Q4 2019 Earnings Call
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Good afternoon. Thank you for joining today's call with me today, our George Colony, Forresters Chairman of the board and CEO Kelley Hippler, Forresters, Chief sales Officer, and Mike Doyle Forresters, Chief Financial Officer, George will open the call.
Kelly will follow George to discuss sales and Mike Doyle will discuss our financials well then open the call to Q Onec a replay of this call will be available until March 14, 2020, and can be accessed by dialing 18888437 for one nine.
Or internationally, one six threeo six five to three zero for Twoq. Please reference the passcode 6135978 pound before we begin I'd like to remind you that this call will contain forward looking statements within the meaning of the price.
Securities Litigation Reform Act of 1995 words, such as expects believes anticipates intends plans estimates or similar expressions are intended to identify these forward looking statements. These statements are based on the company's current plans.
And expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward looking statements. Some of the important factors that could cause actual results could differ are discussed in our reports and filings.
With the Securities and Exchange Commission.
Company undertakes no obligation to update publicly any forward looking statements whether as a result of new information.
Sure events or otherwise I'll now hand call over to George colony.
Thank you for joining the Forrester Q4 2019 call.
Following my remarks Kelley Hippler for sure CSL, we'll update on sales and then Mike Doyle will conclude with the financial review for the quarter. We will then take questions.
On many levels 29 team was a watershed year for Forrester.
We successfully integrated serious decisions, we grew our legacy research business and we continue to enhance and extend new products.
And we did all of this will executing on our financial plan, finishing the year at the upper end of revenue guidance and exceeding EPS targets.
This marks two consecutive years of double digit EPS growth and we're expecting a third year in 2020.
Hi retention was at 72% one point above Q4, 2018 and client enrichment. That's the average growth of client accounts remained at healthy levels at 106%.
In its first year the serious decisions acquisition was accretive to earnings.
We are now a full year into the acquisition of serious decisions and are excited about the opportunities that the deal is unlocking.
As with all acquisitions. This one had its challenges highlighted by the changes we've made in sales in may when we brought the serious decision salesforce under the leadership Forresters global sales team.
Well this created short term bookings gaps at mid year and higher than planned attrition in this year is salesforce. It it's at the company up to achieve its 2020 plan.
We chose to address our challenges earlier, rather than later and I believe that that strategy will pay off.
With the structural integration complete we're now operating as one company.
In 2020, we are focused on three imperatives as an integrated operation.
Number one cross sell.
The Forrester.
The Forrester and serious decision sales forces.
We're fully integrated as of January one with all salespeople selling both portfolios, while we internally call everyone that sells everything.
We made this decision because Forrester research and serious decisions research is typically sold to the same buyer in budget Center.
This position salespeople to cross sell the two research products Forrester to serious decisions clients and serious decisions to Forrester clients.
In 2019, we reached 2.9 million in cross sold deals.
And the Kelly's remarks shield described the combined salesforce in more detail.
The second imperative is to expand the research staff for the serious decisions product line.
What we experienced higher than expected attrition in the serious Salesforce in 2019 research organization attrition was below plan, which kept the products strong and moving forward as integration proceeded.
In 2020, we will be expanding the serious decisions research staff to increase the already strong value proposition for clients.
And finally, we will continue to work to create a seamless portfolio research that spans Forrester and a serious decisions.
Now I described this architecture on the Q3 call, but I want to review it again on this call because it is fundamental to our go forward positioning.
The value proposition of the new Forresters simple, but powerful.
In the age of the customer where companies must enhance experience and operate differently to build customer obsession.
They require help on three levels, all which are now provided by Forrester.
Number one vision research.
Companies must have the ability to see around the next quarter to see future opportunities, new external threats and changing competitive dynamics.
An example of this would be our new Tech research, which plugs our clients into emerging technology early so they can gain first mover status.
Vision research has been a traditional strengthened focus of Forrester and it is used by our clients to increase their speed.
Secondly strategy research.
