Forrester Research Q3 2009 earnings call

This analysis does not look at areas of interest to investors, but seeks to pull out insights that are relevant to clients and prospects of Forrester Research, the number two advisory analyst firm, as well as communications and IT vendor analyst relations (AR) teams. 

This post is part one of two parts when it comes to an analysis of the Forrester Q3 earnings. This is because the 10-Q, which will come out within two weeks of the earnings call, has more detail than the currently available 8-K and the earnings call.  We will review that document when it is available. 

The key take away from Forrester’s Q3 2009 earnings announcement is that Forrester is weathering this economic downturn much better than the last recession. In that recession, Forrester saw revenues plunge ~34% and experienced a broad and deep reduction in staff. After three quarters in 2009, overall revenue is only down 3% with research revenues actually up 2%. Headcount is 960, down 8% from 2008 year end, but still 23% higher than YE2007. In addition, Forrester currently has 16 sales and 4 research openings so it is not simply reducing headcount, but selectively filling positions as well. Furthermore, CEO George Colony told the Wall Street analysts on today’s call that he plans on adding 10 to 20 sales headcount in the 4^th quarter (it is not clear if this expansion includes or is incremental to the current sales job openings on the website). This contrasts with the 51% reduction in staff from YE2000 to YE2002. Finally, at the end of Q3 2009 Forrester is sitting on $280m in cash and short term investments.

Why should this matter to enterprise clients and vendor analyst relations (AR) staff? Because Forrester is not in survival mode it has not had to slash sales or research headcount. Rather it has continued to keep the client–facing staff at a level that makes retaining existing and adding new enterprise clients relatively straightforward. This means that Forrester’s ability to maintain its research agenda and marketplace influence are not being seriously imperiled as 2009 comes to a close.

For AR teams this means that there is unlikely to be disruptive analyst turnover that would negatively impact analyst lists and interactions plans. Unfortunately, there is still the likelihood that sales representatives and analysts will be hitting the vendor community hard for incremental consulting/service units engagements and Roleview seats. Vendors should realize that not buying

Forrester Research Q2 2009 earnings

This analysis does not look at areas of interest to investors, but seeks to pull out insights that are relevant to clients and prospects of Forrester Research, the number two advisory analyst firm, as well as communications and IT vendor analyst relations (AR) teams. 

Forrester Research (NASDAQ: FORR) reported its Q2 2009 earnings on July 30, 2009. See the end of the blog entry for a summary and link to the press release. 

This post is part one of two parts when it comes to an analysis of the Forrester Q2 earnings. This is because the 10-Q, which comes out within two weeks of the earnings call, has more detail than the currently available 8-K and the earnings call.

Forrester’s acquisition of JupiterResearch was made in Q3 2008 which makes Q2 year-over-year comparisons not entirely relevant for our purposes. As a consequence, we will be checking sequential quarter comparisons because they will show the trends in this downturn and be more informative for AR and research clients.

Q2 revenues were down 3% year-over-year to $61.6m, about what guidance predicted. Cash and short term investments were $239.4m, up approximately $26m year-over-year and $13.6m over Q1.

As expected, consulting (called Advisory by Forrester for financial reports) and events revenues were down which is typical during a recession. Consulting was down 8%. Forrester did not give numbers, but said Events did meet the reduced expectations in terms of revenue, overall was profitable and even saw one event, Customer Experience Forum 2009, sell out.

There was a decrease of 92 total clients from Q1 to 2,493 (150 total decline since year end 2008). Forrester stated these were mostly