Q1 2021 Forrester Research Inc Earnings Call
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Good afternoon. Thank you for joining today's call with me today is George Colony forces Chairman of the board and CEO.
Kelley Hippler forces Chief sales officer.
And Scott should not losses, interim Chief financial Officer and Treasurer.
George will open the call Kelley will follow George to discuss sales and Scott will discuss our financials.
Well then open the call to Q&A.
Carrie Johnson forces Chief Research Officer will be joining the Q&A portion of the call.
A replay of this call will be available until June the fifth 2021 and can be accessed by dialing 8558592056.
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Before we begin I'd like to remind you that this call will contain forward looking statements within the meaning of the private 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 and the forward looking statements.
Some of these some of the important factors that could cause actual results. The difference are discussed in our reports and filings with the Securities and Exchange Commission.
The company undertakes no obligations to update publicly any forward looking statements, whether as a result of new information future events or otherwise.
I would now like to hand, the call over to George Colony, you may begin.
Thank you very much for listening to force through 2021 of Q1 Investor call.
I will begin with an update on the quarter Kelley Hippler head of sales will give a sales update and Scott you and art portion of interim CFO will then give a financial review for the quarter.
Terry Johnson Enforcers head of research and products will join US and then the four of us will take questions.
Let me start by reflecting on the overall economy.
We are entering a period of recovery of the U S with Europe lagging the Asian markets slightly ahead of the U S.
Disruption from the pandemic continues in certain regions with India being the most prominent example.
It's clear that the pandemic has driven some important market changes.
Tumor behavior has shifted permanently towards digital.
The way, we work has been reorganized around virtual and flex and companies must now be all in all the connecting to their customers buy of sophisticated technology.
This backdrop, the Forrester value proposition has never been more resonant, we will be on the side and by the side of our clients as they navigate the challenges of the post pandemic economy.
And the first quarter of 2021, we significantly beat our expectations for revenue operating margin and earnings per share.
The momentum that began building in the third quarter of 2020 continued forward into Q1.
While we are cautious given that the pandemic is not over globally, we expect our momentum to carry through the year.
We grew contract value bookings by 4% year over year, we have seen three quarters of sequential CV growth since the second quarter of 2020 net.
And as a result of the strong performance, we will be raising guidance for the year and Scott will go into that and more detail.
As I mentioned on our last call Forrester is laser focused on expanding contract value.
The value of <unk> annual recurring research revenue.
We define TV products and services that our clients use periodically over a year's time and then renew on a yearly basis.
In 2021, we are planning to grow CV bookings by double digit rates.
The consistent expansion of the contract value is attractive to investors as a result, and predictable and profitable revenue streams.
In past years, we attract syndicated revenue and agreement value for investors. These metrics are now being replaced by the more conventional and simpler CV.
Now, how we'll see the growth improve the long term prospects of Forrester and drive shareholder value.
The CV grows earnings and free cash flow will increase.
We will invest this cash and three ways number one expanding and improving the sales and marketing engine to.
Two enhancing and launching research products and then three acquiring other companies.
More powerful sales engine, coupled with improved CV products and acquired contracts will enable force you to growth CV at faster rates generating increased cash, which will then be reinvested continuing the cycle.
Scott will share results of three key metrics that the company will be reporting on a quarterly basis CV growth wallet retention and CV client retention.
I want to turn to the performance of our three businesses research. This is where most of our CV products reside consulting and events and starting with research.
Leadership, and Q1 was up 6% year over year, and analysts' inquiries increased 23% as clients as clients used Forrester to help build their post crisis strategies and execute on key digital initiatives.
Our future of work research continues to resonate as we are guiding our clients back to offices and into flex work arrangements.
One of the most read reports from late Q1 was the opportunity unknowns and the risks of vaccine passports and the workplace.
We also deliver research to help clients update the stacks to become more adaptive creative and resilient and we call this future fit.
The post pandemic drive to be digital is challenging legacy.
And control of focused Cio's.
Our future fit research is helping companies since change in their customers and markets and then update the technology quickly to meet these new demands.
We grew CV bookings and our feedback now startup venture feedback now enables companies to measure and improve customer experience in real time and we.
We have developed touchless Smiley boxes for the post pandemic world.
Feedback now had a strong quarter powered by enrichment and multiyear renewals and the healthcare transportation and retail industries as well as new clients like net play and a major European Roadside Management Corporation.
Consulting also exceeded expectations with 21% growth year over year in part driven by the sustained success of content marketing.
