FORR — Forrester Research, Inc.

Summary of Forrester Research, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $85.5 million, down 5% year-over-year from $89.9 million.
• Research Revenue: Decreased by 2%; consulting revenue down 13% due to exiting the strategy consulting business.
• Client Retention: Improved to 78%, up one point from the previous quarter and five points from the prior year.
• Wallet Retention: Increased to 89%, up two points from the last quarter and three points year-over-year.
• Contract Value (CV): Declined by 3%, an improvement from a 6% decline in 2025.
• Free Cash Flow: Strong at $19 million; $25 million when excluding one-time capital expenditures.
• Net Income: Negative $7 million, a 135% decrease from $2 million in Q1 2025; EPS at negative $0.04.
• Operating Income: Negative $0.9 million, compared to a positive $2.5 million in the prior year.

2. Strategic Updates and Business Highlights

• AI Focus: Forrester aims to become a leading AI research company, emphasizing the importance of private AI models for businesses.
• Research Releases: Over 420 reports released in Q1, including significant findings on AI adoption challenges.
• Forrester AI Enhancements: Upgraded AI model launched, now fully conversational and integrated with Microsoft Teams and Copilot.
• Sales Initiatives: New Chief Sales Officer is implementing changes to improve sales productivity and focus on high-potential accounts.
• Product Portfolio Expansion: Introduction of AI Access and embedding Forrester AI into client workflows to enhance service delivery.

3. Forward Guidance and Outlook

• Revenue Guidance: Increased low-end guidance for 2026 to a range of $350 million to $360 million, reflecting improved metrics and stronger event sponsorships.
• Expectations for 2026: Revenue expected to decline 9% to 12% year-over-year, with research and consulting revenues anticipated to decline in the mid-single digits and low 20s, respectively.
• Operating Margin: Expected to be in the range of 6% to 6.5% for the year, with a tax rate of 29%.

4. Bad News, Challenges, or Points of Concern

• Consulting Revenue Decline: The exit from the strategy consulting business is leading to significant revenue loss.
• Overall Revenue Decline: Continued revenue decreases are expected due to prior bookings declines and changes in the consulting and events segments.
• Negative Net Income: The company reported a substantial loss in net income and EPS, raising concerns about profitability.
• Market Competition: The rapid evolution of AI technology presents both opportunities and challenges, requiring Forrester to stay ahead of competitors.

5. Notable Q&A Insights

• Confidence in CV Recovery: Management expressed optimism about future contract value increases due to strong event engagement and bookings.
• Product Roadmap: Continued focus on expanding product offerings, particularly in AI, with significant traction noted in Microsoft integrations.
• Sales Strategy Changes: The new sales structure and training aimed at leveraging AI are expected to enhance sales effectiveness and confidence.
• AI Access Performance: The new product is meeting expectations, aiding in both new business acquisition and re-engagement of former clients.

Overall, Forrester Research, Inc. is navigating a challenging landscape with a focus on AI and client retention, while also addressing significant revenue declines and operational adjustments.