Good day, ladies and gentlemen, and welcome to the Second Quarter 2010 Forrester Research Earnings Conference Call. My name is Saline; I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct the question-and-answer-session. (Operator instructions). As a reminder, this conference is being recorded for replay purposes. I'd now like to turn the conference over to your host for today, Karyl Levinson, Vice President, Corporate Communications. Please proceed.

Good morning, thank you for joining our second quarter call. With me today are George Colony, Forrester's Chairman of the Board and CEO, Charles Rutstein, Forrester's Chief Operating Officer, and Mike Doyle, Forrester's Chief Financial Officer. Mike will open the call and provide detail on our financial results for the quarter. George will follow Mike and provide a strategic update on the business and our role-based strategy. After George completes his review, we'll open the call to Q&A. A replay of this call will be available until August 5, 2010 and can be accessed by dialing 888-286-8010. Please reference the pass code 90149232. This call is also available via webcast, and will be archived in the investor section at forrester.com. Before we begin, I'd like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expect, believe, anticipate, intend, plans, estimate, or similar, expressions are intended to identify these forward-looking statements. These statements are based on the Company's current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Some of the important factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The Company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. I'll now hand the call over to Mike Doyle.

Thanks, Karyl. I will now begin my review of Forrester's second quarter financial performance, the balance sheet at June 30, our second quarter metrics and the outlook for the third quarter and full-year 2010. Please note that the income statement numbers I'm reporting are pro forma and exclude the following items; amortization of intangibles, stock-based compensation expense, reorganization costs in 2009, acquisition related costs and credits and net realized gains and losses from investments. Also, we continue to utilize an effective tax rate at 40% for pro forma purposes. The actual effective tax rate for the second quarter of 2010 is approximately 39%. For the second quarter, Forrester met its quarterly guidance for revenue, pro forma operating margin and earnings per share. We're pleased with the continued improvement in our operating performance which reflects healthy revenue across all product segments, and excellent operating discipline, resulting in strong bottom-line performance. We continue to see signs of an improving economy both with improved customer retention, which is now above historical averages and improved customer enrichment metrics. Cash flow performance was strong for the quarter and up versus prior year. Now, let me turn to more detailed review of our second quarter results. Forrester second quarter revenue increased 5% to 64.7 million from 61.6 million in the second quarter of last year. Given our deferred revenue recognition model, we are continuing to see the positive revenue effects of our improved bookings performance over the last three quarters, despite the negative impact of foreign currency on our second quarter revenue. In addition, we continue to experience strong consulting delivery and increased events revenue. Second quarter research services revenue increased 5% to 40.8 million from 39 million last year; research services revenue was 63% of total revenue for the quarter which was in line with…

Thank you, Mike and I'd like to welcome everyone to the call. I'll cover four topics this morning. Number one, the economy in Forrester's forecast, two, an update on the company's three business imperatives. Three, Forrester's social efforts and finally number four I would like to say a few words about the capital structure of the company. Turning first to the economy in tech spending. As we move beyond mid-year, Forrester continues to reject growth in the IT market both here and abroad. Our analyst forecast to tech spending will increase 9.9% in the U.S. this year, and 7.8% globally in U.S. dollars. We continue to project the computer equipment and software spending will lead this growth. We see the market for equipment growing 19.4% and the market for software growing 10.5%. We forecast IT services to grow at 6.4%. Services expenditures follow the purchase of software, so it necessary lags the general recovery in tech. globally Forrester's forecasting 7.2% growth in Asia Pacific tech spending measured in local currency. Western and Central Europe will experience the slowest IT market growth at 4.1% also measured in local currency. Tech spending as you know is closely correlated with the GDP growth. Forrester expects nominal U.S. GDP to increase 3.5% in 2010. I'd like to turn now to Forrester's three business imperatives and they are number one, becoming more robust, two, increasing the size of the sales force, and three, increasing the percentage of Forrester's business that's its indicated. Looking first to the extension of robust, on the research front, we continue to make important progress toward roles. Practice leaders, the managers of each of the role businesses continued to do the research for consulting data product streams to former coherent and relevant suite of offerings to the individual roles. Achieving relevancy…

Thank you. (Operator Instructions). And your first question comes from the line of Laura Lederman with William Blair. Please proceed.

Good morning and thanks in advance for taking my questions. One is can you talk a little bit and I guess this is my question between the difference in the growth and deferred and in the agreement value which was up much less and then I have some more questions. Thank you.