Once companies have a clear view of the future Forrester works of them to plan the choices they should make what technologies to invest in how to organize what skills to acquire where to focus executive attention and what markets to attack.
For sure and serious decisions have long track records of directing our clients towards the right strategic choices and examples would be forresters extensive library of technology comparison waves.
Serious decisions demand waterfall framework.
Having the right strategy enables companies to beat competitors.
And finally three execution research.
Once companies see the future and have made the right choices serious decisions research directs them on how to operate.
What models to deploy how to make fact based decisions.
And how to apply best practices and benchmarks to bring more precision to operations.
The serious way as a methodology for how to operate enabling our clients to align BTB marketing sales and product to optimize the revenue engines.
Companies are able to achieve this alignment grow 19% faster than unaligned companies.
In 2020, we will be building out all three levels of research vision strategy and execution.
In addition movie we will be creating a seamless experience across all three levels aligning topics technologies in themes.
So this portfolio is differentiated unique offering our clients a one stop shop that can make them faster more competitive and able to grow at higher rates in the age of the customer.
In addition to leveraging the Sears decisions acquisition, we plan to expand to other new products certification and our real time customer experience cloud, what we call feedback now.
Both of these products experienced strong growth in 2019, and we expect that momentum to continue in 2020.
Now as a final note I wanted to talk about forces financial position as we move into the year, we continue to retire debt incurred with the serious decisions acquisition. During 2019, we paid down 42 million of debt, including 36 million of discretionary payments on our revolver, we will continue to accelerate debt payments in 2020 clearing our financial.
Decks for future acquisitions.
So to conclude we are happy to have the integration of serious decisions complete we're excited about our prospects in 2020 and beyond.
The vision strategy and execution portfolio that we have built.
Built resonates with our clients and a points the company toward accelerated growth intensified client engagement and higher renewal rates.
So I would like to pass the call over to Kelley Hippler, Forresters Chief sales Officer Kelly.
Thank you George.
Our original plan for 2019 wants to run the serious decision sales team separately from the Forrester sales organization.
George mentioned in May we accelerated the integration and move the serious decisions teams under Forrester sales leader.
Well serious decisions attrition remained in the mid Thirtys through year end legacy Forrester attrition was down 3% of our prior year.
Our ramp rep productivity on the legacy Forrester side increased for the 12 consecutive quarter.
We also saw double digit improvement and sales productivity for our reps selling this area decisions portfolio.
In the quarter, our 12 month rolling client retention improved over prior year.
Thanks to our strong new business efforts. We also saw an increase in total client count.
Now turning to 2020.
In mid January we held a global sales kick off in Boston. It was impressive to see the growth in our organization from 528 to just shy of 700 over the course of the past year.
Sales kick off marked a pivotal moment in our company's history as our sellers had an opportunity to meet as a fully integrated team and the customer engagement model.
This also provided a greater chance to network and share best practices with colleagues from across the globe.
There was a palpable excitement around the value that the new Forrester will bring to our clients across the vision strategy and execution to help them drive growth.
During the sales kick off client panel one of our largest healthcare clients expressed his excitement about working with the new for us during 2020 sharing that quote you have both size at the modern organization needs operational and Aspirationally, helping us to get ahead in the market I show up everyday to solve business problems.
Summer strategic summer operational having people that you trust in the trenches with you solving these large problems is powerful.
To ensure that our 2020 plan is met and that we continue to lay the groundwork for double digit growth in future years, our priorities for 2020 will be to number one increased sales head count not only are we back filling those individuals who left the organization with sales reps, who have the treats and drivers that aligned to the customer engagement model.
But we will also be expanding the sales force by 5% to start the year.
Number two deliver cross product training to help our clients reach their desired outcome Forresters training sales rep, and our customer success organization on the Forrester and serious decisions portfolios.
We will also be leveraging our sales footprint to accelerate the growth of feedback now.
Number three improve the employee experience our own research tells us that customer experience and employee experience go hand in hand, we will continue to build out our sales training and enablement function to make sure that our teams are armed with the training collateral and tools needed to be effective in their role and to allow them to maximize.
