Forrester Research, Inc. (FORR) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates declining revenue and margins, particularly in consulting and events, despite some positive developments with AI Access. The Q&A reveals concerns about consulting exits and uncertainties in contract value growth. Although there is optimism for AI products, the overall financial outlook, including a significant EPS decline, suggests a negative sentiment. The lack of specific guidance and ongoing challenges in key business segments contribute to a negative rating, likely leading to a stock price decline in the near term.
Key Financial Performance
Q4 CV Declined 6% year-over-year. Reasons include macro uncertainty and challenges in the U.S. government strategy consulting pullback.
Q4 Revenue Declined 7% year-over-year to $101.1 million. Decline attributed to macro uncertainty and underperformance in consulting and events businesses.
Full Year 2025 Revenue Declined 8% year-over-year to $396.9 million. Decline driven by the final leg of migration to Forrester Decisions, and underperformance in consulting (down 9%) and events (down 29%).
Free Cash Flow (2025) Approximately $18 million. Positive cash flow driven by strong collections and improved vendor payment terms.
Retention (2025) Reached 87%, up 1 point from the start of 2025. Client retention improved by 3 points in Q4 and 4 points from the start of 2025, attributed to the positive impact of the new AI Access product.
Client Count (Q4 2025) Increased for the first time since Q4 2021. Growth attributed to a broader portfolio of products and the success of AI Access.
Multiyear Deals (Q4 2025) 72% of CV made up of multiyear deals, up from 69% in Q4 2024. Increase attributed to the attractiveness of AI products.
AI Access Bookings (2025) Over $5 million since its launch in September 2025. Positive forward momentum noted.
Research Revenue (Q4 2025) $76.6 million, a 4% decline year-over-year. Decline due to the transition from legacy research products to Forrester Decisions.
Consulting Revenue (Q4 2025) $21.8 million, a 16% decline year-over-year. Decline driven by a 50% drop in strategy consulting bookings and macro challenges.
Events Revenue (Q4 2025) $2.7 million, a 1% decline year-over-year. Decline attributed to lower sponsorship revenue and ticket sales.
Operating Income (Q4 2025) $4.2 million, a 53% decline year-over-year. Decline due to reduced revenue and ongoing cost management.
Net Income (Q4 2025) $3.2 million, a 53% decline year-over-year. Decline attributed to reduced revenue and macro challenges.
Earnings Per Share (Q4 2025) $0.17, a 53% decline year-over-year. Decline attributed to reduced revenue and macro challenges.
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Operating Highlights
AI Access product: Launched in 2025, AI Access generated over $5 million in bookings and saw a 55% year-over-year increase in unique users and a 65% increase in prompts. It enhances client experience by enabling the creation of original content and is integrated into Forrester Decisions.
Forrester AI: Rebranded from Izola, Forrester AI will expand its conversational capabilities and be embedded within client systems. It supports corporate initiatives and integrates into third-party workflows.
Regional events strategy: Shift from multi-day events to shorter, regional forums in North America, EMEA, and APAC to address client travel budget constraints and time limitations.
Restructuring and cost alignment: Reduced workforce by 8% and exited the strategy consulting business to focus on higher-margin subscription research. This restructuring aligns costs with revenue and supports AI investments.
Retention life cycle: Implemented a standardized process to improve client retention, led by a new customer success executive. Retention improved by 4 points year-over-year.
Focus on AI and research growth: Increased investment in AI capabilities and actionable research to drive growth. Introduced Blueprints for step-by-step guidance and expanded proprietary data offerings.
Sales leadership and execution: Appointed a new Chief Sales Officer with a proven track record to enhance sales culture and execution, aiming to return to CV growth.
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Risk or Challenges
Decline in Revenue: Forrester experienced a 7% year-over-year decline in Q4 revenue and an 8% decline for the full year 2025. This was attributed to challenges in research, consulting, and events businesses.
