Forrester Research ((FORR)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Forrester Research’s latest earnings call painted a cautious yet hopeful picture for investors. Management acknowledged sharp revenue and earnings declines alongside weakness in consulting and events, but pointed to growing AI traction, improving retention, and a strong balance sheet as levers for a gradual turnaround. Risk remains elevated, yet credible growth drivers are beginning to take shape.
AI Products Emerge as a Key Growth Engine
Forrester highlighted notable momentum in its AI offerings, positioning them at the center of its recovery plan. Forrester AI saw unique users rise 55% year over year in Q4 and prompts climb 65%, while the newer AI Access product generated more than $5 million in 2025 bookings and materially shortened sales cycles, helping win new clients.
Retention and Client Count Show Early Signs of Repair
Client dynamics, a critical leading indicator for subscription businesses, improved over the year. Retention reached 87%, up roughly four points year over year, and client count finally grew sequentially in Q4 for the first time since 2021, with management crediting AI Access and more disciplined execution across the retention lifecycle.
Multiyear Contracts Bolster Revenue Visibility
The company reported a healthier mix of multiyear agreements, which should support more predictable subscription revenue. Multiyear deals rose to 72% of total contract value at year‑end, up from 69% a year earlier, strengthening forward visibility for the core research segment despite broader top‑line pressure.
Cash Generation and Balance Sheet Provide Cushion
Despite earnings pressure, Forrester delivered positive cash flow and maintained a solid financial foundation. Full‑year free cash flow reached $18 million, cash from operations was $21.1 million, and the company ended with about $127.7 million in cash versus only $35 million of debt, while still holding more than $77 million of share repurchase authorization.
Cost Cuts Aim to Realign Structure With Demand
Management leaned hard into expense discipline as revenues declined, cutting into its cost base without crippling strategic investments. Adjusted operating expenses fell 2% in Q4 and 7% for the full year, supported by roughly 6% lower headcount, benefits savings, and facility consolidation, all aimed at better matching costs to the current revenue run‑rate.
Research Segment Holds Up Better Than the Rest
The company’s higher‑margin subscription research business proved more resilient than consulting and events, underlining its strategic priority. Research revenue was $76.6 million in Q4 and $295.6 million for 2025, down 4% and 7% respectively, while research contract value slipped 6% to $292.4 million, declines that were milder than in other lines.
Management Lays Out a Focused 2026 Roadmap
Executives detailed a tighter playbook to return to contract value growth next year, centered on a smaller set of priorities. The plan emphasizes executing the retention lifecycle, expanding product options while embedding Forrester AI, upgrading go‑to‑market execution under new sales leadership, and producing more actionable, data‑rich research such as Blueprints and all‑seasons content.
Top-Line Contraction Highlights Execution Challenge
Headline numbers underscored the depth of the current slump, particularly outside core subscriptions. Total revenue fell 6% in Q4 to $101.1 million and 8% for 2025 to $396.9 million, while contract value declined 6% for the year, with much of the weakness concentrated in non‑research offerings that management is now reshaping.
Consulting Weakness Triggers Exit From Strategy Work
Forrester’s consulting arm had a tough year, forcing more radical changes to its portfolio. Consulting revenue dropped 16% in Q4 and 9% for 2025 to $88.2 million, and strategy consulting bookings plunged more than 50%, prompting the company to wind down that line, which carries an estimated $6 million revenue impact and an $8 million backlog to fulfill through 2026.
Events Business Undergoes Major Reset
The events segment remained a significant drag as sponsorships and ticket demand stayed soft. Events revenue slid 29% for the year to $13.1 million, with Q4 revenue of $2.7 million down modestly year over year, leading management to overhaul the model by shifting toward smaller, regional, shorter‑format gatherings in search of better economics and engagement.
Margins Compress as Earnings Follow Revenue Down
Profitability deteriorated meaningfully, reflecting both the revenue compression and restructuring actions. Adjusted operating income was just $4.2 million in Q4, down 53% and representing 4.1% of revenue, while full‑year adjusted operating income fell 21% to $30.3 million and net income and EPS declined by similar percentages.
Restructuring and Workforce Cuts Signal a Leaner Forrester
To support its pivot back to research and AI, the company is absorbing sizable restructuring charges while cutting staff. Management said the latest restructuring will affect roughly 8% of employees, carries expected costs of about $13.5 million to $14 million, and is designed to permanently reset the cost base to match the streamlined business mix.
Guidance Points to Another Down Year Before Stabilization
Looking ahead, Forrester issued conservative 2026 guidance that bakes in another year of revenue decline as the transition plays out. The company projects revenue between $345 million and $360 million, modest contract value growth exiting the year, operating margins of 6.0% to 6.5%, and EPS of $0.72 to $0.82, with research expected to rise to about 80% of total revenue.
Forrester’s earnings call underscored a company in the midst of a difficult but deliberate reset. Investors will need to weigh near‑term revenue and margin pressure against improving retention, strengthening AI adoption, and a more focused research‑centric model, with 2026 shaping up as a key test of whether these initiatives can translate into renewed, durable growth.