Our time partnering with our clients.
We will continue to update you on our progress against these three priorities throughout the course of 2020 and with that I'd like to turn the call over to Mike Doyle to review, our Q4 and full year financial results.
Thanks Kelly.
I will now begin my review of Forresters financial performance for the fourth quarter of 2019, including a look at our financial results. The balance sheet at December 30, Onest, our fourth quarter metrics and the outlook for the first quarter and full year 2020.
Please note that the income statement numbers I'm reporting our pro forma and exclude the following items.
Impact on revenue from the acquisition related fair value adjustment to deferred revenue.
Stock based compensation expense amortization of intangibles acquisition and integration costs and net gains and losses from investments.
We continue to utilize an effective tax rate of 31% for pro forma purposes for 2000 in 19.
In addition, we'll continue to highlight the impact of serious decisions on our consolidated results by indicating year over year performance with and without the acquisition and the relevant section. So my comments.
For the fourth quarter for us to deliver pro forma revenue the upper end of guidance and earnings per share that exceeded guidance.
Revenue grew by 27% for the quarter and by 6%, including excluding serious decisions.
Expenses were favorable to expectations driven by open sales head count and bonus savings.
Our full year earnings exceeded guidance by seven cents per share and increased 21% versus prior year, while we were integrating the largest acquisition and Forresters history.
We did experience some increased turnover in sales, which impacted series decisions performance in 2019 and will impact our growth rate in the first half of 2020.
We are how we're very happy with the product performance and client satisfaction with the serious decisions product line and it's a big part of our growth plan for 2020.
Now, let me turn to a more detailed review of our fourth quarter results.
Force Forresters fourth quarter revenue increased by 27% to 125.1 million from 98.6 million in the fourth quarter of 2018.
Serious decisions impacted growth by approximately 21% in the quarter.
Fourth quarter research services revenue increased by 29% to 80.1 million from 62.1 million and series decisions accounted for 26% of the growth in the quarter.
Research services revenue represented 64% of total revenue for the quarter.
Fourth quarter Advisory services and events revenue increased by 23% to 45 million from 36.5 million and serious decisions accounted for 14% of growth in the quarter.
Visor services and events revenue represented approximately 36% of the total revenue for the quarter.
The international revenue mix was flat to the fourth quarter of 2018 serious decisions impacted international revenue mix by a negative 1% for the quarter.
I would now like to take you through the product activity behind our revenue starting with Forrester research.
First is published research and decision tools enable clients to better anticipate and capitalize on the disruptive forces affecting their businesses and organizations.
We believe Forrester research provides insights and frameworks as well as operational tools to drive growth and a complex and dynamic market.
Research services revenue increased by 36% for the fourth quarter of 2019 with the serious decisions accounting for all of the growth for the quarter.
Onto our connect offerings, which encompass our leadership boards executive programs and certification products.
Leadership Wars provide peer connections to allow clients to collaborate and create plans born from practical experience.
Executive programs pairs clients with former C level executives trusted partners, who clients can count on to help them make big calls.
Our certification products provide companies with training and certification opportunities for their teams that combine hands on activities with instruction from Forrester analysts.
As of December 30, Onest, 2019, Forrester leadership boards and executive programs at a total of 1459 members down 1% compared to the prior quarter and down 2% compared to prior year.
Connect revenue increased by 7% for the fourth quarter of 2019, driven mainly by our certification offering.
Serious decisions accounted for 3% of the growth.
Our analytics products help clients understand and anticipate dynamic and changing b to b and B to C customers.
Our services provide a view in a potential potential future change and offer powerful measures and models to create a blueprint for growth.
For the fourth quarter revenue increased by 27% driven by feedback now which accounted for 22% of the growth in the quarter.
Forresters advisory and consulting offerings help clients apply forresters intellectual property to drive action across the enterprise, enabling them to act faster and smarter in a market that rewards customer obsession speed and agility.