Consulting Business Challenges: The strategy consulting business faced a greater than 50% decline in bookings in 2025 due to U.S. government contract instability and macroeconomic challenges. This led to the decision to sunset the strategy consulting business line.
Events Business Underperformance: The events business saw a 29% decline in revenue for 2025, driven by lower sponsorship revenue and ticket sales. Tightened travel budgets and reduced client availability for multi-day events were cited as contributing factors.
Macroeconomic Uncertainty: Continued macroeconomic uncertainty negatively impacted Forrester's performance, particularly in consulting and events.
Retention and Wallet Retention Issues: While client retention improved to 87%, wallet retention remained low, primarily due to lower enrichment numbers. This impacted contract value (CV) performance.
Restructuring Costs: The company incurred $13.5 million to $14 million in restructuring costs, including workforce reductions of approximately 8%, to align costs with revenue.
Competitive Pressures in Strategy Consulting: The strategy consulting business faced increasing competition, further contributing to its underperformance and eventual discontinuation.
Shift in Events Strategy: Forrester is moving away from multi-day events to shorter, regional forums due to client feedback and budget constraints, which may pose risks during the transition.
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Guidance & Outlook
Revenue Guidance for 2026: Forrester expects revenue to be in the range of $345 million to $360 million, representing a decline of 9% to 13% compared to 2025. The revenue outlook anticipates better performance in the second half of the year.
Research Business Outlook: The research portion of the business is expected to approach 80% of total revenue in 2026, up from 75% in 2025. The research segment is projected to experience a mid-single-digit decline in revenue.
Consulting Business Outlook: The consulting business is expected to decline in the low 20% range in 2026 due to the planned sunset of the strategy consulting product line.
Events Business Outlook: The events business is projected to decline in the high teens for 2026, with a shift towards shorter, more intimate regional events.
Operating Margin Guidance: Operating margins are expected to be in the range of 6% to 6.5% for 2026.
Earnings Per Share (EPS) Guidance: Forrester expects EPS to be in the range of $0.72 to $0.82 for the full year 2026.
AI Investments and Product Enhancements: Forrester plans to expand its AI capabilities, including enhancing Forrester AI's conversational features and embedding it within client systems. New versions of Forrester Decisions will also be introduced to enable faster corporate initiatives.
Retention and Client Engagement: The company aims to improve client retention through consistent execution of the retention life cycle, which has shown double-digit improvements in seat holder retention.
Restructuring and Cost Alignment: Forrester has reduced its workforce by 8% and plans to use cost savings to fund AI investments. The company is exiting the strategy consulting business and restructuring its events portfolio to align costs with revenue.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you bucket the different pieces of the consulting business being exited versus continued, and is the mid- to high $60s million range a good base for 2027 and beyond?
A:Chris Finn explained that the sunsetting and strategy consulting will have a revenue impact of approximately $6 million. For 2026, there is a backlog of about $8 million, expected to tail off by the end of Q3 or early Q4. The range of high 50s to low 60s million is about right for 2027 and beyond.
Q:What is causing the 6% year-over-year decline in contract value growth?
A:Christophe Favre noted volatility and uncertainties in the U.S. government and business sectors, particularly on the user side. However, there is momentum in international markets and a turnaround in the high-tech sector. George Colony also mentioned the impact of government factors.
Q:Can you elaborate on the product pipeline for the year?
A:Carrie Fanlo stated that the focus is on providing clients with more ways to buy and integrate Forrester's offerings into their daily work. George Colony mentioned an 'AI Surge' scheduled for the first half of the year, with a backlog of product improvements and new offerings.
Q:What initiatives are being taken to improve the conference business revenue stream?
A:Carrie Fanlo highlighted two key areas: rebuilding the sponsorship sales organization and aligning events better with sponsor and attendee needs. This includes smaller, localized events and workshops, which were successful in 2025 and will continue in 2026.
