Forrester Research (FORR) Q4 2001 earnings summary

Executive summary

• Revenue rose 1% to $159.1M in 2001, while operating income fell to $20.6M and net income to $18.1M amid weak technology spending and recessionary pressures.

• The launch of WholeView Research and TechRankings, alongside organizational and expense changes, positioned the business for a gradual recovery; management expected difficult conditions to persist into 2002.

Financial highlights

• Revenue was $159.1M, up 1% YoY; core research revenue increased 3% to $123.7M, while advisory services and other revenue declined 3% to $35.4M.

• Operating income was $20.6M vs. $27.1M; net income was $18.1M vs. $21.6M; diluted EPS was $0.76 vs. $0.88.

• Adjusted diluted EPS was $0.84 in 2001, excluding reorganization costs; reported diluted EPS was $0.76.

• Operating cash flow was $28.7M vs. $70.0M in 2000, primarily reflecting lower agreement value and related accounts receivable and deferred revenue balances.

Outlook and guidance

• Management expected economic conditions to persist into 2002, with some improvement in 2003; lower agreement value and renewal rates pointed to possible revenue decline in 2002.

• The tech recovery was forecast to begin gaining momentum in Q3 2002, with high-tech growth exceeding 10% in 2003.

• A Jan. 2002 workforce reduction of ~126 positions was expected to trigger a $4.0M–$6.0M reorganization charge in Q1 2002.

• Cash, marketable securities, and operating cash flow were expected to cover working capital, financing, and capital expenditure needs for at least two years.