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Forrester Investor Summary Q4 2024
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2© Forrester Research, Inc. All rights reserved. Forward-Looking Statements & Non-GAAP Measures This presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. These projections or statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements. Please see the Company’s Annual Report to shareholders and its filings with the SEC, including its recent filings on Forms 10-K and 10-Q, for a discussion of important risk factors that could cause actual events or results to differ materially from those in the projections or forward-looking statements. Forrester believes that adjusted financial results provide investors with consistent and comparable information to aid in the understanding of Forrester's ongoing business and are also used by Forrester in making compensation decisions. Our adjusted presentation excludes amortization of acquisition-related intangible assets, stock-based compensation, restructuring costs, a legal settlement, a loss from the sale of a divested operation and transaction costs, and net gains or losses from investments, as well as their related tax effects. We also utilized an assumed tax rate of 29% in 2024 and 2023, which excludes items such as the settlement of prior year tax audits and the effect of any adjustments related to the filing of prior year tax returns. The adjusted data does not purport to be prepared in accordance with Generally Accepted Accounting Principles in the United States.
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3© Forrester Research, Inc. All rights reserved. Forrester At A Glance Forrester is one of the most influential research and advisory firms in the world. Business and technology leaders rely on Forrester to accelerate growth through customer obsession. Global reach with offices & operations across Asia Pacific, Europe, and North America Number of employees ~1,600 Fortune 100 Clients 62% 2024 Financial Overview • ~73% of Total Revenue in Research • ~27% of Total Revenue in Consulting and Events • ~80% of Contract Value in Forrester Decisions • Adjusted EBITDA of $46.1 million Note: *Figures as of 12/31/24. * *
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4© Forrester Research, Inc. All rights reserved. Why Invest in Forrester? 1. Massive market opportunity 2. Attractive recurring revenue business model 3. Focus on contract value growth 4. Differentiated research platform (Forrester Decisions) and continuous guidance engagement model 5. Leadership team well-positioned to scale business
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5© Forrester Research, Inc. All rights reserved. Total Available Research Market Massive untapped research market opportunity Note: Forrester estimates. $78 MARKET OPPORTUNITY BILLION $115 MARKET OPPORTUNITY BILLION
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6© Forrester Research, Inc. All rights reserved. Research, Consulting & Events: A System To Drive Contract Value Consulting: Forrester Consulting helps clients implement modern strategies that align and empower teams to deliver on a shared vision for growth. Our Consulting business includes consulting projects and advisory services.Research Multi-year, annual recurring revenue product portfolio that contributes directly to contract value (CV) growth. 2024 revenue: $316.7 million Consulting 2024 revenue: $97.3 million Events 2024 revenue: $18.5 million Events: Aligned with Forrester's research product portfolio and go-to-market offerings, Forrester Events brings its research to life. Forrester hosts approximately 10 events each year, in North America, EMEA and APAC.
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7© Forrester Research, Inc. All rights reserved. Growing CV Current CV Renewed CV Enrichment New Business Product Innovation Pricing Net Contract Value Increase Future CV Acquisitions provide an opportunity for accelerated growth
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8© Forrester Research, Inc. All rights reserved. The Forrester Contract Value Growth Engine Invest in: 1. Sales & Marketing 2. Products & Platform 3. Acquisitions Generate Cash Grow CV
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9© Forrester Research, Inc. All rights reserved. Forrester’s Transformation Aimed At Driving Sustained Contract Value Growth 2019 2020 2021 2022 2023 Acquired SiriusDecisions Began development of the Forrester Decisions platform Refocused the business on CV Aligned the revenue engine Invested in Product Management and Digital Delivery Established Customer Experience function Launched Forrester Decisions research portfolio Transitioned approximately 1/3 of CV portfolio to Forrester Decisions Delivered 2/3rd of CV portfolio on Forrester Decisions by year-end New sales leadership in place to drive CV growth Built Product Foundation Product Transformation Executing on Transformation 2024 Completed migration to Forrester Decisions Ongoing GTM improvements 2025 Continue enhancements to Forrester Decisions Singular GTM focus on Forrester Decisions
