Forrester Research, Inc.

Good afternoon, and thank you for standing by. Welcome to Forrester's third quarter 2023 conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Vice President of Corporate Development and Investor Relations, Ed Bryce Morris. Please go ahead.

Thank you, and hello everyone. Thanks for joining today's call. Earlier this afternoon, we issued our press release for the third quarter of 2023. If you need a copy, you can find one on our website in the Investors section. Here with us today to discuss our results are George Colony, Forrester's Chief Executive Officer and Chairman, and Chris Finn, Chief Financial Officer. Carrie Johnson, our Chief Product Officer, and Nate Swan, our Chief Sales Officer, are also here with us for the Q&A section of the call. 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 in the forward-looking statements. Factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission, and the company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. Lastly, consistent with our previous calls, today we will be discussing our performance on an unadjusted basis, which excludes items affecting comparability. While reporting on an adjusted basis is not in accordance with GAAP, we believe that reporting numbers on this adjusted basis provides a meaningful comparison and an appropriate basis for our discussion. You can find a detailed list of items excluded from these adjusted results in our press release. And with that, I'll hand it over to George.

Thank you for joining Forrester's Q3 2023 earnings call. As has been true for the last four quarters, we continue to navigate through a challenging macroeconomic environment while simultaneously progressing on a major product transition. As we enter the busiest selling season of the year for Forrester, I would like to cover five key themes. One, Forrester's third quarter performance. Two, enhancements to the Forrester Decisions product. Three, our work applying generative AI to our business. Four, an update on our third quarter events. And five, improvements to our sales process. As a result of persistent headwinds, contract value was flat in Q3. However, we are pleased to report that Forrester Decisions has now reached approximately $200 million in contract value, representing 57% of our overall CV. In our non-CV businesses, we have seen signs of stabilization. as well as a modest improvement in our strategy consulting volume. Consulting is transitioning to be a smaller part of our overall business, but its importance as part of our CV growth engine remains undiminished. We are piloting acceleration services, prepackaged consulting offerings that are aligned with priorities in the Forrester Decisions services. The packages will give clients in-depth direction and guidance as they apply our research models and frameworks in their organizations. We remain on track to convert two-thirds of our CV to Forrester Decisions by the end of the year, and Chris will go into more details in a few moments. Turning now to the enhancements we've made to the Forrester Decisions product. Firstly, we are excited to report that the addition of client outcomes, which was mentioned in our previous call, has made significant progress. As a reminder, client outcomes is a new feature that identifies our clients' most pressing initiatives and links them to contextually relevant Forrester Decisions assets. We have now cataloged initiatives and outcomes for 80% of Forrester Decisions clients. Client outcomes will play a vital role in creating a stickier product as it directly aligns our offerings with the work that our clients are doing every day. It creates a continuous dialogue between clients and our research, which we call the golden thread, stitching the partnership together over the long term. A new form of IP, which we call Solutions Blueprints, codifies the most common client initiatives into step-by-step guides for success. On the research side, I'm excited to share that we have recently published both our 2024 planning guides and our prediction series for the year ahead. These widely read reports provide guidance for our clients as they make critical 2024 budget decisions. We have also released our top emerging tech report. This was a major collective effort by our research organization in which we tracked and analyzed 410 emerging technologies to highlight the tech that will shape business over the next three years. And finally, Q3 also marked the launch of the AI Advantage, our sixth bold vision research theme. Because AI will become pervasive in a wide array of business applications, we are making this analysis available to all Forrester Decisions personas. The most important enhancement to Forrester Decisions is currently in beta test with 75 clients. Izola, our generative AI tool, enables clients to converse with Forrester's massive database of research and get answers quickly and efficiently. We believe that it is the most significant step forward in delivering value to our clients since the launch of our website in 1994. After testing and refinement, Izola will become available to all Forrester Decisions clients, further enhancing the product experience. Izola is one of four generative AI projects being developed at Forrester. In addition to improving our clients' research experience, we expect these GenAI applications to be used to increase the efficiency of