|
0.5 |
|
|
|
0.5 |
|
|
|
0.8 |
|
|
|
0.4 |
|
Income (loss) before income taxes |
|
|
(1.0 |
) |
|
|
4.3 |
|
|
|
0.5 |
|
|
|
2.1 |
|
Income tax expense |
|
|
4.7 |
|
|
|
2.1 |
|
|
|
2.4 |
|
|
|
1.1 |
|
Net income (loss) |
|
|
(5.7 |
%) |
|
|
2.2 |
% |
|
|
(1.9 |
%) |
|
|
1.0 |
% |
Three and Nine Months Ended September 30, 2024 and 2023
Revenues
|
|
Three Months Ended |
|
|
Absolute |
|
|
Percentage |
|
|||||||
|
|
September 30, |
|
|
Increase |
|
|
Increase |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
|
|
(dollars in millions) |
|
|
|
|
|
|
|
|||||||
Total revenues |
|
$ |
102.5 |
|
|
$ |
113.4 |
|
|
$ |
(10.9 |
) |
|
|
(10 |
%) |
Research revenues |
|
$ |
77.1 |
|
|
$ |
80.6 |
|
|
$ |
(3.5 |
) |
|
|
(4 |
%) |
Consulting revenues |
|
$ |
23.4 |
|
|
$ |
28.2 |
|
|
$ |
(4.9 |
) |
|
|
(17 |
%) |
Events revenues |
|
$ |
2.1 |
|
|
$ |
4.6 |
|
|
$ |
(2.5 |
) |
|
|
(54 |
%) |
Revenues attributable to customers outside of |
|
$ |
23.6 |
|
|
$ |
25.8 |
|
|
$ |
(2.2 |
) |
|
|
(9 |
%) |
Percentage of revenue attributable to customers |
|
|
23 |
% |
|
|
23 |
% |
|
|
— |
|
|
|
|
|
|
|
Nine Months Ended |
|
|
Absolute |
|
|
Percentage |
|
|||||||
|
|
September 30, |
|
|
Increase |
|
|
Increase |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
|
|
(dollars in millions) |
|
|
|
|
|
|
|
|||||||
Total revenues |
|
$ |
324.4 |
|
|
$ |
362.7 |
|
|
$ |
(38.3 |
) |
|
|
(11 |
%) |
Research revenues |
|
$ |
237.3 |
|
|
$ |
249.2 |
|
|
$ |
(11.9 |
) |
|
|
(5 |
%) |
Consulting revenues |
|
$ |
71.3 |
|
|
$ |
90.0 |
|
|
$ |
(18.6 |
) |
|
|
(21 |
%) |
Events revenues |
|
$ |
15.8 |
|
|
$ |
23.5 |
|
|
$ |
(7.7 |
) |
|
|
(33 |
%) |
Revenues attributable to customers outside of |
|
$ |
73.4 |
|
|
$ |
79.0 |
|
|
$ |
(5.6 |
) |
|
|
(7 |
%) |
Percentage of revenue attributable to customers |
|
|
23 |
% |
|
|
22 |
% |
|
1 point |
|
|
|
|
||
24
Research revenues are recognized as revenue primarily on a ratable basis over the term of the contracts, which are generally 12 or 24-month periods. Research revenues decreased 4% and 5% during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods primarily due to the decrease in CV, as discussed above. From a product perspective, the decrease in revenues was primarily due to a decline in revenue from our reprint product and our other smaller and discontinued products. In addition, revenue from our subscription research products declined 1% and 2% during the three and nine months ended September 30, 2024, respectively.
Consulting revenues decreased 17% and 21% during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods. The decrease in revenues during the three and nine months ended September 30, 2024 was due to a decrease in delivery of consulting services due to lower client bookings.
Events revenues decreased 54% and 33% during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods. The decrease in revenues during the three and nine months ended September 30, 2024 was due primarily to a decrease in sponsorship revenues and a decrease in event ticket revenue.
