Forrester Research (FORR) Q4 2006 earnings summary

Executive summary

• FY06 revenue rose 19.9% to $181.5M, net income increased 48.7% to $17.8M, and operating cash flow climbed 91.2% to $45.8M; client count grew 15.2% to 2,312.

• Results were accompanied by major long-term investment in product and service, a role-based strategy, and organizational realignment effective Jan. 1, 2007.

Financial highlights

• FY06 revenue was $181.473M, up 20% YoY; research revenue reached $114.876M (+19%) and advisory services and other revenue $66.597M (+22%).

• Net income was $17.756M versus $11.944M in 2005; diluted EPS was $0.77 versus $0.55, both on restated results.

• Income from continuing operations was $16.057M; operating income was $20.042M, compared with $14.783M in 2005.

• Deferred revenue increased 15% to $99.9M; agreement value rose 16% to $172.8M at year-end.

• Operating cash flow was $45.762M versus $23.932M; cash and available-for-sale securities totaled $207.833M at year-end.

Outlook and guidance

• RoleView’s role-focused research, community features, and tools were expected over time to lift renewals, expand existing accounts, win new clients, and accelerate prospect close rates.

• FLB had grown at >50% annually with high renewal rates and premium pricing; management made its role-based model the organizing strategy for research, events, data, consulting, and boards.

• Cash, investments, and operating cash flows were expected to cover working capital, financing, and capital spending needs for at least two years; further product and infrastructure investment was planned.