FORR — Forrester Research, Inc.

Summary of Forrester's Q4 and Full Year 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 Revenue: $101.1 million, down 6% from $108 million in Q4 2024.
• Full Year Revenue: $396.9 million, an 8% decline from $432.5 million in 2024.
• Contract Value (CV): Declined 6% in Q4 and 8% for the full year, with improvements noted compared to previous quarters.
• Free Cash Flow: Approximately $18 million for 2025.
• Client Retention: Improved to 87%, up 1 point year-over-year; Q4 saw a 3-point increase.
• Net Income: $3.2 million for Q4, down 53% year-over-year; full year net income decreased 21% to $22.2 million.
• Earnings Per Share (EPS): $0.17 for Q4, down from $0.36; full year EPS at $1.16, also a 21% decline.

2. Strategic Updates and Business Highlights

• Forrester is pivoting to focus on AI, launching AI Access, which generated over $5 million in bookings since its September launch.
• The company is restructuring its consulting segment, exiting strategy consulting due to poor performance, particularly in U.S. government contracts.
• Events strategy is shifting to shorter, localized formats in response to client feedback on travel budgets and time commitments.
• A new Chief Sales Officer, Christophe Favre, aims to enhance sales execution and culture of growth.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Expected to be between $345 million and $360 million, reflecting a decline of 9% to 13% from 2025.
• Anticipated declines in consulting (low 20s%) and events (high teens%), while research is expected to decline in the mid-single digits.
• Operating margins projected between 6% to 6.5% for 2026, with a focus on improving retention and new product offerings.

4. Bad News, Challenges, or Points of Concern

• Continued macroeconomic uncertainty and declines in the consulting and events segments are significant challenges.
• Strategy consulting bookings dropped over 50% in 2025, leading to the decision to exit this business line.
• The events business saw a 29% decline in revenue for the year, primarily due to reduced sponsorship and ticket sales.
• Overall revenue performance for 2025 was at the low end of guidance, raising concerns about future growth.

5. Notable Q&A Insights

• The restructuring of the consulting business is expected to result in approximately $6 million in revenue loss, with an existing backlog of $8 million to service through 2026.
• Sales leadership changes aim to improve retention and growth, with a new focus on industry-specific strategies and enhancing sales processes.
• There is a noted disconnect between the perceived value of Forrester's research versus large language models, but management believes their proprietary data and human expertise will maintain client trust.
• AI Access is seen as a key driver for client engagement and retention, with positive feedback on its ease of use and effectiveness in decision-making processes.

Overall, while Forrester faces significant challenges, particularly in consulting and events, there are positive signs of improvement in client retention and the potential for growth through AI initiatives and restructuring efforts.