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 |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
Cost of services and fulfillment (dollars in millions) |
|
$ |
42.2 |
|
|
$ |
48.0 |
|
|
$ |
(5.8 |
) |
|
|
(12 |
%) |
Cost of services and fulfillment as a percentage of |
|
|
41 |
% |
|
|
42 |
% |
|
(1) point |
|
|
|
|
||
Service and fulfillment employees |
|
|
690 |
|
|
|
790 |
|
|
|
(100 |
) |
|
|
(13 |
%) |
|
|
Nine Months Ended |
|
|
Absolute |
|
|
Percentage |
|
|||||||
|
|
September 30, |
|
|
Increase |
|
|
Increase |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
Cost of services and fulfillment (dollars in millions) |
|
$ |
138.0 |
|
|
$ |
151.9 |
|
|
$ |
(13.9 |
) |
|
|
(9 |
%) |
Cost of services and fulfillment as a percentage of |
|
|
43 |
% |
|
|
42 |
% |
|
1 point |
|
|
|
|
||
Cost of services and fulfillment expenses decreased 12% during the three months ended September 30, 2024 compared to the prior year period. The decrease was primarily due to (1) a $4.7 million decrease in compensation and benefit costs due to a decrease in headcount and incentive bonus costs and (2) a $0.9 million decrease in event expenses.
Cost of services and fulfillment expenses decreased 9% during the nine months ended September 30, 2024 compared to the prior year period. The decrease was primarily due to (1) a $12.1 million decrease in compensation and benefit costs due to a decrease in headcount and incentive bonus costs, partially offset by an increase in benefit costs (mainly due to a benefit during 2023 resulting from the introduction of the flexible vacation and personal paid time off policy in the United States), (2) a $1.0 million decrease in event expenses, (3) a $0.6 million decrease in professional services costs primarily due to a decrease in contractor costs, and (4) a $0.5 million decrease in facilities costs.
Selling and Marketing
|
|
Three Months Ended |
|
|
Absolute |
|
|
Percentage |
|
|||||||
|
|
September 30, |
|
|
Increase |
|
|
Increase |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
Selling and marketing expenses (dollars in millions) |
|
$ |
38.3 |
|
|
$ |
40.0 |
|
|
$ |
(1.7 |
) |
|
|
(4 |
%) |
Selling and marketing expenses as a percentage of |
|
|
37 |
% |
|
|
35 |
% |
|
2 points |
|
|
|
|
||
Selling and marketing employees (at end of period) |
|
|
663 |
|
|
|
680 |
|
|
|
(17 |
) |
|
|
(3 |
%) |
|
|
Nine Months Ended |
|
|
Absolute |
|
|
Percentage |
|
|||||||
|
|
September 30, |
|
|
Increase |
|
|
Increase |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
Selling and marketing expenses (dollars in millions) |
|
$ |
117.9 |
|
|
$ |
123.1 |
|
|
$ |
(5.1 |
) |
|
|
(4 |
%) |
Selling and marketing expenses as a percentage of |
|
|
36 |
% |
|
|
34 |
% |
|
2 points |
|
|
|
|
||
25
Selling and marketing expenses decreased 4% during the three months ended September 30, 2024 compared to the prior year period. The decrease was primarily due to a $1.7 million decrease in compensation and benefit costs due to a decrease in headcount, commissions expense, and incentive bonus costs.
Selling and marketing expenses decreased 4% during the nine months ended September 30, 2024 compared to the prior year period. The decrease was primarily due to a $5.7 million decrease in compensation and benefit costs due to a decrease in headcount, commissions expense, and incentive bonus costs, partially offset by an increase in benefit costs (mainly due to a benefit during 2023 resulting from the introduction of the flexible vacation and personal paid time off policy in the United States). This decrease was partially offset by a $1.2 million increase in professional services costs primarily due to an increase in consulting fees.
General and Administrative
|
|
Three Months Ended |
|
|
Absolute |
|
|
Percentage |
|
|||||||
|
|
September 30, |
|
|
Increase |
|
|
Increase |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
General and administrative expenses (dollars in |
|
$ |
15.7 |
|
|
$ |
15.1 |
|
|
$ |
0.6 |
|
|
|
4 |
% |
General and administrative expenses as a percentage |
|
|
15 |
% |
|
|
13 |
% |
|
2 points |
|
|
|
|
||
General and administrative employees (at end of |
|
|
255 |
|
|
|
280 |
|
|
|
(25 |
) |
|
|
(9 |
%) |
|
|
Nine Months Ended |
|
|
Absolute |
|
|
Percentage |
|
|||||||
|
|
September 30, |
|
|
Increase |
|
|
Increase |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
General and administrative expenses (dollars in |
|
$ |
44.2 |
|
|
$ |
51.7 |
|
|
$ |
(7.4 |
) |
|
|
(14 |
%) |
General and administrative expenses as a percentage |
|
|
14 |
% |
|
|
14 |
% |
|
|
— |
|
|
|
|
|
The fluctuation in general and administrative expenses was immaterial during the three months ended September 30, 2024 compared to the prior year period.
