Forrester Research ((FORR)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call from Forrester Research presented a mixed sentiment, reflecting both achievements and challenges. While the company celebrated growth in the government sector and an expanding sales pipeline, these positives were countered by significant revenue declines and client retention issues. Strategic initiatives in AI and research were highlighted as promising, yet the financial results underscored ongoing market and operational difficulties.
Government Sector Growth
Forrester Research reported substantial progress in the government sector during Q2, securing several significant contracts with U.S. state and local governments, as well as European federal agencies. This growth was attributed to competitive wins and a rising interest in research-focused generative AI applications, showcasing the company’s strength in this area.
Sales Pipeline Increase
The company experienced a 15% increase in its total sales pipeline from Q1 of 2025, indicating a growing potential for future sales and conversions. This expansion suggests that Forrester is well-positioned to capitalize on upcoming opportunities, although conversion rates remain an area for improvement.
New Research Constructs
Forrester introduced two new research frameworks: the Buying Networks research series for B2B and the Total Experience Score for B2C. These frameworks have been well-received by clients, reflecting the company’s innovative approach to research and its commitment to meeting client needs.
Event Attendance Increase
The company reported an increase in on-site attendance at its CX Summits, with North America and Europe seeing rises of 11% and 21%, respectively. Satisfaction scores also reached an all-time high, indicating a positive reception from attendees and a successful execution of these events.
Improvement in AI Research Tool, Izola
Forrester’s AI research tool, Izola, saw significant improvements, now capable of drawing answers from graphics and charts in reports. Client usage of Izola increased by 22%, and prompts were up 44% quarter-over-quarter, demonstrating enhanced functionality and growing client engagement.
Total Revenue Decline
Despite these advancements, Forrester faced an 8% year-over-year decline in total revenue. This was driven by mid-single-digit declines in research and consulting businesses, alongside ongoing challenges in the events business, highlighting financial pressures.
Client and Wallet Retention Challenges
The company experienced a decrease in client value (CV) and wallet retention by 7% and 1%, respectively. These figures indicate challenges in maintaining existing client relationships, which could impact future revenue streams.
Events Revenue Decline
Forrester’s events revenue decreased by 23% compared to the second quarter of 2024, primarily due to challenges with sponsorship revenues. This decline underscores the difficulties faced in the events segment, despite increased attendance.
Operating Income and EPS Decline
Operating income and earnings per share (EPS) both saw declines of 24% and 25%, respectively, compared to Q2 of last year. These figures reflect the financial pressures the company is under, despite some operational successes.
Forward-Looking Guidance
In its guidance, Forrester provided insights into its financial and strategic outlook. The company reported a total revenue of $111.7 million for Q2, an 8% year-over-year decline. Despite this, they exceeded consensus expectations for revenue, operating margin, and EPS. Client retention improved slightly to 74%, while the sales pipeline grew by 15% quarter-over-quarter. Forrester maintained its full-year margin and EPS guidance, with expected revenue for 2025 ranging between $400 million and $410 million, a decrease from 2024. The company also highlighted its continued focus on new research frameworks and enhancements to its AI tool, Izola.
In summary, Forrester Research’s earnings call painted a picture of both promise and challenge. While the company is making strides in government contracts and research innovation, it faces significant revenue and retention hurdles. The forward-looking guidance suggests cautious optimism, with strategic initiatives aimed at overcoming current market and operational challenges.