internal operations, improve the productivity of our Salesforce, and augment our customer success process. I believe that generative AI will revolutionize the research business, and we are positioning Forrester to lead that revolution. Turning now to our events business. In Q3, we hosted three events, Technology and Innovation North America, Data Strategy and Insights, and B2B Summit APAC. We continue to successfully attract audiences through our hybrid events model, which combines in-person and a digital experience. This approach is enabling Forrester to widen the reach of events globally. Approximately 25% of our event attendees are joining virtually. Our Q3 events received all-time high session scores for experience, value, and content. Notably, our executive leadership exchange program, a set of tracks built for C-level technology leaders, grew nearly 50% year over year. Nate Swan, Forrester's head of sales, and Lisa Riley, Forrester's head of events, are successfully partnering to optimize events for driving new research contract sales and for boosting cross-sell with existing accounts. In response to client demand, we are premiering a new flagship technology event next year. By bringing together data and technology through the merger of our data strategy insights and our technology and innovation events, tech and data teams will be able to align on growth and opportunity in a single, unified forum. This move has already resulted in growing sponsorship renewals 100% year over year. Next year, the events portfolio will consist of B2B Summit, CX Forum, and the Technology Forum, each held in North America, Europe, and Asia. We believe that simplifying and focusing on our events will improve the client experience and more closely align the business with research content. Events continue to play a significant role in sales pipeline generation. The Technology Innovation Forum alone generated over $9 million in client opportunities, up significantly from 2022. I would like to turn to our ongoing journey to create a high-performance sales team at Forrester. In September, Carter McCorry joined as Vice President of New Business. Carter has deep new business experience in the research industry, having worked in sales at the Corporate Executive Board before that company was acquired. He will run new sales in the Americas as well as manage global revenue development. This is a team that converts leads to new opportunities. Recognizing the importance of customer success in sustaining long-term partnerships, we also recently welcomed the new Vice President of Customer Success, Senthil Kumar. Sental brings significant experience from his previous role at Salesforce, where he was a regional VP of CS. Nate Swan, our chief sales officer, continues to build a culture of process and coaching in the Salesforce, and Carter and Sental will be excellent additions to his team. In Q3, we saw three themes play out in our sales motion. First, we are seeing broadened relationships within user-client organizations. This quarter, a major American telco expanded their contract, with forester decisions and deployments across multiple business units contributing to over $1 million in CV. These types of deals are exactly what forester decisions was designed to do with our legacy base, start conversations, and unlock new opportunities in previously untapped functional areas. Second, we are seeing strong traction with governments, both in the United States and internationally. Governments and public agencies now recognize the connection between delivering high-quality citizen and customer experiences. Our government clients benefit from Forrester benchmarks, frameworks including Zero Trust, and certifications, while helping them meet stringent security requirements. In the quarter, we closed several million-dollar-plus deals with U.S. government agencies, as well as significant government contracts at APAC and EMEA. The third trend in Forrester Decision sales is the conversion of large technology vendors over to the platform. In Q3, a major U.S.-based tech company expanded their relationship by signing a $1.2 million Forrester Decisions contract, which will be used by C-level executives to operate their functions. Forrester will now play an important role helping the company increase growth through the alignment of sales, marketing, and products. Forrester's Board of Clients convened last week in Cambridge. These executives have advised Forrester on our strategy and our products, and this is the 25th anniversary of the formation of the board. Feedback on Forrester decisions was overwhelmingly positive, and the board was enthusiastic about enhancements we are making to the platform, in particular, the addition of Izola. To end my remarks, I want to reiterate that I remain confident and positive regarding the future of our business. Unlike in past turbulent times like 2001, we have a powerful product platform, a differentiated strategy, and a sales force that is making the transition to high performance. Additionally, we see generative AI as a game changer for our business that has the potential to make our product more usable and valuable for our clients. We know where we are going, and although we have encountered challenges, we remain resolute in our pursuit of growing CV. Thank you very much, and I will now turn the call over to Chris Finn, Forrester CFO. Chris.