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Forrester Research Reports First-Quarter Financial Results

  Forrester Research Reports First-Quarter Financial Results

Business Wire

CAMBRIDGE, Mass. -- April 24, 2013

Forrester Research, Inc. (Nasdaq: FORR) today announced its 2013 first-quarter
financial results.

First-Quarter Financial Performance

  *Total revenues were $71.5 million for the first quarter of 2013, compared
    with $70.3 million for the first quarter of last year. Research revenues
    increased 1%, and advisory services and other revenue increased 3%
    compared with the first quarter of last year.
  *On a GAAP basis, net income was $2.3 million, or $0.10 per diluted share,
    for the first quarter of 2013, compared with net income of $3.2 million,
    or $0.14 per diluted share, for the same period last year. On a pro forma
    basis, net income was $4.8 million, or $0.21 per diluted share, for the
    first quarter of 2013, which reflects a pro forma effective tax rate of
    39%. Pro forma net income excludes stock-based compensation of $1.9
    million, amortization of $0.6 million of acquisition-related intangible
    assets, reorganization costs of $1.6 million, and net investment losses of
    $0.1 million. This compares with pro forma net income of $5.1 million, or
    $0.22 per diluted share, for the same period in 2012, which reflects a pro
    forma tax rate of 39%. Pro forma net income for the first quarter of 2012
    excludes stock-based compensation of $1.3 million, amortization of $0.6
    million of acquisition-related intangible assets, $1.3 million of
    reorganization costs, and net investment gains of $0.1 million.

“Forrester exceeded guidance on revenue, operating margin, and earnings per
share for the first quarter,” said George F. Colony, Forrester’s chairman and
chief executive officer. “While we are encouraged by the operating results,
our performance is not yet consistent across all geographies. During the first
quarter, we saw strong performance from some sales teams, while others are
still stabilizing. Our recovery is continuing, but it is not complete.”

A reconciliation of GAAP results to pro forma results may be found in the
attached financial tables.

Forrester is providing second-quarter 2013 financial guidance as follows:

Second-Quarter 2013 (GAAP):

  *Total revenues of approximately $77.5 million to $80.5 million.
  *Operating margin of approximately 8.5% to 10.5%.
  *Other income, net of approximately $0.2 million.
  *An effective tax rate of 40%.
  *Weighted average diluted shares outstanding of approximately 22.7 million.
  *Diluted earnings per share of approximately $0.18 to $0.22.

Second-Quarter 2013 (Pro Forma):

Pro forma financial guidance for the second quarter of 2013 excludes
stock-based compensation expense of $0.9 million to $1.1 million, amortization
of acquisition-related intangible assets of approximately $0.6 million,
reorganization costs of approximately $0.3 million, and any investment gains
or losses.

  *Pro forma operating margin of approximately 11.0% to 13.0%.
  *Pro forma effective tax rate of 39%.
  *Pro forma diluted earnings per share of approximately $0.23 to $0.27.

Our full-year 2013 guidance is as follows:

Full-Year 2013 (GAAP):

  *Total revenues of approximately $290.0 million to $298.0 million.
  *Operating margin of approximately 6.0% to 7.0%.
  *Other income, net of approximately $0.8 million.
  *An effective tax rate of 39%.
  *Weighted average diluted shares outstanding of approximately 21.9 million.
  *Diluted earnings per share of approximately $0.52 to $0.59.

Full-Year 2013 (Pro Forma):

Pro forma financial guidance for full-year 2013 excludes stock-based
compensation expense of $5.7 million to $6.2 million, amortization of
acquisition-related intangible assets of approximately $2.3 million,
reorganization costs of approximately $1.9 million, and any investment gains
or losses.

  *Pro forma operating margin of approximately 9.5% to 10.5%.
  *Pro forma effective tax rate of 39%.
  *Pro forma diluted earnings per share of approximately $0.79 to $0.86.

Quarterly Dividend

Forrester also announced today that its board of directors has approved a
quarterly dividend of $0.15 per share payable June 19, 2013, to shareholders
of record on June 5, 2013.

About Forrester Research

Forrester Research, Inc. (Nasdaq: FORR) is an independent research company
that provides pragmatic and forward-thinking advice to global leaders in
business and technology. Forrester works with professionals in 17 roles at
major companies providing proprietary research, customer insight, consulting,
events, and peer-to-peer executive programs. For more than 29 years, Forrester
has been making IT, marketing, and technology industry leaders successful
every day. For more information, visit www.forrester.com.