You bet. Thanks a good questions Laura, I mean what we did we have made a changed in methodology on agreement value, mid-stream last year and basically what we stripped out of agreement value going forward was the second year of multi-year deals. So, our historical numbers still carry the multi-year deal activity in there whereas our current year performance reflects only the first year of the multi-year deal. So, as we cycle through that metric it will become more normalized I would suspect as we get into 2011 but for now it's going to create some distortions which is why we still believe the deferred revenue and deferred revenue plus future AR become better signals of what's going to happen with our business.

Do you have by chance the apples-to-apples to growth in agreement?

I don't have that, what we can do is it will try and pull back together on an approximate basis and we will push it out onto the website as a metric so it's available to all investors.

It will be great, thank you. My second question is EMEA and how your business looked as you went through the quarter. There has been a lot of rhetoric and concern about euro zone, demand in general. So, I guess a two prompt question is how did your business look as you went to the quarter and also separately I know George that you gave a number for growth in Europe been fairly weak but what type of deterioration are you guys actually seeing in IT spending in general in Europe? So that 3% for the full year, does that include a negative second half given there has been good demand in the first? Sorry for the wrong long winded question.

.: And I think that outlook probably persists for our business, certainly as far as I can see into this quarter but it's not like it was during the times back in '09 and end of '08. We're not talking about deals just evaporating. It's just sort of a slower pace of things going on.

Its one of those deals Laura, where if you read the paper you think that Europe is in major distress but we see gradual recovery there. We actually expect the euro to strengthen as the year continues onward. So it's not as bad as the daily news would show and it's, again as Charles said we have good growth here, just not as fast as the U.S.

If we talk about price increases and what you're thinking of there, what you've implemented, what you're likely to implement and also the markets receptance to price increases?

So, so as you know Laura, we typically undertake price changes in the summer time. This year is no exception. We always look at the same three factors; product demand, the value that we deliver and the competitive environment. Now it's important to note that we made an important change to the packaging last year as you may recall. That is implications for the pricing. The big win out of that packaging change was that we now have the flexibility to differentially price our offerings by client segment and that allows us of course to extract appropriate value from clients for the value that we deliver. Therefore the picture that I'll tell you about the pricing front is a little muddy. It's a little hard to see. It's not an across the board price increase. Rather the price change that we're making isn't across the board but rather specific to the segment. So in general we're taking prices up a few percent inline with the rising cost of doing business, maybe a little more aggressive in places where we face little competition and a little less aggressive elsewhere. In general though, the pricing environment has been very good. Our rate of discounting has come down during this year. Part of that is the discipline in the sales force and part of that I think is the environment in which we're operating.

Thank you. One final question, then I'll pass it on. If you look at the last comment about some areas more competitive, some areas less competitive, could you talk about which of those areas are, which are less and which are more?

Sure. As you may expect Laura, in places where we have a direct competitor, for example in the IT space with Gartner, that's going to be more competitive in places where there is no pure analog as in the marketing and strategy business, there is nice competition.

That's what saved your boat. Never pay to assume. Thanks a lot guys.

Thanks Laura.

Your next question comes from the line of Kevin Ciabattoni from Boenning & Scattergood. Please proceed. Kevin Ciabattoni - Boenning & Scattergood: Good morning guys.

Good morning, Kevin. Kevin Ciabattoni - Boenning & Scattergood: Can you give us some color on what you've seen in terms of sales cycles in the quarter and then also what your strategy is going forward in terms of account segments and a plan to maybe increase penetration in the 1B plus accounts?

Your looking at how we moved that 3.2 number? Kevin Ciabattoni - Boenning & Scattergood: Yup.

Okay, so a couple of things there. With respect to the sales cycles, they have become much more predictable than they were. Let's say this time last year and that that is perhaps the most significant change. I would say the cycle time may be down, but only modestly. The difference is that it become highly predictable. During the downturn what we saw typically was a deal would be on track until a very early late stage. And then something unexpected, unexpected both for us and for the buyer would happen. That's no longer going on. In fact, our forecast accuracy based on the cycle times we expect has been rock solid all the way through the first half of the year. So, that feels stable to me. With respect to the second part of the question about deeper penetration into those on 1B plus accounts, Greg Nelson is our Chief Sales Officer. He is working hard on just that. And that metric gets a little bit muddy by the fact that it includes both the enrichment which Mike talked about in the quarter into existing 1B plus accounts, but it would also includes the new signings, and when we sign new accounts, they will typically come on at few receipt. So that kind of dilutes the metric, and it's a little hard to see from the outside what's going on there.