Q:Why is there a disconnect between the value of Forrester's research and LLM models, and when might this change?
A:Christophe Favre emphasized that Forrester's AI solutions provide proprietary data and human expertise, which differentiates them from LLMs. George Colony added that public models are less trusted and predicted that 70% of revenue from AI models will come from private models in the future.
Q:Will there be changes in the sales process with the new sales leadership?
A:Christophe Favre outlined plans to reorganize the North American go-to-market strategy around six industries, focus on high-potential accounts, and improve retention through a business development mindset and better execution of the retention lifecycle. A balanced scorecard will measure both quantitative and qualitative sales metrics.
Q:How did AI Access perform in Q4, and how is it trending in the new year?
A:George Colony and Carrie Fanlo reported that AI Access exceeded expectations in Q4, with faster deal cycle times and increased client counts. Chris Finn noted that deal cycle times were cut by almost 50%, and a win-back campaign is planned for the first half of the year.
Q:Why is the velocity faster for AI Access?
A:Christophe Favre explained that AI Access is easier to buy and sell, with an attractive value proposition that helps win back old clients and compete against other organizations and internal skill-building efforts.
Q:Review of Unclear Management Responses
A:Management appeared to avoid directly answering Anja Soderstrom's question about specific product pipeline details for 2026, providing only general statements about upcoming offerings and strategies without concrete examples or data.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI Access
AI capability
AI evolution
AI investment
AI technology
APAC
Access product
Christophe
EMEA
action
afternoon Full
basis income
booking
business consulting
capability AI
challenge decline
change event
client content
client count
client product
client retention
content marketing
cost structure
culture sale
cycle client
cycle process
focus
idea
increase
initiative
landscape
life cycle
offering
portion
revenue decline
saving
segment
success
FORR Transcript
Forrester Research, Inc. (FORR) Q4 2025 Earnings Call Transcript
Unknown2-12
The earnings call summary indicates declining revenue and margins, particularly in consulting and events, despite some positive developments with AI Access. The Q&A reveals concerns about consulting exits and uncertainties in contract value growth. Although there is optimism for AI products, the overall financial outlook, including a significant EPS decline, suggests a negative sentiment. The lack of specific guidance and ongoing challenges in key business segments contribute to a negative rating, likely leading to a stock price decline in the near term.
Forrester Research, Inc. (FORR) Q3 2025 Earnings Call Transcript
Unknown10-30
The earnings call summary and Q&A highlight mixed signals. While net income and EPS saw significant increases, revenue declined in key areas like research and consulting, and guidance was weak. The Q&A revealed concerns about AI's impact and unclear management responses, but also noted improved conversion rates and potential in government sectors. The Carahsoft partnership offers promise, but results aren't immediate. Overall, the positives and negatives balance out, leading to a neutral sentiment for short-term stock price movement.
Forrester Research, Inc. (FORR) Q2 2025 Earnings Call Transcript
Unknown8-1
The earnings call summary indicates declining revenue across multiple sectors, lower operating margins, and a weak financial performance. Although there are efforts to improve the events business and positive trends in multiyear deals, the guidance for 2025 shows a revenue decline, and the Q&A reveals concerns about sales force conversion rates and sponsorship challenges. The lack of share repurchases and no clear guidance on improving sales conversions further contribute to a negative outlook, suggesting a likely stock price decline of -2% to -8% over the next two weeks.
Forrester Research, Inc. (FORR) Q1 2025 Earnings Call Transcript
Unknown5-7
The earnings call summary and Q&A indicate several negative factors: revenue and client value declines, goodwill impairment, and weak market conditions. Guidance for 2025 shows expected revenue decline and flat contract value growth. The Q&A further highlights challenges in government and financial sectors, and management's vague responses on attrition and client growth. Despite a strong cash position and share repurchase authorization, these factors suggest a strong negative sentiment and likely stock price decline.
FORR Report
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