What Forrester Research (FORR) Said on Its Q3 Earnings Call

Key Points

• Forrester’s Q3 performance declined: Revenue fell 9% year over year to $86.1 million, while adjusted operating income dropped 35% to $6.5 million. Consulting revenue was particularly weak, partly due to declines in content marketing and the exited strategy consulting business.
• Retention improved, but contract value remained under pressure: Contract value declined 3.5%, though wallet retention rose to 89% and client retention reached 78%. Management expects full-year contract value to range from a 2% decline to 2% growth, with results dependent on fourth-quarter bookings and delayed federal and enterprise deals.
• AI products are gaining traction as Forrester maintains guidance: AI Access accounted for about 4% of contract value and helped drive increased platform usage, while new offerings and integrations aim to expand growth. The company maintained its revenue and margin outlook and raised the low end of its adjusted EPS forecast to $0.77.

Forrester Research NASDAQ: FORR reported third-quarter 2026 results that showed continued declines in revenue and contract value, though management pointed to improved retention metrics, new AI-related products, and sales initiatives as supports for a return to contract value growth.

Total revenue declined 9% year over year to $86.1 million from $94.3 million. Research revenue fell 3% to $70.1 million, while consulting revenue declined 31% to $14.7 million. Chief Financial Officer Chris Finn said consulting was affected by declines in the company’s content marketing business and its exited strategy consulting operation.

Adjusted operating income declined 35% to $6.5 million, or 7.6% of revenue, compared with $9.9 million, or 10.5% of revenue, in the prior-year quarter. Adjusted net income was $4.7 million, or $0.24 per share, versus $7.2 million, or $0.37 per share, a year earlier.

Contract Value Decline Narrows as Retention Improves

Contract value, a key company measure, declined 3.5% from a year earlier. That compared with a 7% decline in the same quarter of 2025 and declines of 3.3% in each of the first two quarters of 2026.

Wallet retention was 89%, up from 86% a year earlier and unchanged from the prior two quarters. Client retention reached 78%, rising one percentage point sequentially and four points from a year earlier.

Finn said the company now expects year-end contract value results to range from a 2% decline to 2% growth, centered around flat performance. He cited three considerations behind the wider outlook:

• Expected growth deals in the U.S. federal government market did not materialize in the third quarter because of funding-related timing issues.
• Some enterprise opportunities in the pipeline are more complex and take longer to close.
• About 40% of annual bookings occur in the fourth quarter, making year-end results sensitive to performance during the period.

Chief Sales Officer Christophe Favre said the company is seeing strength in North American high-tech customers and among technology executives, including CIOs, CTOs, CISOs, and enterprise architects in sectors such as financial services, manufacturing, and business services. He also cited momentum in international markets, particularly Asia-Pacific, while noting the U.S. federal market remains challenging due to funding uncertainty.

Favre said the company’s pipeline remains consistent with recent quarters, with a greater contribution from new products and AI offerings. He said the company is emphasizing pipeline quality, late-stage conversion, deal velocity, and sales productivity.

New Products Expand AI Portfolio

During the quarter, Forrester introduced Team Solutions, a research product designed to help teams collaborate on business transformations, and AI Access Plus, which provides AI-enabled access to Forrester research along with quarterly inquiry sessions with analysts.

Chief Executive Officer George Colony said the new offerings are intended to broaden access to Forrester’s research and create opportunities for upselling within the existing client base. Finn said AI Access, launched a year earlier, has become one of the company’s best-selling new products and accounted for approximately 4% of contract value through the third quarter. He expects that figure to approach 5% by year-end.

Finn said AI Access, a self-service product, carries materially higher margins than the company’s Forrester Decisions product. AI Access Plus includes more analyst engagement and therefore has greater selling and servicing costs, but he said it still offers higher margins than the company’s highest-tier products.

Favre said more than half of the company’s sales force has sold AI Access, which he described as effective in winning new customers, bringing back former customers, and expanding Forrester’s reach within organizations.

AI Usage and Platform Integrations Grow

Colony said Forrester AI usage continued to increase. The number of prompts grew 13% sequentially and 142% year over year during the third quarter, while total users increased 6% from the prior quarter and 65% from a year earlier.

The company has been expanding its “Where You Work” strategy, which makes Forrester AI accessible through Microsoft Teams and Microsoft Copilot environments. In the third quarter, it added a limited early-adopter program for an Anthropic Claude plugin. Colony said the company is also exploring integrations with Slack and Gemini.

Management said AI represents both a means of delivering research more quickly and an opportunity to support clients as they build private AI models, deploy agentic systems, and reshape their businesses around AI technologies.

Guidance, Capital Allocation and Events

Forrester maintained its full-year revenue outlook of $350 million to $360 million, representing a decline of 9% to 12% from 2025. The company continues to expect research revenue to decline by a mid-single-digit percentage, consulting revenue to fall in the low 20% range, and events revenue to decline in the mid- to high-teens range.

The company maintained its adjusted operating margin outlook of 6% to 6.5% and raised the low end of its full-year earnings-per-share outlook. Forrester now expects adjusted earnings per share of $0.77 to $0.82, compared with its previous range of $0.72 to $0.82.

Forrester ended the quarter with $117.6 million in cash and $30 million in debt after repaying $5 million during the period. The company repurchased approximately $10 million of stock in the third quarter and had about $66 million remaining under its repurchase authorization. Finn said Forrester plans to continue repurchasing shares aggressively through the remainder of the year.

The company also reported sold-out events in Asia-Pacific and Europe, including its B2B Forum in London and AI Forums in Singapore and Sydney. Finn said the company’s revised events strategy emphasizes shorter, smaller forums intended to improve efficiency and attendee engagement, with early indicators including healthy sponsorship activity in Europe, the Middle East, Africa, and Asia-Pacific.

About Forrester Research (NASDAQ:FORR)

Forrester Research, Inc is a global research and advisory firm that provides business and technology leaders with insights, guidance and tools to support strategic decision-making. The company serves professionals across areas including technology management, marketing, customer experience, sales and product development.

Forrester's offerings include syndicated research, proprietary data and analysis, consulting services, advisory support, executive peer exchanges, events and subscription-based access to its research platform.

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