General and administrative expenses decreased 14% during the nine months ended September 30, 2024 compared to the prior year period. The decrease was primarily due to (1) a $5.4 million decrease in legal costs, due primarily to a $4.8 million provision for a legal settlement recorded in 2023 for a wage-related matter and related legal services and (2) a $2.5 million decrease in compensation and benefit costs due to a decrease in headcount and incentive bonus costs, partially offset by an increase in benefit costs (mainly due to a benefit during 2023 resulting from the introduction of the flexible vacation and personal paid time off policy in the United States). These decreases were partially offset by a $0.6 million increase in software costs.
Depreciation
Depreciation expense decreased by $0.3 million and $0.5 million during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods due to certain software assets becoming fully depreciated.
Amortization of Intangible Assets
Amortization expense decreased by $0.6 million and $1.7 million during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods due to a decrease in the amortization of trademark and technology intangible assets.
Restructuring and Related Costs
In May 2023, we implemented a reduction in our workforce of approximately 8% across various geographies and functions to better align our cost structure with our revised revenue outlook for the year, and to streamline our sales and consulting organizations to more efficiently go to market in support of driving contract value growth in the future. We recorded $7.5 million of severance and related costs for this action during the second quarter of 2023. In addition, we closed certain of our smaller offices both inside and outside the U.S. in order to reduce facility costs and better match our facilities to our hybrid work strategy. As a result of closing the offices, we recorded restructuring costs of $2.3 million, which included $1.3 million related to right-of-use asset impairments and accelerated amortization and $0.6 million related to impairments of leasehold improvements. We also incurred $0.7 million in contract termination costs.
26
In February 2024, we implemented a reduction in our workforce of approximately 3% across various geographies and functions to better align our cost structure with the revenue outlook for the year. We recorded $0.7 million of severance and related costs for this action during the fourth quarter of 2023, and $2.8 million during the first quarter of 2024. We recorded a restructuring charge of $3.8 million during the first quarter of 2024 related to closing one floor of our offices in California, of which $3.2 million related to an impairment of a right-of-use asset and $0.6 million related to an impairment of leasehold improvements. We anticipate all of the severance and related costs for this plan to be paid during 2024.
During the third quarter of 2024, we recorded an additional restructuring charge of $0.7 million related to closing both floors of our offices located at 150 Spear Street, San Francisco, California, of which $0.4 million related to an impairment of the right-of-use assets and $0.3 million related to an impairment of leasehold improvements. Also during the third quarter of 2024, we recognized $0.2 million of expense from the write-off of foreign currency translation adjustments related to the liquidation of a small foreign operation.
Loss From Sale of Divested Operation
Loss from sale of divested operation of $1.8 million was attributable to the sale of our FeedbackNow product line in August 2024.
Interest Expense
Interest expense consists of interest on our borrowings. The fluctuation for interest expense was immaterial during the three and nine months ended September 30, 2024 compared to the prior year periods.
Other Income, Net
Other income, net primarily consists of interest income, gains and losses on foreign currency, and gains and losses on foreign currency forward contracts. Other income, net decreased by $0.1 million and increased by $1.1 million during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods. The increase in other income, net for the nine months ended September 30, 2024 was primarily due to a $1.9 million increase in interest income, partially offset by a $0.9 million increase in foreign currency exchange losses.
Income Tax Expense
|
|
Three Months Ended |
|
|
Absolute |
|
|
Percentage |
|
|||||||
|
|
September 30, |
|
|
Increase |
|
|
Increase |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
Provision for income taxes (dollars in millions) |
|
$ |
4.7 |
|
|
$ |
2.4 |
|
|
$ |
2.3 |
|
|
|
99 |
% |
Effective tax rate |
|
|
(440 |
%) |
|
|
49 |
% |
|
(489) points |
|
|
|
|
||
|
|
Nine Months Ended |
|
|
Absolute |
|
|
Percentage |
|
|||||||
|
|
September 30, |
|
|
Increase |
|
|
Increase |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
Provision for income taxes (dollars in millions) |
|
$ |
7.9 |
|
|
$ |
3.8 |
|
|
$ |
4.1 |
|
|
|
106 |
% |
Effective tax rate |
|
|
461 |
% |
|
|
51 |
% |
|
410 points |
|
|
|
|
||
The increase in the effective tax rate during the nine months ended September 30, 2024 compared to the prior year period is primarily due to the following discrete tax items during the nine months ended September 30, 2024: 1) tax expense from the disposition of assets related to the FeedbackNow product line of $3.5 million, 2) tax expense from the settlement of share-based awards of $1.7 million, 3) foreign withholding taxes due to the dissolution of a foreign subsidiary of $0.3 million, and 4) a valuation allowance recorded against non-realizable state NOL carryforwards due to the dissolution of a domestic subsidiary of $0.5 million. However, for the fourth quarter of 2024, we anticipate that our effective tax rate will be approximately 40%, resulting in a full year 2024 effective tax rate in a range of 135% to 270%.