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10© Forrester Research, Inc. All rights reserved. Forrester: A Unique Continuous Guidance Model Library Model Consulting ModelForrester Forrester Align Your Business Business and Tech Together Experts On and By Your Side Focusing You On Your Customers Information overload Not focused on specific initiatives or outcomes Research only, no tools or frameworks Project based One time, not continuous support Not invested in ongoing success
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11© Forrester Research, Inc. All rights reserved. Forrester Decisions Business and technology leaders rely on Forrester Decisions to tackle their initiatives and deliver business outcomes. Portfolio of 13 distinct services that support 25 different functions across the business Value delivered through unique continuous guidance model tuned to each clients’ context Creates bedrock of client knowledge and continuity from project to project Seamless connection to further engagement through consulting
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12© Forrester Research, Inc. All rights reserved. Forrester Decisions: What’s Inside? Bold Vision Stay ahead of changing customer and market dynamics, plan for the future, and set your strategy with leading research and insights. • Big Research Themes • Customer Insights • Predictions • Market Forecasts • Technology And Service Provider Landscapes Curated Tools And Frameworks Empower your team to conquer your priorities with proven strategic models and plug-and-play templates. • Key Performance Indicators • Peer Benchmarks • Assessments • Strategic Models • Tools and Templates • Forrester Wave Evaluations • Certification Courses Hands-On Guidance Accelerate progress and de-risk decisions with best practices tailored to you and your team. • Guidance Sessions • Peer Discussions • Event Attendance • Dedicated Relationship Management
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13© Forrester Research, Inc. All rights reserved. Forrester Helps These Executives & Their Teams Accelerate Growth Through Customer Obsession Revenue Operations Leaders Sales Operations Leaders B2B Sales Executives Sales & Revenue Enablement Leaders Channel Sales Leaders Product Management Leaders Portfolio Marketing Leaders Product Marketing Leaders Partner Ecosystem Marketing Leaders Channel Marketing Leaders Analyst Relations Leaders Marketing Operations Leaders Security & Risk Leaders CX Leaders B2C Marketing Executives B2B Marketing Executives Brand & Comms Leaders Demand Leaders Chief Information Officers Chief Technology Officers Chief Digital Officers Data, AI, and Analytics Leaders Enterprise Architecture Leaders Infrastructure & Operations Leaders Application Development & Delivery Leaders PERSONAS SERVED
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14© Forrester Research, Inc. All rights reserved. Forrester Delivers Results For Our Clients 12% increase in digitally active banking clients over two years — A consumer bank undergoing digital transformation to differentiate the business and accelerate growth • Business services • High-tech • Financial services • Consumer • Government • Manufacturing • Healthcare • Communication • Utilities Top customer industries Revenue was 140% over target projections. — An insurance company that relied on Forrester to drive its customer-focused digital transformation effort 45% increase in community membership — A software company aligned at key points in the customer journey to activate advocacy and long-term retention $1.5 billion in total opportunity value — A printing and imaging company looking to increase product launch effectiveness and enhance corporate communications Saved $100,000 and eliminated 1M+ outdated records — An expense management company, looking to improve data quality and data policies
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15© Forrester Research, Inc. All rights reserved. The Value and ROI of Investing in Forrester Decisions ROI 259% BENEFITS PV $2.54M NPV $1.83M INITIATIVE SUCCESS 26% more likely Three-Year Benefits For The Composite Organization Improved success rate of transformational initiatives $1.1M Optimized market expansion $884K Faster time to value for transformational initiatives $406K Gained operational efficiency $170K Note: Benefits Present Value (Benefits PV), Net Present Value (NVP) Forrester conducted a Total Economic Impact (TEI) study to examine the potential return on investment (ROI) organizations may realize by investing in Forrester Decisions. The composite organization invests $710,000 in costs and experiences $2.54 million in benefits over three years, adding up to a net present value (NPV) of $1.83 million and an ROI of 259%
