Forrester Research Q2 Earnings Call Highlights

Key Points

• Q2 revenue fell 10% year over year to $100.2 million, while adjusted operating income declined 24% to $10.4 million. Contract value declined 3%, but client count increased and management maintained its full-year guidance.
• Forrester expects full-year revenue of $350 million to $360 million, with continued declines in research, consulting and events, alongside a 6%–6.5% operating margin and EPS of $0.72–$0.82. The company plans to accelerate share buybacks after repurchasing about $1 million in Q2.
• AI adoption and bookings showed momentum: AI Access generated roughly $10 million in bookings since launch, Forrester AI users rose 69% year over year, and Q2 contract-value bookings grew year over year, particularly in technology research and international markets.

Forrester Research NASDAQ: FORR reported second-quarter results that met its internal expectations as the company continued to manage declining revenue while pursuing contract value growth by the end of 2026. Management maintained its full-year guidance and pointed to improving bookings trends, product adoption and a growing sales pipeline as support for its outlook.

Chief Executive Officer and Chairman George Colony said contract value, or CV, declined 3% during the quarter, matching the first-quarter rate of decline. Wallet retention was flat, while client retention declined by one percentage point sequentially. Client count increased during the quarter.

Revenue fell 10% year over year to $100.2 million from $111.7 million. Research revenue declined 8%, while non-CV businesses declined 15%. Colony attributed consulting and events pressure to market uncertainty as well as Forrester's decision to exit strategy consulting.

“Overall, our Q2 performance was aligned with our expectations, with consensus beats on revenue, margin, and EPS,” Colony said. “Despite headwinds in our consulting and events businesses, we have confidence in attaining our plan in the second half of the year.”

Financial Results and Outlook

On an adjusted basis, operating expenses declined 8%, primarily reflecting lower compensation costs. Headcount fell 7% following restructuring earlier in the year, although the company modestly increased quota-carrying sales headcount as it works toward renewed CV growth.

Adjusted operating income declined 24% to $10.4 million, or 10.4% of revenue, compared with $13.7 million, or 12.2% of revenue, in the prior-year quarter. Net income decreased to $7.7 million from $9.8 million, while earnings per share fell to $0.40 from $0.51.

Research revenue declined 8%, including a 7% reduction in research-product revenue and a 12% decline in reprints. Client retention was 77%, up three percentage points from a year earlier but down one point from the first quarter. Client count rose by 10 during the quarter to 1,770, and retention of 89% was up four percentage points year over year and unchanged sequentially.

Chief Financial Officer Chris Finn said churn, down-sell and new-business performance met or exceeded expectations, while upsell was slightly below expectations and flat from the prior period.

Consulting revenue totaled $20 million, down 15% from the prior year. Finn said the majority of that decline reflected the strategy consulting business, which Forrester stopped actively selling earlier this year and expects to exit by year-end. Content marketing revenue fell 13%, partly offset by 21% growth in advisory services.

Events revenue decreased 17% to $8.5 million as sponsorship and ticket sales were affected by Forrester's move toward shorter and more intimate forums.

For the full year, the company maintained its forecast for revenue of $350 million to $360 million, representing a decline of 9% to 12% from 2025. It continues to expect:

• Research revenue to decline by a mid-single-digit percentage.
• Consulting revenue to decline in the low 20% range.
• Events revenue to decline in the mid- to high-teens percentage range.
• Operating margin of 6% to 6.5%.
• Full-year earnings per share of $0.72 to $0.82.

The company generated $25 million in operating cash flow in the first half. Cash at quarter-end exceeded $130 million, while debt was $35 million. Forrester resumed share repurchases late in the quarter, buying about $1 million of stock, and said it plans to accelerate buybacks in the second half. More than $76 million remained under its repurchase authorization.

AI Products and Sales Momentum

Management highlighted increasing adoption of Forrester AI and its AI Access product. Finn said AI Access generated approximately $10 million in bookings since its launch nine months ago.

Forrester introduced an AI agent for Microsoft Copilot during the quarter, following its prior integration of Forrester AI into Microsoft Teams. By the end of the quarter, hundreds of client accounts had been activated to access Forrester AI through Teams and Copilot.

Colony said total Forrester AI users increased 33% sequentially and 69% year over year, while prompts rose 58% from the first quarter and 105% from the prior-year period. During the quarter, Forrester AI surpassed indexed search as the primary way Forrester Decisions clients interacted with the company’s research database.

Chief Product Officer Carrie Johnson said Forrester was the first research company among its competitors to establish a presence in Microsoft Teams and the first to introduce an AI agent in Copilot. The company is also working on integrations with Gemini, Claude and Slack, according to Colony.

Chief Sales Officer Christophe Favre said CV bookings grew year over year in the second quarter, with double-digit growth in technology research and continued positive CV performance in Europe, the Middle East and Africa and the Asia-Pacific region. North American government remained a challenged area, though Favre said he expects a potential turning point in the federal segment during the third quarter as the company has developed a pipeline around AI Access and executive-leader offerings.

Favre also cited the company’s reorganization of North American sales around six vertical industries and a sales-force balanced scorecard intended to improve accountability for pipeline quality and performance. He said technology, industrial and manufacturing customers were showing increased interest in transforming their go-to-market strategies and using AI-related offerings.

Events and AI Research

Forrester’s B2B Summit North America in Phoenix drew 1,400 attendees, up 9% year over year, along with 59 sponsors and 110 sessions. The company estimated that the event influenced about $3.5 million in CV bookings.

The summit focused on what Forrester calls the “go-to-market singularity,” or changes in buyer behavior and sales and marketing practices driven by AI. Colony said the company believes businesses need to augment sales and marketing with AI agents, respond more quickly to customer changes and better align marketing, sales and product organizations.

Forrester also held customer-experience forums in New York, San Francisco and Amsterdam, with the New York and Amsterdam events selling out. At those forums, the company introduced an updated Total Experience score that incorporates customer experience, brand experience and employee experience.

Colony said Forrester released hundreds of AI research frameworks, models, benchmarks and technology blueprints in the quarter, including reports examining how the roles of chief information officers, chief marketing officers and chief information security officers may change in the AI era.

About Forrester Research (NASDAQ:FORR)

Forrester Research, Inc is a leading global research and advisory firm that provides insights and guidance to business and technology leaders. Founded in 1983 and headquartered in Cambridge, Massachusetts, the company offers a wide range of services designed to help clients understand market dynamics, evaluate technology investments and develop customer-centric strategies. Forrester's core offerings include syndicated research reports, bespoke advisory services, consulting engagements and data-driven analytics.

Through its extensive research practice, Forrester produces in-depth analyses of emerging technologies, industry trends and best practices across sectors such as information technology, marketing, customer experience and digital business.

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