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.
27
The Research segment includes the revenues from all of our research products as well as consulting revenues primarily 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 costs of the product management organization responsible for product pricing and packaging, and the launch of new products. During the third quarter of 2024, we realigned the reporting structure of its technology teams and as such certain technology costs are no longer reported within the Research segment, and are now reported within the line selling, marketing, administrative and other expenses. Prior period amounts have been recast to conform to the current presentation.
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.
The Events segment includes the revenues and the costs of the organization responsible for developing and hosting our events.
We evaluate reportable segment performance and allocates 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 related costs, loss from sale of divested operation, interest expense, and other income. The accounting policies used by the segments are the same as those used in the consolidated financial statements.
|
|
Research Segment |
|
|
Consulting Segment |
|
|
Events Segment |
|
|
Consolidated |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Three Months Ended September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research revenues |
|
$ |
77,070 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
77,070 |
|
Consulting revenues |
|
|
4,335 |
|
|
|
19,034 |
|
|
|
— |
|
|
|
23,369 |
|
Events revenues |
|
|
— |
|
|
|
— |
|
|
|
2,088 |
|
|
|
2,088 |
|
Total segment revenues |
|
|
81,405 |
|
|
|
19,034 |
|
|
|
2,088 |
|
|
|
102,527 |
|
Segment expenses |
|
|
(27,886 |
) |
|
|
(9,580 |
) |
|
|
(3,042 |
) |
|
|
(40,508 |
) |
Year over year revenue change |
|
|
(7 |
%) |
|
|
(12 |
%) |
|
|
(54 |
%) |
|
|
(10 |
%) |
Year over year expense change |
|
|
(7 |
%) |
|
|
(11 |
%) |
|
|
(25 |
%) |
|
|
(10 |
%) |
|
|
Research Segment |
|
|
Consulting Segment |
|
|
Events Segment |
|
|
Consolidated |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Three Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research revenues |
|
$ |
80,606 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
80,606 |
|
Consulting revenues |
|
|
6,517 |
|
|
|
21,720 |
|
|
|
— |
|
|
|
28,237 |
|
Events revenues |
|
|
— |
|
|
|
— |
|
|
|
4,588 |
|
|
|
4,588 |
|
Total segment revenues |
|
|
87,123 |
|
|
|
21,720 |
|
|
|
4,588 |
|
|
|
113,431 |
|
Segment expenses |
|
|
(30,089 |
) |
|
|
(10,739 |
) |
|
|
(4,031 |
) |
|
|
(44,859 |
) |
|
|
Research Segment |
|
|
Consulting Segment |
|
|
Events Segment |
|
|
Consolidated |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Nine Months Ended September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research revenues |
|
$ |
237,314 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
237,314 |
|
Consulting revenues |
|
|
14,478 |
|
|
|
56,843 |
|
|
|
— |
|
|
|
71,321 |
|
Events revenues |
|
|
— |
|
|
|
— |
|
|
|
15,794 |
|
|
|
15,794 |
|
Total segment revenues |
|
|
251,792 |
|
|
|
56,843 |
|
|
|
15,794 |
|
|
|
324,429 |
|
Segment expenses |
|
|
(90,080 |
) |
|
|
(29,181 |
) |
|
|
(15,043 |
) |
|
|
(134,304 |
) |
Year over year revenue change |
|
|
(7 |
%) |
|
|
(17 |
%) |
|
|
(33 |
%) |
|
|
(11 |
%) |
Year over year expense change |
|
|
(5 |
%) |
|
|
(15 |
%) |
|
|
(7 |
%) |
|
|
(7 |
%) |
|
|
Research Segment |
|
|
Consulting Segment |
|
|
Events Segment |
|
|
Consolidated |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Nine Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research revenues |
|
$ |
249,211 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
249,211 |
|
Consulting revenues |
|
|
21,439 |
|
|
|
68,518 |
|
|
|
— |
|
|
|
89,957 |
|
Events revenues |
|
|
— |
|
|
|
— |
|
|
|
23,522 |
|
|
|
23,522 |
|
Total segment revenues |
|
|
270,650 |
|
|
|
68,518 |
|
|
|
23,522 |
|
|
|
362,690 |
|
Segment expenses |
|
|
(94,477 |
) |
|
|
(34,521 |
) |
|
|
(16,186 |
) |
|
|
(145,184 |
) |
28
Research segment revenues decreased 7% for both the three and nine months ended September 30, 2024 compared to the prior year periods. For the three and nine months ended September 30, 2024, research product revenues within this segment decreased 4% and 5%, respectively, primarily due to the decrease in CV, as discussed above. From a product perspective, the decrease in revenues was primarily due to a decline in revenue from our reprint product and our other smaller and discontinued products. In addition, revenue from our subscription research products declined 1% and 2% during the three and nine months ended September 30, 2024, respectively. For the three and nine months ended September 30, 2024, consulting product revenues within this segment decreased 33% and 32%, respectively, primarily due to decreased delivery of consulting and advisory services by our research analysts due primarily to lower client bookings for these services.