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16© Forrester Research, Inc. All rights reserved. Michael Facemire Chief Technology Officer Leadership Team Well-Positioned To Scale The Business George F. Colony Chairman of the Board, Chief Executive Officer Ryan Darrah Chief Legal Officer Sharyn Leaver Chief Research Officer Chris Finn Chief Financial Officer Nate Swan Chief Sales Officer Deep experience accelerating growth at global SaaS and CV-oriented companies Jobina Gonsalves Chief People Officer Carrie Johnson Chief Product Officer Andrew Cox Interim Chief Marketing Officer
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17© Forrester Research, Inc. All rights reserved. Financial Overview Q4 2024
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18© Forrester Research, Inc. All rights reserved. Q4 2024 Financial Summary Consolidated Revenue $108.0M -9% vs. PY Research Revenue $79.4M -7% vs. PY Consulting Revenue $25.9M -8% vs. PY Event Revenue $2.7M -42% vs. PY Adj. Operating Margin 8.3% 252 bps vs. PY Adj. EPS $0.36 +44% vs. PY Adj. EBITDA Margin 9.6% 229 bps vs. PY Free Cash Flow -$2.5M
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19© Forrester Research, Inc. All rights reserved. Full Year 2024 Financial Summary Consolidated Revenue $432.5M -10% vs. PY Research Revenue $316.7M -5% vs. PY Consulting Revenue $97.3M -18% vs. PY Event Revenue $18.5M -34% vs. PY Adj. Operating Margin 8.9% -197 bps vs. PY Adj. EPS $1.47 -23% vs. PY Adj. EBITDA Margin 10.7% -198 bps vs. PY Free Cash Flow -$7.3M
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20© Forrester Research, Inc. All rights reserved. Research Revenue Trends $92.2 $80.9 $87.7 $80.6 $85.2 $76.6 $83.7 $77.1 $79.4 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1'24 Q2'24 Q3'24 Q4'24 Revenue by Quarter (millions)
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21© Forrester Research, Inc. All rights reserved. CV & Wallet Retention Trends 51% 63% 78% 80%33%% FD of CV $338.9 $330.3 $325.1 $328.4 $323.6 $312.8 $311.9 $309.8 $307.6 $110.2 $146.4 $165.9 $189.0 $202.5 $221.7 $233.3 $241.3 $246.3 93% 89% 89% 88% 87% 87% 88% 88% 89% 50% 60% 70% 80% 90% 100% 110% $0 $50 $100 $150 $200 $250 $300 $350 $400 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1'24 Q2'24 Q3'24 Q4'24 44% CV ($MM) Wallet Retention FD CV ($MM) 89% 87% 89% 90%100%FD WR 90% Note: Figures have been restated for 2025 FX rates. 58% 90% 71% 88% 75% 90%
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22© Forrester Research, Inc. All rights reserved. Client Count & Client Retention Trends Legacy Client Count % Client Retention 48% 61% 78% 82%32%% FD Clients 1,731 1,441 1,241 1,046 891 642 526 434 341 822 1,019 1,142 1,292 1,366 1,480 1,526 1,568 1,601 74% 74% 74% 73% 73% 72% 72% 73% 73% 50% 60% 70% 80% 90% 100% 100 600 1,100 1,600 2,100 2,600 3,100 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1'24 Q2'24 Q3'24 Q4'24 FD Client Count 41% 86% 81% 81%89%% FD Client Retention 87% 55% 85% 82% 70% 82% 74% 81% Note: For comparative purposes, we have recast client count and retention for the FeedbackNow divestiture.
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23© Forrester Research, Inc. All rights reserved. Consulting and Event Revenue Trends $37.5 $31.8 $30.0 $28.2 $28.3 $23.1 $24.8 $23.4 $25.9 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1'24 Q2'24 Q3'24 Q4'24 Revenue by Quarter (millions) $7.2 $1.0 $17.9 $4.6 $4.6 $0.4 $13.4 $2.1 $2.7 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1'24 Q2'24 Q3'24 Q4'24 Revenue by Quarter (millions) Events Attendees 3 4 1 55 982 1,119 657 1,1441,532 Note: Attendees are defined as paid and member tickets to events. Consulting Events - - 4 2,711 - - 4 2,377
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24© Forrester Research, Inc. All rights reserved. 2025 Full Year Guidance Revenue: $400M to $415M • Declining 4% to 8% compared to prior year Adjusted Operating Margin: 8.0% to 9.0% • Declining ~90 bps to increasing ~10 bps compared to prior year Adjusted EPS: $1.20 to $1.35 • Declining 8% to 18% compared to prior year
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25© Forrester Research, Inc. All rights reserved. Non-GAAP Reconciliations
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26© Forrester Research, Inc. All rights reserved. Non-GAAP Reconciliation – Income From Operations and EBITDA Note: Amounts might not total due to rounding. (dollars in millions) Q4-23 Q4-24 FY 23 FY 24 Income (loss) from operations - GAAP ($1.4) ($0.6) $6.8 $0.7 Amortization of intangible assets 2.8 2.2 12.0 9.6 Restructuring costs 1.1 4.1 13.3 11.8 Divestment -- -- -- 2.0 Legal settlement -- -- 4.8 -- Stock-based compensation included in the following expense categories: Cost of services and fulfillment 2.6 1.9 9.1 8.7 Selling and marketing 0.8 0.5 2.9 2.2 General and administrative 0.9 0.7 3.5 3.5 Adjusted income from operations $6.8 $8.9 $52.3 $38.5 Depreciation 1.9 1.5 8.5 7.6 Adjusted EBITDA $8.7 $10.4 $60.7 $46.1
