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01/11 16:23
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Total Revenue $111.7 million for Q2 2025, a decrease of 8% year-over-year. This decline was driven by mid-single-digit declines in research and consulting businesses and ongoing challenges in the events business.
Research Revenue $77.9 million for Q2 2025, down 7% year-over-year. Excluding the divestiture of FeedbackNow, research revenue declined by 5% year-over-year. The decline reflects ongoing budgetary and macroeconomic factors.
Consulting Revenue $23.4 million for Q2 2025, down 5% year-over-year. The consulting product line was flat, but advisory services were down compared to the prior year. This decline reflects federal government cost-cutting mandates targeting one-time consulting dollars.
Events Revenue $10.2 million for Q2 2025, a decrease of 23% year-over-year. Despite increased attendance and strong satisfaction scores, challenges with sponsorship revenues contributed to the decline.
Operating Income $13.7 million for Q2 2025, a decrease of 24% year-over-year. This was primarily driven by declining revenue in the quarter.
Net Income $9.8 million for Q2 2025, a decrease of 24% year-over-year. This decline was due to lower operating income and revenue.
Earnings Per Share (EPS) $0.51 for Q2 2025, a decrease of 25% year-over-year. This was driven by declining revenue and operating income.
Cash Flow from Operating Activities $23.1 million for the first half of 2025. No year-over-year comparison provided.
Client Retention 74% for Q2 2025, up 1 point quarter-over-quarter. This improvement reflects progress in sales organization and client engagement.
Wallet Retention 85% for Q2 2025, down 1 point quarter-over-quarter. This decline was driven by lower enrichment by existing clients.
Izola AI Tool Enhancements: Izola can now draw answers from graphics, figures, and charts in research, and converse with findings in specific reports. Client usage increased by 22% and prompts by 44% quarter-over-quarter.
New Research Constructs: Introduced 'Buying Networks' for B2B marketing and 'Total Experience Score' for B2C, which combines brand and customer experience indices. These frameworks are gaining traction among clients.
Government Sector Growth: Secured significant contracts with U.S. state/local governments and European federal agencies, driven by competitive wins and interest in generative AI applications.
Sales Pipeline Growth: Sales pipeline increased by 15% from Q1 2025. Improvements in leadership, hiring, and performance management are driving progress.
Event Attendance and Satisfaction: CX Summits in North America and Europe saw 11% and 21% increases in attendance, respectively, with satisfaction scores at all-time highs.
Focus on Generative AI: Positioning as a leading AI research company with extensive coverage of AI and enhancements to Izola tool.
Economic Instability: Ongoing instability in the economy is affecting enterprise and vendor clients, leading to decreased CV and wallet retention, and an 8% decline in total revenue.
Revenue Decline: Total revenue decreased by 8%, with mid-single-digit declines in research and consulting businesses and a 23% decline in the events business.
Events Business Challenges: The events business underperformed expectations, with sponsorship revenues and overall performance declining, despite increased attendance and satisfaction scores.
Consulting Business Headwinds: Consulting revenues decreased by 5%, with anticipated further headwinds in the second half of the year due to shifts in U.S. government spending and macroeconomic factors.
Sales Organization Performance: Challenges in upscaling the sales organization, including the need to address low-performing sales reps and improve hiring processes, are impacting the ability to sell and renew Forrester Decisions.
Macroeconomic Factors: Budgetary constraints and macroeconomic uncertainties are leading to lower enrichment by existing clients and impacting wallet retention.
Federal Government Spending Cuts: Federal government cost-cutting mandates are reducing opportunities for consulting dollars, although research CV opportunities are expanding.
Profitability Pressures: Operating income and net income decreased by 24%, driven by declining revenue and lower operating margins.
Sponsorship Revenue Decline: Sponsorship revenues for events are declining, contributing to the underperformance of the events business.
Market Uncertainty: Continued tariff, geoeconomic, and political volatility are creating an uncertain outlook for the second half of the year.
Economic Outlook for H2 2025: The company expects continued economic uncertainty in the second half of 2025, driven by tariff, geoeconomic, and political volatility. Despite these challenges, Forrester is maintaining its margin and EPS guidance for the full year.
Revenue Guidance for 2025: Forrester has tightened its revenue guidance for 2025 to a range of $400 million to $410 million, representing a 5% to 8% decline compared to 2024. The reduction is attributed to lower expectations in consulting and events businesses, while the research business is expected to decline mid-single digits.
Operating Margin and EPS Guidance for 2025: Operating margins are expected to be in the range of 8% to 9% for 2025, with EPS projected between $1.20 and $1.35 for the full year.
Consulting and Events Business Outlook: The consulting business is expected to decline mid- to high-single digits, while the events business is projected to decline by approximately 20% for the year. Adjustments reflect challenges in sponsorship revenues and consulting demand.
Sales Pipeline Growth: The total sales pipeline has grown by 15% from Q1 2025, indicating potential for improved sales performance in the second half of the year.
Government Sector Opportunities: Forrester anticipates growth opportunities in the government sector, driven by competitive wins and interest in generative AI applications. This is expected to contribute to improved performance in the second half of 2025.
Generative AI Tool (Izola) Enhancements: Forrester continues to refine its generative AI tool, Izola, which has seen a 22% increase in client usage and a 44% rise in prompts quarter-over-quarter. Enhancements include the ability to analyze data from graphics and charts, as well as interact with specific report findings.
Research and Product Development: Forrester introduced two new research constructs: the 'buying networks' series for B2B marketing and the 'total experience score' for B2C personas. These frameworks are expected to drive client engagement and revenue growth.
Stock Repurchase Program: The company did not repurchase any shares in the quarter but has approximately $80 million of stock repurchase authorization intact. They plan on reinstating their stock repurchase program in the second half of the year.
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.
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.
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.
The earnings call reveals several negative factors: revenue and EPS declines, goodwill impairment charge, and flat client retention. The Q&A highlights concerns over guidance sustainability and government sector challenges. The lack of share repurchases and weak financial guidance further indicate potential stock price decline. These factors, combined with a poor market environment and the company's inability to address specific risks, suggest a strong negative sentiment.
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