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements
include, but are not limited to, statements about anticipated growth,
productivity improvements, restructuring activities, Forrester’s financial
guidance for the second quarter of and full-year 2013, and the timing and
amount of the repurchase of Forrester shares. These statements are based on
Forrester’s current plans and expectations and involve risks and uncertainties
that could cause actual future activities and results of operations to be
materially different from those set forth in the forward-looking statements.
Important factors that could cause actual future activities and results to
differ include, among others, Forrester’s ability to retain and enrich
memberships for its research products and services, technology spending,
Forrester’s ability to respond to business and economic conditions and market
trends, the risks and challenges inherent in international business
activities, competition and industry consolidation, the ability to attract and
retain professional staff, Forrester’s dependence on key personnel, the
possibility of network disruptions and security breaches, and possible
variations in Forrester’s quarterly operating results. Financial guidance
regarding shares outstanding and per-share amounts does not take into account
any purchase of shares in Forrester’s modified "Dutch auction" self-tender
offer to purchase up to $130 million of its common shares and may materially
change depending upon the outcome of the self-tender offer. Forrester
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events, or otherwise. For
further information, please refer to Forrester’s reports and filings with the
Securities and Exchange Commission.

The consolidated statements of income and the table of key financial data are
attached.

© 2013, Forrester Research, Inc. All rights reserved. Forrester is a trademark
of Forrester Research, Inc.



Forrester Research, Inc.
Consolidated Statements of Income
(Unaudited, in thousands, except per share                     
data)
                                                       Three Months Ended
                                                       March 31,
                                                        2013         2012
                                                                      
Revenues:
Research services                                      $ 50,378       $ 49,760
Advisory services and other                             21,121       20,500
Total revenues                                          71,499       70,260
                                                                      
Operating expenses:
Cost of services and fulfillment                         27,027         26,938
Selling and marketing                                    27,057         25,133
General and administrative                               9,487          9,611
Depreciation                                             2,360          1,993
Amortization of intangible assets                        559            614
Reorganization costs                                    1,591        1,343
Total operating expenses                                68,081       65,632
                                                                      
Income from operations                                   3,418          4,628
                                                                      
Other income, net                                        376            409
Gains (losses) on investments, net                      (51    )      59
Income before income taxes                               3,743          5,096
                                                                      
Income tax provision                                    1,402        1,915
Net Income                                             $ 2,341       $ 3,181
                                                                      
Diluted income per share                               $ 0.10        $ 0.14
                                                                      
Diluted weighted average shares outstanding             22,658       23,173
                                                                      
Basic income per share                                 $ 0.10        $ 0.14
                                                                      
Basic weighted average shares outstanding               22,306       22,738
                                                                      
Pro forma data (1):
Income from operations                                 $ 3,418        $ 4,628
Amortization of intangible assets                        559            614
Reorganization costs                                     1,591          1,343
Stock-based compensation included in the
following expense categories:
Cost of services and fulfillment                         904            653
Selling and marketing                                    422            224
General and administrative                              534          446
                                                                      
Pro forma income from operations                         7,428          7,908
                                                                      
Other income, net                                       376          409
Pro forma income before income taxes                     7,804          8,317
                                                                      
Pro forma income tax provision                          3,044        3,244
                                                                      
Pro forma net income                                   $ 4,760       $ 5,073
                                                                      
Pro forma diluted income per share                     $ 0.21        $ 0.22
Diluted weighted average shares outstanding             22,658       23,173

(1) Forrester believes that pro forma 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 pro forma presentation excludes amortization of
acquisition-related intangible assets, stock-based compensation,
reorganization costs and net gains or losses from investments, as well as
their related tax effects. The pro forma data does not purport to be prepared
in accordance with Accounting Principles Generally Accepted in the United
States.

                                                           
                                                                  
Forrester Research, Inc.
Consolidated Balance Sheet and Cash Flow                   
Data
(Unaudited, in thousands)
                                                                  
                                                  March 31,       December 31,
                                                  2013            2012
                                                                  
Balance sheet data:
Cash, cash equivalents and marketable             $ 273,478       $  242,656
investments
Accounts receivable, net                          $ 49,160        $  74,623
Deferred revenue                                  $ 152,188       $  150,479
                                                                  
                                                                  
                                                  Three Months Ended
                                                  March 31,
                                                  2013            2012
                                                                  
Cash flow data:
Net cash provided by operating activities         $ 35,453        $  34,886
Purchases of property and equipment               $ (939    )     $  (2,418  )
Repurchases of common stock                       $ -             $  (7,700  )
Dividend paid                                     $ (3,350  )     $  (3,195  )
                                                                  
                                                                  
                                                  As of
                                                  March 31,
                                                  2013            2012
Metrics:
Agreement value                                   $ 218,619       $  220,695
Client retention                                    77      %        80      %
Dollar retention                                    90      %        90      %
Enrichment                                          95      %        99      %
Number of clients                                   2,442            2,524
                                                                  
                                                  As of
                                                  March 31,
                                                  2013            2012
Headcount:
Total headcount                                     1,222            1,204
Research staff                                      441              445
Sales staff                                         460              439

Contact:

Forrester Research, Inc.
Michael Doyle, +1-617-613-6000
Chief Financial Officer
mdoyle@forrester.com
or
Forrester Research, Inc.
Jon Symons, + 1-617-613-6104
Vice President, Corporate Communications
press@forrester.com
 
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