Research segment expenses decreased 7% and 5% during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods. The decrease in expenses during the three months ended September 30, 2024 was primarily due to a $2.3 million decrease in compensation and benefit costs primarily due to a decrease in headcount. The decrease in expenses during the nine months ended September 30, 2024 was primarily due to a $4.5 million decrease in compensation and benefit costs primarily due to a decrease in headcount.
Consulting segment revenues decreased 12% and 17% during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods. The decrease in revenues during the three and nine months ended September 30, 2024 was primarily due to a decrease in delivery of consulting services due to lower client bookings.
Consulting segment expenses decreased 11% and 15% during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods. The decrease in expenses during the three months ended September 30, 2024 was primarily due to a $1.3 million decrease in compensation and benefit costs primarily due to a decrease in headcount. The decrease in expenses during the nine months ended September 30, 2024 was primarily due to (1) a $4.8 million decrease in compensation and benefit costs primarily due to a decrease in headcount and (2) a $0.6 million decrease in professional services primarily due to a decrease in contractor costs.
Event segment revenues decreased 54% and 33% during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods. The decrease in revenues was primarily due to a decrease in sponsorship revenues and a decrease in event ticket revenue.
Event segment expenses decreased 25% and 7% during the three and nine months ended September 30, 2024, respectively, compared to the prior year periods. The decrease in expenses was primarily due to a decrease in event costs.
Liquidity and Capital Resources
We have historically financed our operations primarily through funds generated from operations. Research revenues, which constituted approximately 73% of our revenues during the nine months ended September 30, 2024, are generally renewable and are typically payable in advance. We used $2.0 million of cash in operating activities during the nine months ended September 30, 2024 and generated $9.8 million of cash from operating activities during the nine months ended September 30, 2023. The $11.8 million decrease in cash from operations for the nine months ended September 30, 2024 compared to the prior year period was primarily due to a $9.9 million decrease in net income (loss), partially offset by the changes in non-cash items affecting net income (loss), and an increase in cash used for working capital.
During the nine months ended September 30, 2024, we generated cash from investing activities of $4.8 million primarily from $6.0 million in proceeds from the sale of the FeedbackNow product line and $1.6 million in net maturities and sales of marketable investments, partially offset by $2.7 million of purchases of property and equipment, primarily consisting of computer software. During the nine months ended September 30, 2023, we generated cash from investing activities of $6.3 million primarily from $10.2 million in net maturities of marketable investments, partially offset by $3.9 million of purchases of property and equipment, primarily consisting of computer software.
We used $13.0 million of cash from financing activities during the nine months ended September 30, 2024 primarily due to $13.0 million for purchases of our common stock and $2.5 million in taxes paid related to net share settlements of restricted stock units, partially offset by $2.4 million of net proceeds from the issuance of common stock under our stock-based incentive plans. We used $18.2 million of cash in financing activities during the nine months ended September 30, 2023 primarily due to $15.0 million of discretionary repayments on our revolving credit facility, $4.1 million for purchases of our common stock, and $2.6 million in taxes paid related to net share settlements of restricted stock units, partially offset by $3.5 million of net proceeds from the issuance of common stock under our stock-based incentive plans. As of September 30, 2024, our remaining stock repurchase authorization was approximately $82.9 million.