But it's a big deal because as you know we've been selling, we sold traditionally to companies and institutions and not to individuals, and that's really the transition that is underway here in sales, and the transition that Greg is really driving us toward. It's this moment to if we have three roles that had expressed an outlook for the four, the four [through] tenths role. And so it is -- I'd say that the sale transition roles is like a little bit to research, but we would expect by 2011 that we will be down, headed down that road and driving the number higher. Kevin Ciabattoni - Boenning & Scattergood: Okay, that's very helpful. And what do you guys seeing in terms of an acquisition pipeline. Are you guys leaning towards either IT or the Research side of things?

Pipeline is, it used to be quite good. It is -- as I said in my remarks pricing is still reasonable. I would say that we're tending to approach more companies and being than being approached by those companies. And those and that is somewhat of more difficult road to move down, but I'll tell you our pipeline is still very strong. With the Board meeting on Tuesday, we reviewed it, and I would say it is as full as it was at this last time last year if everything is all right.

Yeah. I would agree. I think that the activity is been good. I agree with George. I think we're been more aggressive in pursuing in addition to any ideas that come across. To your question about client group, we look for all client groups. So, we are opportunistic because we are -- frankly, we are bullish in all three of our client group businesses. So, if we see opportunities out there, we are going to pursue them. So, it tends to be a cross client groups. Kevin Ciabattoni - Boenning & Scattergood: Does the pipeline includes targets for every, for all the three client groups?

That's correct. Kevin Ciabattoni - Boenning & Scattergood: Okay and then one last into housekeeping. What was the impact of affects in the quarter, and what you guys kind of feeling for that back half of the year?

We -- the impact on revenue for the quarter was about a point on our growth. So we -- our revenue was up 5%. Absent FX it would have been up 6%. Now that tends to drop down, and have a very modest impact adversely on the bottom line. So, as I think I've said before we have a natural hedge and a lot of our expenses that are outside of the U.S. as well. We have analysts; we have sales people who are sitting in host countries as well, so that softens the impact. For the balance of the year, our guidance assumes that both the euro and the pound will stay at rates where they sit today, but our low end of the guidance captures what we think could be some downside to both the euro and the pound and some of the upside captures. I don't expect frankly much upside on foreign exchange. But at this point we are assume flat and our downside captures, what we think could be the downside on both euro and the pound. Kevin Ciabattoni - Boenning & Scattergood: Okay. Great, thanks.

You bet.

Thanks.

Your next question comes from the line of Brian Murphy with Sidoti & Company. Please proceed. Brian Murphy - Sidoti & Company: Hi, thanks for taking my question. Michael, the consolidated gross margin is down a couple of hundred basis points year-over-year. I was wondering if you could just give us a rough breakdown of the impact there. I'm guessing part of that is currency, but what was the rest? Was it mix or is that higher salaries or what?

Yeah. We have a couple of things going on Brian. I think that --most importantly is that as our business rebounded, if I look at both, what we paid out in commissions and what we paid out in our matrix bonuses which we pay out quarterly based on business performance; versus prior year they are up significantly and as we said, that's a good problem for us to have in expenses because that means our business is growing both, from a top line basis but also that we're hitting bottom line numbers as well. And the other piece of it is headcount growth. We are up year-over-year and that adds to it. So, we're continuing to reinvest in the business. So, yeah there was, FX actually gives us a little bit of favorability on the expense side but the bulk of it is really, it's comp and benefits associated with increased headcount and improved business performance. Brian Murphy - Sidoti & Company: Okay. And George, you gave us a lot of detail about what you guys are doing with Social. Would you say that that's where Forrester's research coverage is most differentiated right now and maybe give us a little bit more detail on why that might give you leg up moving forward?

Well, I think it is a good area of differentiation. But it's not the only area of differentiation. I would say that as we're becoming more role-based, we're becoming more differentiated from the competition. Our research is specifically about the problems and challenges of each of those roles. So I would say, if you ask me the question generally, what's your differentiation, say goal is number one? I would say in the differentiation with Gartner as an example. Because we have a large practice of marketing and strategy we are able to help IT groups and marketers work together on issues like social computing. So, the secondary differentiation, if role is number one, two would be the fact that we are in the marketing strategy space. That's number two. The number three, I think you're right. I think we have a very, very strong practice in Social. I think -- I'm a little biased here I guess but I'd say we're the world leaders in analyzing Social and it's direction and it's future. As you know, Groundswell was the bestselling book of Harvard Business School Press in 2008 and Empowered, our new book coming out; we expect to be just as successful. So, I think it's a good early strength for us. Brian Murphy - Sidoti & Company: Sounds good. Thanks a lot.

Okay.

Your next question comes from the line of Vincent Colicchio with Noble Financial. Please proceed.