Revenue increased by 17% for the fourth quarter, driven by strong delivery and high utilization of our consultants and analyst serious decisions accounted for 7% of the growth in the quarter.
Our events business provides a leading contact content via immersive experiences focused on enabling professionals and customer experience digital transformation privacy and security and sales and marketing.
In the fourth quarter, we held seven events in North America, we held customer experience San Francisco.
Data strategies and insights in Austin.
Serious decisions technology exchange in Denver, and our Q4 serious decisions Road show.
In London, we held both our CX Europe and serious decisions Europe events and in Singapore, We held our serious decisions APEC summit.
Fourth quarter events revenue increased by 65% with all growth being related to series decisions.
Legacy Forrester events revenue remained flat year over year, despite having one less event in the quarter compared to prior year.
I will now highlight the expense and income portions of the income statement.
Operating expenses for the fourth quarter increased by 27% and 107.6 million compared to 84.9 million the prior year.
Cost of services and fulfillment increased by 28% with all of the growth related to serious decisions.
Selling and marketing expenses increased by 29% with 21% of the growth due to serious decisions and the remainder due mainly to higher head count Merit and commissions.
General and administrative costs increased by 17% with 12% of the growth related to series decisions and the remainder due to higher facilities and services costs.
Overall headcount increased 25% compared to the fourth quarter of 2018 with 21% of the growth due to serious decisions.
At the end of the fourth quarter, we had a total staff a 1795 people, including products and advisory services staff of 688.
And total sales force of 698.
Products and advisory services head count increased by 23% year over year with 18% due to serious decisions total salesforce increased by 32% year over year with 29% due to serious decisions.
Operating income was 17.5 million were 14% of revenue compared to operating income of 13.7.
Fourth or 13.9% of revenue in the fourth quarter of 2018.
Interest expense for the quarter was 1.7 million this compared to no interest expense in the fourth quarter of 2018.
Net income for the quarter was 10.7 million and earnings per share was 57 cents on diluted weighted average shares outstanding of $18.7 million compared with net income of 9.6 million and earnings per share of 52 cents on 18.5 million diluted weighted average shares outstanding in the fourth quarter of 2000.
And 18.
Ill now review Forresters fourth quarter metrics to provide more perspective on the operating results for the quarter.
These metrics are inclusive of acquisitions when appropriate.
Agreement value. This represents the total value of all contracts to research and advisory services in place without regard to the amount of revenue that has already been recognized.
As of December 31, 2019 agreement value was 358 million up 34% from the fourth quarter of 2018 serious decisions impacted Q4 agreement value growth by 25%.
It's compared to December through in 2019, our total for client companies was 2880.
Up 22% compared to last year, and essentially flat compared to the third quarter.
Serious decisions impacted Q4 client count growth by approximately 17%.
Client count unlike a retention in enrichment metrics as a point in time metric at the end of each quarter.
As we mentioned in second quarter, we've updated the methodology, we used to calculate client retention dollar retention and enrichment to focus on account level activity as opposed to contract level activity. Additionally, we have broaden the products and services included in the calculation, which better reflects our solutions oriented approach to serving our clients.
Historical values have been restated to allow for appropriate comparisons the retention and enrichment metrics reflect legacy Forrester performance and exclude the impact of our recent acquisitions.
Forresters client retention rate was 72% for the fourth quarter down one point compared to last quarter end up one point compared to last year.
Our dollar retention rate was 90% on Chen unchanged compared to prior to last quarter and prior year.
Forresters enrichment rate was 106% for the fourth quarter down five points compared to last quarter end down three points compared to last year.
We calculate client and dollar retention rates and enrichment rates on a rolling 12 month basis due to the fluctuations which can occur between quarters with deals to close early or slip into the next quarter.
The rolling 12 month methodology captures the proper trend information.
Now I'd like to review the balance sheet.
Our cash at December 31, 2019 was 67.9 million, which has a decrease of $72.4 million from 140.3 million at the end of 2018.
The decrease in cash was due to the funding of the serious decision acquisition, Lex, which I will explain in more detail.