We have a credit facility that provides up to $150.0 million of revolving credit commitments. The credit facility has a balance of $35.0 million at September 30, 2024 and matures in December of 2026. The credit facility permits us to increase the revolving credit commitments in an aggregate principal amount up to $50.0 million, subject to approval by the administrative agent and certain customary terms and conditions.
29
The credit facility 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 of September 30, 2024 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 6 – 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 7 years. As of September 30, 2024, remaining non-cancelable lease payments are due as follows: $4.0 million in 2024, $26.4 million within 2025 and 2026, $8.8 million within 2027 and 2028, and $6.2 million beyond 2028.
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, 2024, we had cash, cash equivalents, and marketable investments of $114.9 million. This balance includes $81.0 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, 2023. There have been no material changes to the critical accounting policies and estimates previously disclosed in that report.
30
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our assessment of our sensitivity to market risk since our presentation set forth in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined under Securities Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. Based upon their evaluation and subject to the foregoing, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance as of that date.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) of the Exchange Act) that occurred during the quarter ended September 30, 2024, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
31
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information set forth in the "Note 16 - Contingencies", in Part I, Item 1 of this Quarterly Report is incorporated herein by reference.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Form 10-K remain applicable to our business. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Through September 30, 2024, our Board of Directors authorized an aggregate $610.0 million to purchase common stock under our stock repurchase program, which includes an additional $25.0 million authorized in April 2024. During the quarter ended September 30, 2024, we purchased the following shares of our common stock under the stock repurchase program:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
Maximum Approximate Dollar |
|
||||
|
|
|
|
|
|
|
|
Total Number of Shares |
|
|
Value of Shares that May |
|
||||
|
|
Total Number of |
|
|
Average Price |
|
|
Purchased as Part of Publicly |
|
|
Yet be Purchased |
|
||||
|
|
Shares Purchased |
|
|
Paid per Share |
|
|
Announced Plans or Programs |
|
|
Under the Plans or Programs |
|
||||
Period |
|
(#) |
|
|
($) |
|
|
(#) |
|
|
(In thousands) |
|
||||
July 1 - July 31 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
87,870 |
|
August 1 - August 31 |
|
|
103,755 |
|
|
$ |
18.61 |
|
|
|
103,755 |
|
|
$ |
85,939 |
|
September 1 - September 30 |
|
|
163,990 |
|
|
$ |
18.53 |
|
|
|
163,990 |
|
|
$ |
82,900 |
|
Total for the quarter |
|
|
267,745 |
|
|
|
|
|
|
267,745 |
|
|
|
|
||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2024, no director or officer of the Company
32
ITEM 6. EXHIBITS
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
|
3.3 |
|
|
|
|
|
3.4 |
|
|
|
|
|
4.1 |
|
|
|
|
|
31.1 |
|
Certification of the Principal Executive Officer. (filed herewith) |
|
|
|
31.2 |
|
Certification of the Principal Financial Officer. (filed herewith) |
|
|
|
32.1 |
|
|
|
|
|
32.2 |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. (filed herewith) |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document With Embedded Linkbase Documents. (filed herewith) |
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL Document). (filed herewith) |
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FORRESTER RESEARCH, INC. |
||
|
|
|
By: |
|
/s/ L. CHRISTIAN FINN |
|
|
L. Christian Finn |
|
|
Chief Financial Officer (Principal financial officer) |
Date: November 8, 2024
34
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
I, George F. Colony, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Forrester Research, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ GEORGE F. COLONY |
George F. Colony |
Chairman of the Board and Chief Executive Officer |
(Principal executive officer) |
Date: November 8, 2024
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
I, L. Christian Finn, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Forrester Research, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ L. CHRISTIAN FINN |
L. Christian Finn |
Chief Financial Officer |
(Principal financial officer) |
Date: November 8, 2024
Exhibit 32.1
CERTIFICATION PURSUANT TO
SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Executive Officer of Forrester Research, Inc. (the “Company”), does hereby certify that to the undersigned’s knowledge:
1) the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, as filed with the Securities and Exchange Commission (the “10-Q Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2) the information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ George F. Colony |
George F. Colony |
Chairman of the Board and Chief Executive Officer |
Dated: November 8, 2024
Exhibit 32.2
CERTIFICATION PURSUANT TO
SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Financial Officer of Forrester Research, Inc. (the “Company”), does hereby certify that to the undersigned’s knowledge:
1) the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, as filed with the Securities and Exchange Commission (the “10-Q Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2) the information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ L. CHRISTIAN FINN |
L. Christian Finn |
Chief Financial Officer |
Dated: November 8, 2024