On this page of StockholderLetter.com we present the latest annual shareholder letter from FORRESTER RESEARCH, INC. — ticker symbol FORR. Reading current and past FORR letters to shareholders can bring important insights into the investment thesis.

 •  4/1/2025 Letter Continued (Full PDF)
 •  4/12/2023 FORR Stockholder Letter
 •  4/2/2024 FORR Stockholder Letter
 •  More "Business Services & Equipment" Category Stockholder Letters
 •  FORR Benford's Law Stock Score = 82

FORR Shareholder/Stockholder Letter Transcript:

2024 ANNUA
UA
AL
A
LR
REPORT


To shareholders and members of the Forrester community,
2024 marked the completion of Forrester   s multi-year journey to transform our research product
into a simple, powerful, customer-led platform, Forrester Decisions. Throughout the year, we
remained laser-focused on migrating our research contract value (CV) to the new product. I am
pleased to report that we reached that goal, with 80% of CV now in Forrester Decisions, 5% in
legacy research, and the remaining 15% in reprints.
Our metrics stabilized during the year, with several showing improvement. Wallet retention rose by
two points, while contract value per client increased by 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
    moving from 62% at the end of 2023 to 69% at year-end 2024.
Despite achieving our CV migration goal, Forrester did not meet its financial plan for the year.
Revenue declined by 10%, adjusted EPS decreased from $1.90 to $1.47, and adjusted operating
margin declined from 10.9% to 8.9%. Also, due primarily to a one-time payment settling a 2023
action, cash flow was negative. Nonetheless, the impact was minimized by our continued
management of expenses.
Why did we embark on this transition?
Our results are likely to prompt investors to ask the question,    If this transformation has been so
difficult, why did we do it?   
We have to go back in time to answer that question. From the 2008 financial crisis until 2018,
Forrester typically grew in the mid to low single digits. We were de-leveraging the business, shifting
more of our business from recurring subscription products like research to one-time products like
consulting. At the end of 2018, our revenue was approximately 60% research contracts and 40%
consulting and events. Because non-CV products have lower gross margins, we had limited
options to expand operating margins.
Our business mix challenged us in three ways: 1) restricted operating margin and cash flow; 2)
attenuated growth, because our base of renewable business (from which organic growth primarily
derives) was shrinking; and 3) challenged comparative market capitalization, as investors do not
put high value on non-CV revenue.
The board believed that we had to change the trajectory of the company. That effort began in 2019.
Here are the steps we took:
1) Acquisition. In January of that year, Forrester acquired SiriusDecisions, a research firm
which specialized in guiding marketing, sales, and product executives in B2B companies.
The focus of SiriusDecisions    research was highly aligned to Forrester   s mission of helping
its clients use technology to win, serve, and retain customers.
2) Focus on CV growth. The acquisition of SiriusDecisions expanded Forrester   s contract
value. We renewed our commitment to expand CV and to change our mix of CV/non-CV
from 60/40 to 70/30, with a long-term goal of 75% in CV.

3) Serving user companies. We believed that our sales force should be primarily devoted to
selling to user companies (firms like banks) while secondarily selling to technology
vendors. User companies vastly outnumber technology vendors and have more potential to
buy multiple Forrester services.
4) Shedding small tech clients. Vendors with under $50 million in revenue constituted a
meaningful portion of Forrester   s client base. These companies would roll in on the tide of
good economic times and roll out when their markets were challenged. Their long-term
value as clients was the lowest in our portfolio. We decided that when we sold to vendors,
we would focus on companies with more than $50 million in revenue.
5) Product integration. In 2019, we operated the Forrester and the SiriusDecisions platforms
as separate products. Clients from both portfolios overwhelmingly called for Forrester to
integrate the two products into one platform. In 2020, we began the journey to combine the
best of Forrester with the best of SiriusDecisions, and we introduced Forrester Decisions in
August of 2021.
6) A multi-year transition. We decided to run a phased, three-year change process, with
clients moving off their legacy research contracts into Forrester Decisions over time.
What happened?
2021, the first year of transition, gave us a glimpse into how powerful our new model could be. In
that year, we grew contract value by 15%, adjusted operating margin increased to 13%, revenue
growth was 10%, and we flowed free cash of approximately $96 million dollars. In retrospect, the
second year of the pandemic was an anomalous economic moment driven by government
spending support and a quickly rising stock market.
In 2022, everything got harder. We found ourselves in a complex product transition against the
backdrop of inflation, rising interest rates, and a technology recession. It became clear that our
sales force would have to pivot their approach to drive sales of the new product     many clients
were clinging to the legacy research product and had to be completely re-sold the new value
proposition.
In early 2023, Nate Swan joined the company as the new Chief Sales Officer. He began the work of
building a new sales process, methodology, compensation, and culture that matched Forrester
Decisions. That year was the most challenging year of the transition, with non-renewals increasing,
driven by clients who opted out of buying the new product. The good news was that Forrester
Decisions was renewing at higher rates than the legacy products. By year-end 2023, over 60% of
our contract value had moved over to the new platform.
The difficult transition continued into 2024, but we were not standing still. In response to client
feedback, we added new features to enable clients to derive more value from Forrester Decisions,
including an expansion of research that we call Expanded Access, a new service called Forrester
Decisions for Data, AI & Analytics, and the addition of Izola, our proprietary generative AI tool that
allows clients to get answers faster. We also rolled out the retention lifecycle initiative, a cadence

for continually checking in with Forrester Decisions clients to ensure that they   re realizing value
and staying engaged. The transition was essentially complete at year-end.
What is Forrester now?
The company emerged from the transformation looking quite different than when it embarked on
this journey:
1) Simplified: We have folded smaller products (e.g., data and certification) into Forrester
Decisions. This has streamlined the product portfolio for our sales force and made it easier
for our clients to buy.
2) Higher recurring revenue: Our business is now nearly three-quarters CV.
3) More attractive to large user companies: Forrester Decisions was designed specifically to
solve the problems of those organizations.
4) More differentiated: Forrester is now unique in three ways: 1) We analyze business and
technology together, not separately; 2) Forrester Decisions offers companies continuous
guidance (via prepared sessions with analysts) in addition to research; and 3) We help
companies win, serve, and retain their customers     in the B2B and B2C environments.
5) The AI Research Company: We offer deep research on how companies can leverage AI to
decrease cost and better serve their customers     in addition to serving our clients using AI
via Izola.
2025: Executing in the new model
When this voyage began, I described what we were building to our investors     a    CV Growth
Engine.    This engine invests cash in three areas: 1) expanding our sales force and improving our goto-market processes; 2) continually enhancing our research product to deliver increased value to
our clients; and 3) acquiring other companies with CV businesses. Successfully performing this
work enables the company to generate even more cash, and the investment cycle repeats.
Perfecting and driving the CV Growth Engine is now our key focus. Of our three investment areas,
sales is our primary focus in 2025: completing the buildout of a go-to-market plan that can
consistently deliver double-digit research contract value growth while selling primarily to user
companies.
Sales is not alone in this endeavor. Our 2025 Theme is:    One Team, One Mission.    All Forresterites
are contributing and dedicated to the effort of expanding CV     this is our collective job one.
Accordingly, Forrester is focused on three key initiatives in 2025:
1. Improving retention through consistently driving client value and earning renewals
2. Widening our reach within client and prospect organizations to drive growth



 4/1/2025 Letter Continued (Full PDF)