Cash paid for serious net of cash required was 237.7 million of which 175 million was funded with debt and 62.7 million funded with cash on hand, we also paid 4.6 million of debt issuance costs as a part of the transaction.
Cash operations.
From operations was 2.8 million for the quarter as compared to 1 million in the fourth quarter last year for the full year cash from operations was $48.4 million, which is an increase of 26% from 2018.
Debt payments were $1.6 million during the quarter.
And 42.3 million for the year, including 36 million of discretionary payments on our revolver.
Debt outstanding at December 31, 2019 was 132.8 million.
We received 700000 in cash from ops Inge exercise in the quarter as compared to 1.8 million in the fourth quarter of last year.
Accounts receivable Decemberthirty, one 2019 was 84.6 million compared to 67.3 million as of December 31, 2018.
Our days sales outstanding at December 31, 2019 was 63 days consistent with the prior year and accounts receivable over 90 days was 6% at December 31, 2019, compared to 4% as of December 31 2018.
Deferred revenue at December 31, 2019 was $179.2 million, an increase of 32% compared to December 31 2018.
In closing, we had a very good quarter end year.
Pro forma revenue performed at the upper end of expectations earnings per share exceeded guidance and cash flow was up 26% for the full year, which allowed us to continue to pay down our debt.
Today, we have paid down 42.3 million, bringing our debt outstanding to 132.8 million, leaving the balance sheet in excellent shape.
We entered 2020 have integrated three acquisitions in less than two years, while sustaining double digit earnings per share growth.
As Kelly mentioned, we've opened up the sale of serious decisions product to the entire Salesforce, which will drive the serious decisions product growth double digit growth levels.
The first half of 2020 will focus on training existing reps beginning in the broader sales rollout of the Sears is isn't product and accelerating the higher hiring of new sales reps as we do this growth will gradually accelerate throughout the year.
In addition, we will see continued growth in products, we invested in during 2019 feedback now and our certification product both achieved double digit growth in 2019, and we expect to continuation of that trend in 2020.
Our guidance reflects the growth in these products as well as modest modest growth in events and leadership boards as we enhance the value proposition for these products during 2020.
Our guidance continues our guidance shows continued topline growth and a continuation of double digit earnings per share growth.
Let me take you through the specifics of our guidance for the first quarter and full year of 2020.
Our guidance excludes the following.
Amortization of intangible assets of approximately $4.7 million for the first quarter and $19 million for the full year 2020.
Stock based compensation expense of 2.7 to 2.9 million for the first quarter and $10.5 million to $11.5 million for the full year 2020.
Integration integration costs of 0.9 are based on 900000 to 1.2 million for the first quarter.
And 1.8 to 2.2 million for the full year 2020.
Fair value adjustment to the acquired deferred revenue from the series acquisitions of approximately 200000 for the first quarter and 400000 for the full year of 2020.
And any investment gains and losses.
Forces, providing first quarter 2020 financial guidance as follows.
Pro forma revenues of 108 to 112 million.
Pro forma operating margin of 4% to 6%.
Pro forma effective tax rate of 31%.
Pro forma earnings per share of 12 cents to 18 cents.
Our full year 2020 guidance is as follows pro forma revenues of 495 to 507 million.
Pro forma operating margin of 11% to 12%.
Pro forma effective tax rate of 31%.
And pro forma diluted earnings per share of $1.80 to $1.94.
We provided guidance on a GAAP basis for the first quarter and full year 2020 in our press release and 8-K filed today.
Thanks, very much and I'm now going to turn the call over to the operator for the Q and a portion of the call.
Okay. Thank you we will now begin the question and answer session. We have a question. Please press Star then one on your Touchtone phone if you wish to be removed from the Q. Please press the pound Sandra hash key veer using a speaker phone you may need to pick a pickup the handset first before pressing the numbers. Once again if you have a question. Please press Star then one on your Touchtone phone.
And I'm standing by for questions.
And we have a question from Andrew Nicolas You can go ahead with your question Andrew.
