Forrester Research, Inc.

Good afternoon, and thank you for standing by. Welcome to Forrester's fourth quarter and full year 2024 conference call. At this time, all participants are on the 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 the 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 fourth quarter and full year 2024. 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, Chief Sales Officer, are also with us for the Q&A section of the call. Before we begin, I'd like to remind you that this call will contain certain 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 obligations to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. Lastly, consistent with previous calls, today we will be discussing our performance on an unadjusted basis, which excludes items infecting 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'll 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 2024 Q4 and full year earnings call. With me is our Chief Financial Officer, Chris Finn, who will present a financial update following my remarks. I will be covering the following key themes. One, our progress in 2024. Two, Q4 and 2024 fiscal year financial performance. And three, focus areas for 2025. 2024 was the final year of our transition to Forrester Decisions, or FD. We embarked on this journey in 2021 and have worked through a number of challenges, all against a backdrop of a tech slowdown in an uncertain economic environment. As Christophe Favre, our head of sales in Europe and Asia, observed, this wasn't a transition to a new product, it was a transition to a new company. We have had to introduce all of our clients to a different value proposition and a new way of working with Forrester. We are pleased to report that our migration is essentially complete, with 80% of our contract value, or CV, now in our FD portfolio. The remaining 20% of CV is largely reprints, with a small portion remaining in our legacy product. As a result, after our multi-year migration, the entire organization is now 100% focused on selling and supporting FD. This will allow research and product to continue enhancing foreshore decisions and our go-to-market teams to focus on retention, enrichment, and adding new clients to the platform. While this period in the company's history has been challenging, we remain confident that the changes we have made will generate long-term shareholder and client value. As discussed on previous calls, while we have been transitioning to Forrester decisions, We've also been refocusing our consulting and events businesses to drive CV. By design, these businesses comprise a smaller portion of our overall revenue mix, now less than 30%. Our consulting business overcame a slow start in the year and showed improved trends in the second half of the year with particular strength in strategy consulting. Our events business was challenged in 2024. While the percentage of clients with events tickets attending events rose to historically high rates, non-client attendees were down, resulting in smaller-than-planned total audiences. Audience size impacted sponsorship sales, which comprise approximately 70% of events revenue. Now, despite these factors, our events continue to record high experience scores from attendees. Our events impart high value. In 2025, we are investing in events to drive higher audiences and expanded experiences. Our metrics stabilize in the year with pockets of improvement. While retention improved by two points, while contract value per client increased 10%, from 143,000 at year-end 2023 to 158,000 at year-end 2024. The percentage of CV that is in multi-year contracts continues to grow, this time removed from 62% at the end of 2023 to 69% at year-end 2024. Turning now to a brief summary of our product improvements in 2024. Izola is Forrester's generative AI tool. It enables clients to quickly access our research and create new syntheses of that research. It went into full availability at mid-year, and we continue to enhance the tool. In the fourth quarter, we released a new version of Izola UX, and we have added functionality enabling clients to access survey data models and WAVE baseline data sets. Izola is now the third highest destination for our clients when they visit the Forrester website. We launched our new Reprints Hub, which allows clients to easily manage their reprint licenses from within the core digital Forester.com platform. The transition to our new in-house site brings us operational efficiencies and cost savings, and it enabled the creation of a new subscription product, Flexible Reprints, which launched in the third quarter. As part of our continual enhancement of Forester decisions, we launched a new service in 2024, Forrester decisions for data, AI, and analytics. This service guides data and technology leaders as they build their AI and data roadmaps, link business objectives to their data strategy, and create modern data governance. Early clients are in the financial services, consumer, and high-tech verticals. Finally this year, we unveiled a major update to our iconic Forrester Wave, the comprehensive product guide that has served tech buyers for more than two decades. These changes simplify the process of buyer selection and allow clients to make purchasing decisions based on their specific needs, preferences, and priorities. Our new interactive wave comparison tool allows clients to view results