Technology vendors continue to use this product to drive the marketing and sales leads and the absence of in person events.
Now turning to Forrester events.
When we held no summit's or forms in the first quarter. The team is preparing for our two largest events, which are being held in the second quarter.
The Companys largest venue DDB summit convened this week and a live virtual format and this is the second time, then that it has been delivered via a digital platform.
Paid attendants and summit was up 20% year over year.
Our second largest event see ex North America will be held in June and sponsorships for both summit and CX North America are sold out.
While all of our events and the first half of the year will be held virtually we are planning to move some of our events to in person and the second half of the year contingent on the infection rates and the willingness of attendees to travel and gather.
I would now like to turn to the launch of an important new product from Forrester.
We decided early in 2020 that we would use the pandemic of year to innovate and stay on the incentive.
Approximately a year ago, we began to design and new research research portfolio, combining the best of Forrester with the best of serious decisions.
We announced the new products, which we call Forrester decisions on Monday of this week with the ringing of the opening bell at NASDAQ.
And one hundreds of interviews clients told us that they wanted to formulate strong visions of the future and then quickly translate those plans into the implementation and outcomes.
It is no longer possible for large companies to run multi year strategy and change management projects customers of morphing too fast and competitors are too aggressive.
So we have designed our new research portfolio to help companies shorten the time between technology vision and business execution.
And very importantly, we are doing this in one research portfolio not too.
The World has no other unevenly divided into technology and business force.
Forrester decisions helps companies merge these disciplines to win more customers and grow faster.
Pay centers like Amazon and Netflix and the business is technology and technology and business and that is how we're going to be leading our clients to move forward.
The new portfolio will serve 15 executives, including Cmo's Chief sales officers chief product officers security of risky risk executives and enterprise architects.
All of these executives will receive all of Forrester vision research the.
The intention is to help clients and technology and business fueled a shared vision of the future. So they can move forward together information to win customers.
The legacy Forrester and serious decisions research products will still be available Theres, no hard cutover to Forrester decisions and.
And that said, we do expect that most clients will be transitioned to the new product within 18 to 24 months.
Enforcement decisions will be available in August and I'm going to I will update you with more details on the Q2 call in July.
Turning to our balance sheet, we generated a record amount of cash from operations and Q1 and ended the quarter with over $125 million.
The company is financially prepared for investments and acquisitions that will drive our CV growth.
I wanted investors to know that we have upgraded our site to include details on the fortress position on ESG environment, social and governance and you can find the link at the bottom of the Forrester Dot Com page under Investor information.
And then conclude my remarks by thanking our employees and clients for the continued trust and dedication.
I also want to let our colleagues and in India and other countries that are battling the pandemic no debt, we will support them in any way that we can.
And with that I'll turn the call over to Kelley Hippler, Forrester as Chief sales Officer Kelly.
Thank you George today, I want to spend a few minutes discussing two things number one our pivots of contract value and number two our preparations for the Forrester decisions launch.
One pivots of contract value. The Forrester sales team has embraced our laser focus on driving contract value growth increasing contract value is centered on building long term and deep partnerships with our clients.
In Q1, we realigned all awards and recognition to celebrate those who over perform on their CV growth targets, including our prestigious winner circle Tret I am pleased to report that year to date, we are on pace with contract value bookings expectations.
To drive contract value, we are taking a multi pronged approach targeting client retention wallet retention and client acquisition efforts.
A few examples of our Q1 wins.
Client retention, we continue to see improvements in retention across geographies. For example, one systems integrator that we partner with and Southern Europe signed a three year renewal totaling 1.25 million of 100% CV relationship.
I'll, let retention, we closed and enrichment program with the major financial services company in the U S to provide research and analytics to support their home lending business for $227000.
Client acquisition, we saw strong performance across our new business teams and the quarter one of our many new business initiatives is a coordinated win back program to re engage clients with Forrester who were lost during the pandemic and we're already getting traction and example was the major U S retailer, who signed a three year 100 per.
<unk> CV contract totaling $384000.
Number two our preparations for the Forrester decisions launch our sales and customer success teams are excited about the launch of Forrester decisions, our new premium product line. Our sales enablement team has built a robust training plan that launched in February to start preparing our teams.
This new product will show the power of aligning the revenue engine across product marketing and sales on a personal note I'm very eager to be able to offer forrester decisions to our clients.
Forrester decisions will help us to deliver on our brand promise of being on our client side and by their size and turn leading to double digit contract value growth and with that I will turn the call over to Scott Chouinard.
Thanks, Kelly I'll now review force this financial performance.