Hi, This is actually Trevor Romeo and for Andrew Thanks for taking my questions.
First of all so very strong margin performance in the quarter were relative to your guidance looks like GNS expense showed some good leverage as a percentage of revenue.
Just wondering if you had any more details on on what drove the upside there and then given the the strong margin improvement in 2019.
Could you see any upside to your margin guidance in 2020, which I think implies only about 20 basis points improvement at the midpoint of I'm looking at that correctly.
Yes, Trevor this is Mike Doyle. So we did we did have good improvement in the fourth quarter couple of things as I mentioned my comments. One was opened a head count and then in the gene a side I think is we had bonus saving so essentially we had an aggressive bonus target that we.
We fell well short of so we made an adjustment to our bonus matrix in the fourth quarter.
That brought favorability if you will into two DNA and to get the primary reason for that.
In terms of opportunity for.
Margin expansion I think that the key is for us and it's a little bit we'd originally had an expectation probably something a little higher a lot depends on how quickly we can hire train and ramped reps and book business. So I think that.
As Kelly mentioned, we had attrition that sustained itself at a higher level on the side I think that as we staff up also as retrain, our existing Forrester legacy reps to be selling this SD product.
Those factors if they move ahead of what we expect will drive greater topline growth, which then will will expand margins.
Thats, where the energy as its really.
How do we grow both our bookings faster and then ultimately revenue faster. So I think it becomes anywhere it will be that where we get out of the gate a little bit quicker than we anticipate we can ramp quicker.
And now will drive better top line growth.
Okay, Great. That's helpful and then Mike I think you. It also said that.
All of the growth in the research revenue line came from serious decisions in the quarter, which I guess implies the legacy was kind of flat.
So I guess anything you'd call out there in the quarter I know you saw little acceleration in legacy Forrester research last quarter. So just any thoughts on what drove that deceleration there.
Yes, I know it's interesting in the legacy research, we actually had some growth we actually had for US which is unusual our reprint business, which typically grows at a pretty healthy rate actually declined in the fourth quarter. So that's unusual we think it's a onetime anomaly.
And since that is bucketed with a broader legacy Forrester research, that's what's driving it down so now we still in the quarter for legacy research, we feel like we had a good quarter, particularly user research that was good we're pretty happy with that and again, we're hoping that's going to compound itself as we go into the year and I do think the reprint revenue will sort itself out that was just again.
A onetime thing in the fourth quarter.
Okay got it that's a that's very helpful. Thank you.
Thanks, Trevor Thanks Trevor.
And our next question comes from Vincent Colicchio go had Vincent.
Yes, Kelly I apologize if I if I missed it what is what was the Sears decisions to attrition and this quarter versus the prior quarter.
So attrition on the Theres decision side has been running between 35 and 37 interest on the last couple of quarters.
Okay. So it was consistent this quarter with that with the prior quarters.
That is correct, okay and is the the level of seniority in terms of the turnovers was that consistent as well.
Ah, yes pretty much.
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And hold on just the SEC, while we try to reconnect the speaker.
And once again, please standby, while we try to reconnect the host.
Ladies and gentlemen, please standby, while we try to connect the host.
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Thank you for standing by we have our speakers reconnected.
Hey, Vince. This is why don't you are still and I know you had one question for Kelly I Didnt have you had a follow up question on that.
And once again, if anyone has questions breast star then one.
And we do have a question from Allen Klee, If you want to go ahead with your question Alan.
Yes, hi.
So can you talk about like how you think about the overall demand environment, maybe now versus.
A year ago, and if you think that has any difference in you on your general longer term thoughts of.
Annual pricing power and any abilities to kind of lower costs of of generating research searches.
Surveys thank you.
Yes, I'd say that this is the general color the economy.
From our standpoint Eligibly on is.
We very quickly very fast very healthy incremental iris aside we don't.
Our analysts in our comments you're are trying to factor that all in.
Generally.
Our demand is very strong.
We will have a price increase in July.
And we believe we can justify that price increase.
Cost of surveys the has now dropped.