tailored to their specific requirements and context. Turning now to our full year and Q4 performance. Bookings attenuated late in the fourth quarter, resulting in a CV decline of 5% for the full year. This was another reminder that we are still adjusting to the exigencies and selling dynamics of forester decisions. The CV bookings missed in the fourth quarter contributed to revenue decline, 9% for the quarter and 10% for the year. That said, revenue and profitability for Q4 and 2024 were at or above the midpoint of our guidance. To keep our expenses aligned with expected revenue in 2025, we had a reduction in force of 6% in early January. Chris will give you additional financial details in a few moments. And now I'd like to touch on our outlook for 2025. We are planning for flat contract value growth in the year. Our outlook is being driven by three factors. One, while the product transition is complete, we believe that our sales motion and culture will be completing its transition in 2025. Two, continued weakness in the technology and tech services markets. And three, economic and political uncertainties. potentially driven by the changes being made by the incoming U.S. presidential administration. So while we expect CV growth to be flat in 2025, we are planning for revenue to be down in the year as a result of negative contract value increase in 2024. However, we expect cash flow to return to historical levels in the year. With the product transition complete, the company is focused on three initiatives in 2025. One, improving retention. Two, driving growth. And three, boosting events to be a more potent driver of retention and CV growth. Now, while retaining clients is, of course, always job one for the company, we are enhancing our systems to drive it higher in 2025. The foremost change is the institutionalization of our retention lifecycle process, which we debuted in the second half of 2024. The retention lifecycle sets a cadence of continuous check-ins with the economic buyer of Forrester decisions. reviewing the client's progress of their most important initiatives. In the second half of 2024, we found correlation between client lifecycle participation and improved retention. To drive growth, we will continue with the regimen we put in place in 2024. One, selling to C-level executives who have the budget and authority to apply our research. Two, ensuring that our sales activities are standardized and consistently followed. And three, applying our new sales methodology, what we call FAST, to reduce the time to close business. Our 2025 growth plan includes investments to boost sales productivity, training and execution, including the hiring of new quota-bearing headcount and account development representatives. Our third initiative is to supercharge our events to make them more powerful platforms for selling and renewing research contracts. I like to call events the Apple Store Forester, the place where we are in person with clients and where our clients can get to spend time with their peers and colleagues. We're making three investments in events. One, shifting marketing dollars to expand the event's audience. Two, incentivizing our sales force to sign up clients and non-clients for events. And three, expanding the experience and content to make events must attend. Our marketing organization is being tightly integrated with our events organization to ensure that we have good alignment of messaging, spend, and attention. Events is a business that we've always been in. We want to better leverage this asset to get the most return in the form of CV growth. Now to conclude, I want to thank investors for their patience as the company has moved through these past three years. While this has certainly been challenging, I want to outline what we have accomplished and why the new Forester will ultimately be a better investment than the old Forester. Number one, The company has pivoted from a 60% CV, 40% non-CV ratio to 73% CV and 27% non-CV. As we return to growth, these new ratios will increase profitability and operating leverage. Two, CV per client and multi-year contracts continue to expand, which will ultimately increase sales productivity. This reflects our ongoing move to shed small company customers in favor of larger corporate clients. Three, we have simplified the business, centering on one power research platform designed to increase cross-sell and wallet retention. Four, we are the only research company of scale that has constructed a generative AI tool to enable clients to get answers and solutions faster. This will improve client satisfaction and retention rates. And finally, five, we have sharpened our competitive positioning and uniqueness. We analyze tech and business together, not in silos. We uniquely focus on helping our clients win, serve, and retain their customers. And finally, unlike our competitors, we offer research and continuous guidance. We are on the side and by the side of our clients. We believe that the transition of the last three years has been worthwhile. Getting to this new model will make the company more profitable, with higher growth potential, and with more opportunities to be embedded with clients. We are through the product transition, and now we are focused on executing, making this distinct model work. Thank you very much, and I will now turn the call over to Chris Finn, Forrester's CFO. Chris?