Good morning guys. The advisory business had a strong quarter. Could you give us a little bit more color in terms of which service lines have stood out?

Sure Vince, its Charles. I think we saw strength in each of the constituent parts that make up that line item. So events was up nicely year-on-year. Consulting delivery was up even more sharply and some of the other much smaller one-time items, the data and so forth were up as well. So I'd say it was fairly widespread but the fastest growing was probably the consulting business.

And is that a good sign in terms of, for an upturn in IT spending? Is that early indicator?

Yeah. You bet. One of the things here Vince is that as the sales force productivity goes up and we continue to add to the backlog of consulting, we're working our way through that. So, let me say it differently. So we sell a contract that's got both syndicated and non-syndicated products in it. We're going to recognize the syndicated overtime and the non-syn often right up-front. So that's why you may see some of the delta. The other factor is Strategic Oxygen, our acquisition that we closed at tail end of last year. That drove a bunch of non-syndicated business as well.

And Mike, a question on the month-by-month progress. As the quarter unfolded was there any difference -- there was a world worry later on the quarter in the June period. Did you see revenue impacted in anyway?

No, I think what happens with us, as you know Vince I'd love to see the cycle change. It certainly would cut down on the grey hairs I have but our cycle has been the same since I've been here I think since George started the business, that we tend to build up towards the end of the last month of every quarter and the last two weeks of every quarter are always a lot of fun, depending upon how you look at it. And this quarter was no different. But we were happy with the way the quarter came out. It worked as we had expected and we're fairly confident that we're rolling and month-by-month we'll make September an exciting month for us and the December is the most exciting month of the year for us.

We saw no deceleration Vince.

Right.

Okay. Thanks guys.

Thanks Vince.

Your next question comes from the line of Dan Leben with Robert W. Baird. Please proceed.

Good morning. This is Mick Dobray for Dan Leben. Just a couple of questions for me. First, surrounding the metrics that you mentioned earlier, I'm trying to understand how much of the metrics improvement was sort of activity in the quarter versus rolling off 2Q'09, which obviously was a bit of different operating environment? How should I think about that?

It's a good question, Mick. I think that, first of all the retention metrics, I'm thrilled by. There are above historical norms. So even if you assume that there is some factor in there that would suggest that we're building off a somewhat lower base; although it wasn't that dramatic as there wasn't a huge dropdown in 2009 like there had been in the years past. That suggests really strong performance and it implies that we've come back very rapidly from the recession and actually at this point are running a little bit ahead of what we've done in the years past. I think enrichment, it steps to some of the slower build back but the fact that we're north of a 100 on a rolling 12, I'm happy about it. It implies that the quarter was reasonably good. And so given that none of those metrics gave that much when we went into 2009, the fact that they have rebounded as strongly as they have suggests that we've had a very, very nice recovery of off of a difficult recession for a lot of business, less so for Forrester. So I feel that if you discount them at all, it's marginal. It really is relative to a year ago.

I'm with Mike here Mick. It's Charles. Regardless of what data are dropping out from Q2 of last year, the fact remains but as a point in time metric it's well above the historical norms and so as a snapshot in time, we're very happy with that performance.

Excellent. And one final point for me here. Can you please elaborate a little bit on the capital structure discussion; perhaps give us an insight as to how the Board is thinking about it and what are some of the goals that they're aiming for in this discussion?

Sure. Basically where we are, first and foremost the users for our cash, primary and priority uses for the cash continue to remain the same which is we are going to reinvest in the business and we will look for acquisitions that we think add to value and that by the way has not changed. That's been historic for us to practice and as we move forward all of the board discussions have absolutely started and ended with that thought in mind. So we're not moving away from that. I agree with George that there is a lot of opportunity in the M&A pipeline. Again we are selective as he has pointed and I think a number of you pointed out over the years. So that tends to be, we get acquisitions sporadically. The pieces that we look at are how do we enhance shareholder value and obviously there's a number of levers to pull. There is dividends in a variety of forms and there is more aggressive share repurchase and those are things that the board is considering. Obviously it's complicated by a very uncertain tax situation in the U.S right now. So I think the board is trying to factor all of these pieces in. We've had I think very good discussions with the board and I think there is more to come to George's point and I think we'll be in a better position to talk and give an update in the third quarter as George suggested.

Thank you.

What I'd say here Mike is that the board is looking is looking at this issue broadly. We'll leave it at that.

Thank you.

(Operator Instructions). If there are no further questions I'd like to hand the call back over to Karyl Levinson, please.

Thank you very much for joining us today. Have a good day.