Forrester Research Q1, 2018 Research Revenues Flat, Events Revenues Up 2%

First-Quarter Financial Performance: Total revenues were $77.7 million for the first quarter of 2018, compared with $77.2 million for the first quarter of 2017. Research revenues were flat, and advisory services and events revenues increased 2%, compared with the first quarter of 2017. On a constant-currency basis, research revenues decreased 2%, and advisory services and events revenues increased 1%, compared with the first quarter of 2017.

Forrester adopted Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers,” as amended, as of January 1, 2018, on a modified retrospective method, such that the new standard was applied to revenue transactions as of January 1, 2018. Prior-year amounts were not restated; rather, the cumulative effect of adopting the standard was recognized as of January 1, 2018. The primary effect on our financial results in the first quarter of 2018 was a reduction in revenue of approximately $2.3 million compared to the prior standards and a reduction in deferred revenue of $7.8 million from the cumulative effect of adopting the standard on January 1, 2018. In addition, accounts receivable and deferred revenue were approximately $5.7 million lower as of March 31, 2018, due to the treatment of cancelable contracts under the new standard.

For the full year of 2018, Forrester expects that adopting the new standard will not have a significant effect on our financial results.

On a GAAP basis, net loss was $1.7 million, or $0.10 per diluted share, for the first quarter of 2018, compared with a net income of $3.0 million, or $0.16 per diluted share, for the same period in 2017.

On a pro forma basis, net loss was $0.2 million, or $0.01 per diluted share, for the first quarter of 2018, which reflects a pro forma effective tax rate of 31%. Pro forma net income excludes stock-based compensation of $2.0 million and amortization of acquisition-related intangible assets of $0.2 million. This compares with pro forma net income of $3.2 million, or $0.17 per diluted share, for the same period in 2017, which reflects a pro forma tax rate of 40%. Pro forma net income for the first quarter of 2017 excludes stock-based compensation of $2.0 million, amortization of acquisition-related intangible assets of $0.2 million, and investment losses of $0.2 million.

“Forrester attained revenue guidance for the first quarter of 2018 but missed EPS guidance,” said George F. Colony, Forrester’s chairman and chief executive officer. “Our EPS shortfall was primarily driven by the impact of the new revenue accounting rules, but we do not expect it to affect our full-year earnings. We are seeing meaningful progress in executing our strategy and remain confident in our view for 2018; therefore, we are leaving our full-year 2018 guidance unchanged.”