I would say that.
The fact that we now have a real time sources of survey material through feedback now that is a very little causeway together.
Together survey in research.
Information.
So we see the rhythms that did not on the typical traditional service side so to cause staying.
Staying flat nothing is increasing unexpectedly on us and demand is strong for the company and our products in our numbers Alan do not reflect any.
Potential impact of to Georges point thinks it may if the economy like the current of Iris like Brexit.
Our FX rates are pretty much.
Roughly the same year over year in terms of our assumption so.
That obviously could change if theres a disruption in the economy Providence is strengthening <unk> dollar and that will impact obviously, our businesses outside the U.S spot, but to Georges point, we're not seen anything yet therefore, our numbers don't reflect anything yet, but we are business in China is small and or the number right. In my head you guys are the number in this yes, it's realm.
Factors that business is decent in size, but China is a piece of bases revenues now.
Maybe just following up on what you said with feedback now could.
It seems like it can be very powerful could could you maybe talk a little more maybe give an example of like as it scales up of.
How you see customers using this and.
What this can turn into.
Yes. This is due to give you some context here. We were currently logging about 450000 Boes per day now through feedback now.
I would expect to go well over 500000 next year.
Probably in the 600000 range.
The entire the.
The value model here Allen is is.
This is not services that survey based customer experience.
We are the.
And we've been doing this for many many years, where we'd survey within the company.
Understand there is the level of their customer experience months later, and then they would do strategically change their customer experience.
This is about.
Giving you our clancy ability to monitor experienced in real time, and given the didnt dahlias than than the ability to then improve experienced in real time.
So it is it so it is a very it's very different than than the traditional model.
And.
Very well received I mean, we're starting our presence is versus the physical side. It soon and when I was a chip and pin number year over 85% physical 50% digital but as we go deeper into 2020 that digital is going to grow. The other piece is happening now on fourth quarter. We had we landed the largest.
They've ever had and that was sourced by one of Kellys.
Sales player. So we try to that have been working pretty much with.
The existing feedback now sales reps their model has been lots of smaller deals some maybe decent sized deals, but a lot of small deals we're going to shifted bigger deals and that should help us accelerate partnering with Kelly sales organization accelerate the growth of feedback now both in 2020 and beyond that deal was north of a million dollars.
Thats, Great and then maybe just something one more thing on the serious decisions Salesforce attrition I am trying to speculate though if I was a sales person at serious decision why would I be one of those people attrition and again I would.
First choice I would say is if I thought it was going to make less money.
Potentially my accounts would go down or from getting lower pay out or is it is.
Can you respond to that or do you think that whatever that issue is that something is going on there maybe that won't be an issue going forward.
Sure on so to that point I think one of the things that we learned after the acquisition.
That wraps success rate than the prior year or below industry standards and anytime you have a sales force that is not by and large hitting its number youre going to suffer attention because people aren't getting to their goals and our objective. So I think unfortunately, we dealt with some of the ramifications of things that happened before we see.
On the scene.
With that said, we have actually just gone through a process right now to level all the serious decisions rat to make sure that we have looked at their skills as looked at their quota as location et cetera, and making sure that they map appropriately to the same level enforcer. So we've made quite a bit of investment there.
With that sales force to make sure that they're at the proper level with the Forrester sales organization. So unfortunately, a lot of that were driven by things that happened before the acquisition and again. It's also unfortunate that a lot of the conversation has been about defensive left and not somebody individuals that have stayed we have some fantastic folks that are now part of that.
Forrester organization, who originate needed with serious decisions are going to be big contributors for us as we move forward here, including both on my leadership team.
Our management ranks that we're really excited about.
Okay. Thank you so much.
Thanks, Thanks Alan.
And we have a follow up question from Vincent Colicchio go head music.
Yes, Kelly I when I got cut off I was asking if the senior already level of the people, leaving answers decisions was consistent with the prior quarter.
Yes, Im sorry, I thought it was something I had said then side of Latam was a technical Glenn.
So yes with that we continue to see pretty much.