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27© Forrester Research, Inc. All rights reserved. Non-GAAP Reconciliation – Net Income and EPS Note: Amounts might not total due to rounding. (dollars in millions, except per share) Q4-23 Q4-24 FY 23 FY 24 Amount Per Share Amount Per Share Amount Per Share Amount Per Share Net income (loss) - GAAP ($0.7) ($0.03) $0.4 $0.02 $3.1 $0.16 ($5.7) ($0.30) Amortization of intangible assets 2.8 0.14 2.2 0.12 12.0 0.62 9.6 0.50 Restructuring costs 1.1 0.06 4.1 0.22 13.3 0.69 11.8 0.62 Divestment -- -- -- -- -- -- 2.0 0.10 Legal settlement -- -- -- -- 4.8 0.25 -- -- Stock-based compensation 4.3 0.22 3.1 0.17 15.5 0.80 14.3 0.75 Gains on investments (0.2) (0.01) (0.8) (0.04) (0.2) (0.01) (0.8) (0.04) Tax effects of items above (2.0) (0.10) (2.2) (0.12) (11.1) (0.58) (3.9) (0.20) Adjustment to tax expense for adjusted tax rate (0.6) (0.03) (0.1) (0.01) (0.6) (0.03) 0.8 0.04 Adjusted net income $4.8 $0.25 $6.8 $0.36 $36.6 $1.90 $28.1 $1.47 Diluted weighted average shares outstanding 19.3 18.9 19.3 19.1
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28© Forrester Research, Inc. All rights reserved. Non-GAAP Cash Flow Reconciliation Note: Amounts might not total due to rounding. (dollars in millions) FY 21 FY 22 FY 23 FY 24 Net cash provided by operating activities $107.1 $39.4 $21.7 ($3.9) Less: purchases of property and equipment (10.7) (5.7) (5.5) (3.4) Free cash flow $96.3 $33.8 $16.2 ($7.3)
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29© Forrester Research, Inc. All rights reserved. Non-GAAP Margin and EPS Full Year 2025 Guidance Reconciliation Note: Amounts might not total due to rounding. Low End of Range High End of Range GAAP operating margin 1.8% 2.8% Amortization of intangible assets 2.1% 2.1% Restructuring costs 0.4% 0.4% Stock-based compensation 3.7% 3.7% Adjusted operating margin 8.0% 9.0% Low End of Range High End of Range Per Share Per Share GAAP - earnings per share $0.24 $0.34 Amortization of intangible assets $0.45 $0.45 Restructuring costs $0.07 $0.08 Stock-based compensation $0.76 $0.81 Tax effects of items above ($0.32) ($0.33) Adjusted - earnings per share $1.20 $1.35
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30© Forrester Research, Inc. All rights reserved. Metric Definitions
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31© Forrester Research, Inc. All rights reserved. Contract Value (CV) represents the value attributable to all of our recurring research- related contracts. It is calculated as the annualized value of all contracts in effect at a specific point in time, without regard to how much revenue has already been recognized. Contract value primarily consists of subscription-based products for which revenue is recognized on a ratable basis, except for the entitlements embedded in our subscription products, such as event tickets and advisory sessions, for which the revenue is recognized when the item is utilized. Contract value also includes our reprint products, as these products are used throughout the year by our clients and are typically renewed. Wallet Retention represents a measure of the CV that we have retained with clients over a twelve- month period, including increases or decreases in retained client CV during the period. Wallet retention is calculated on a percentage basis by dividing the annualized contract value of our current clients, who were also clients a year ago, by the total annualized contract value from a year ago. Metric Definitions
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32© Forrester Research, Inc. All rights reserved. Forrester Decisions Wallet Retention is calculated on a percentage basis by dividing the annualized contract value of our current FD clients, who were also FD clients a year ago, by the total annualized contract value from all FD clients a year ago. Annualized contract value of a FD client includes all of their CV products, including both FD and heritage non-FD products. Client Retention represents the percentage of client companies (defined as all clients that buy a CV product) at the prior year measurement date that have active contracts at the current year measurement date. Forrester Decisions Client Retention modifies this definition to include only Forrester Decision clients. Client Count is the total of enterprise clients with an active CV contract. Forrester Decisions Client Count represents only clients that have an active Forrester Decisions contract. Free Cash Flow is calculated as cash flow generated from operating activities less cash paid for property and equipment. Metric Definitions
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