Steady attrition numbers across different populations again, I think typically with the Salesforce Ito Q1 is there to the seasonality to the curious and I think once we get through this quarter things are definitely going to stabilize but it's been pretty consistent across job level than geography is as we worked our way through 29.
And we expected to stabilize shortly hearing tiny tiny.
And I'm not sure this one's for but how conservative as the 5% growth rate for the Salesforce for 2020 may that increase a bit if we come in with better than expected performance in the first half.
Sure Vince I'll take that one so we are starting off with 5% and then the work that we have ahead of us is to reevaluate and reassess the territory, scoring model that we developed as part of our move into the customer engagement model to figure out what the optimal size territory is so there is a possibility that we will add more.
We go throughout the year once we do that work, but we also want to be thoughtful about making sure that we have adequate territories for our sellers to be able to get to their quotas, but I would not be surprised by mid year, we're continuing to add to that number.
Okay.
So for me nice quarter guys.
Thanks Vince.
And our next question comes from on yet.
Soderstrom go ahead on your.
Hi, everyone.
Hi, guys came ahead Jan.
So I just have a follow up on Alan's question about the feedback now. So you are monitoring that their custom extraction in real time, and then are you already not able to act on that or is that something thats coming into future.
To respond.
However, the that might be able to act on that.
Yes.
On the customer given feedback that.
Our able to act on it in a real time SATA, yes, yes that is the customers have real real time connection to that data.
So your website, but also through.
Through mobile apps.
And in fact that southern Thats helped primarily how it's being used by our clients. Today. This is the current feedback now.
It is being used to respond quickly to problems to dirty bathrooms too.
Due to any any any.
There is being moderately good read so yes, it is being used to Dave to monitor real time and to improve in real time.
Okay. So close through better we're better at improving real time and something we're less better. So is this is a obviously this is a growing muscle on the part of these plans.
This concept that experience can in fact be moved to improve in real in real time.
Okay and that was helpful and then in terms of them.
Okay certificates you lost one in the third quarter. So you have two three and now right.
Certification, yes, yes, okay.
How do you see that portfolio building out.
Oh Im sorry.
We actually are very happy with that business I mean, we literally you've just got going with that and we've had really healthy growth.
And we inherited the business also from Sears decisions, but we've essentially we're moving forward that business. We expect is also going to grow double digits again in 2020.
Like the product we've got a good team running it and we're pretty bullish on what that can do for us. So we're feeling good about on it in any of the two primary certification spaces. The first of course is customer experience.
And there are believe believed our three levels and customer experience verification. That's the first in the second is VTB marketing that's coming directly from Sears decisions. There is lots of opportunity certification to ride on the on the serious decisions research.
And to build as exists as an example in demand marketing in marketing operations in sales operations. So lots of lots of new areas to be launching certifications, primarily running lumpy execution research for Sears is any research.
Okay, what's sort of ramp do you foresee having on backlog.
Yeah sure.
From from my perspective look I think those businesses are going into grown accelerate and the intent of talking about them. Both in this call and as it relates to the year was in terms of dollars. They are not huge yet, but I think the point, we were trying to make as we are continuing to invest in it.
Broad array of products within Forrester in addition to managing through the serious decision acquisition integration. So.
I think that these are integral parts of our business and that they're going to grow at a pretty healthy clip over the next five years I think feedback now has a tremendous amount of upside to Georges point, we're really and I would say stage, one and the physical form, but theres more to come and certification as George described has a lot of opportunities to take this business into other areas. In addition to the ones. We currently service.
Yeah.
Okay. Thank you that will sell from me.
Thanks I appreciate it thank you.
We have no more questions in the queue. At this time would you like to make some final statement.
Yes first everyone. Thanks for the patients I apologize for the minor technology logical glitches does periodically happen.
We have already put them dates out there with folks were looking forward to get out on the Rowan and talking about the story and look forward to very very exciting 2020 for Forrester. So thank you very much replied to all for joining them. Thank you Sir.
Thank you.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
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