Good afternoon, and thank you for standing by. Welcome to Forrester's First Quarter 2024 Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Vice President of Corporate Development and Investor Relations, Ed Bryce Morris. Please go ahead.

Thank you, and hello, everyone. Thanks for joining today's call. Earlier this afternoon, we issued our press release for the first quarter of 2024. If you need a copy, you can find one on our website in the Investors section. Here with us today to discuss our results are George Colony, Forrester's Chief Executive Officer and Chairman; and Chris Fin, Chief Financial Officer; Carrie Johnson, our Chief Product Officer; and Nate Swan, our Chief Sales Officer, are also here with us for the Q&A section of the call. Before we begin, I'd like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities and Litigation Reform Act of 1995. Words such as expects, believes, anticipates, intends, plans, estimates or similar expressions are intended to identify those 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 our forward-looking statements. Factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission, and the company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Lastly, consistent with our previous calls, today we will be discussing our performance on an adjusted basis, which excludes items affecting comparability. While reporting on an unadjusted basis is not in accordance with GAAP, we believe that reporting numbers on this adjusted basis provides a meaningful comparison and an appropriate basis for our discussion. You can find a detailed list of items excluded from these adjusted results in our press release. And with that, I'll hand it over to George.

Thank you for joining Forrester's Q1 earnings call. With me today is Forrester's Chief Financial Officer, Chris Finn, who will provide a financial update following my remarks. We will then be joined by Carrie Johnson, our Chief Product Officer; and Nate Swan, our Chief Sales Officer, for the Q&A portion of the call. Today, I'd like to cover 5 key themes: number one, our financial performance in Q1; 2, the Forrester Decisions migration; 3, investments in Generative AI; 4, improvements to our sales process and 5, a preview of our Q2 events. In the first quarter, CV decreased 4% in alignment with our plan. Our key metrics have stabilized with wallet retention up slightly from the prior quarter at 88% and Forrester Decisions client retention at 82%, flat compared to Q4. Overall, Forrester Decisions client retention continued to outpace our legacy research products with retention of the new platform running 10 points better than its predecessors. As we complete our migration, we anticipate retention to improve, creating a base for a return to contract value growth, and Chris will provide more detail on our metrics shortly. While our CV business is stabilizing, we've continued to see challenges in our consulting business and effect it continues from 2023. The macroeconomic environment, especially within tech, remains difficult with many companies still adverse to spending for projects. We plan to drive this business forward in Q2 and beyond with more focused sales and marketing efforts. We are in the final year of our transition to Forrester Decisions, and I'm pleased to report that our migration efforts remain on track. Since launching our new platform in August of 2021, we have moved 70% of our contract value and are poised to hit our goal of 80% of our CV unforced decisions at year-end. We…

Thanks, George, and good afternoon, everyone. Our first quarter results were mixed as our CV Research business performed in line with our expectations, while the consulting business underperformed as it continues to be impacted by a challenging budgetary environment and the broader issues affecting the tech market. Despite these uneven results, we saw some positive green shoots in Q1, including reaching the 70% threshold of CV and Forrester Decisions, an uptick in new business supported by interest in our high-performance IT and Gen AI content, the stabilization of our key retention metrics and the expanded rollout of our AI tool, Izola. Q1 saw a 4% CV decline in the quarter and overall revenue decreased 12%. For the total company, we generated $100.1 million in revenue compared to $113.7 million in the prior year period. As we noted on our prior call, we expected revenue decline this year due to the impact from the decline in bookings during 2023. The revenue decline in the first quarter was higher than expected, though, by approximately 4 points, largely driven by our advisory and consulting businesses. We continue to believe that macro headwinds will perpetuate throughout 2024, and this is causing our clients to put off buying decisions or modestly shrinking their overall research budgets. This is significantly impacting our consulting business and to a lesser extent, our research and events businesses. And although we expect to return to bookings growth in the second half of 2024, the revenue impact will be muted this year. In terms of our revenue breakdown for the quarter, Research revenues decreased 5% compared to the first quarter of 2023, with revenue from our subscription research products, down 3%, coupled with declines in our reprint and other small and discontinued products. Overall client retention of 72% was flat and…

Thank you, Chris. Before we open up the call for Q&A, I want to reiterate the fundamentals of our business. Large corporations continue to need research and advice to navigate tech changes and shifts in customer behavior. The dynamics that drive long-term demand for Forrester services are not abating, and force decisions is the research platform that allows us to seize this expanding opportunity. I'm now going to hand the call back to the operator, and we will now take questions.

Thank you, sir. [Operator Instructions]. Please stand by while we compile the Q&A roster. And I show our first question comes from the line of Andrew Nicholas from William Blair.

This is Tom Roesch on for Andrew Nicolas. I wanted to ask about what kind of selling environment you saw during the quarter and how it progressed relative to your expectations as well as the fourth quarter?

Just to clarify, you said what type of selling environment are we seeing? I want to make sure I heard that clearly. By the way.

Yes, the selling.

Great. So, the selling environment, certainly, we remain very confident in selling to senior executives. We saw with our new business teams, especially that we really increased year-over-year on that new business motion up very significantly, and we see that as a big opportunity in Q2 as well to continue. On the high-tech side, we saw really great progress on our ideal customer profile. So really staying focused there, and that actually is turning in some really good results. But certainly, challenges in other parts of the business in the high-tech side of the business with some of the retention challenges that you would see with the tech recession that is out there. We're seeing really good results in certain sectors like the government sector, we're seeing some good results around the world. So, I feel confident in the selling environment and facing some of the same challenges that I think others face in selling to vendors right now.

Europe and Asia, I think feels stronger than the U.S.

Great. And then for my follow-up, I was wondering what feedback on Izola so far? And kind of what kind of benefits you're expecting as we go through the year, whether it be on retention or maybe new sales?

Sure. I'll start with that. This is Carrie. Client feedback on Izola has been incredibly strong. Part of the reason here is that we have developed this sort of side by side with clients, taking small groups and expanding them in terms of access and really starting to understand the context of a question. So Generative AI can certainly produce some nonsensical results. And we have worked really hard to make sure that the answers are from our trusted research only, and that is what clients have been responding to that it's really helping them get fast answers from across our trusted set of longitudinal research and also then inform the conversations that they're having with our experts more. So, they're getting a leg up in the conversations that are coming to the table with part of the answer, and then we're having deeper conversations with our analysts. I'll let Nate talk a little bit about the Izola as a competitive differentiation and the selling environment, Izola's only available to Forrester Decisions clients, which is a big selling point, we believe, for the new portfolio as we look to both migrate customers and also from a new business perspective. And it's also quite appealing to leaders who are looking for their teams to get up to speed quickly on key initiatives.

Although some legacy clients want Izola, right?

They do. And it's only available to Forrester to [indiscernible].

Yes. And as far as in the selling environment, it certainly makes it easier. You're getting to answers quicker. So clients are looking for answers. They're looking for answers quickly. And so, if we can help save them time, it is certainly well received. So, our existing clients and our prospects have given us great feedback that it is a great time saving effort and has given them really good answers.

It's also saving time on the Forrester side because CSM don't have to get involved. With those questions.

Yes.

And I'd also just add one more thing, too, just around -- from a sales perspective. It is opening doors for us, and we're having the conversations, obviously, and that's been helpful. Good question.

And I show our next question comes from the line of Anja Soderstrom from Sidoti.

I have a follow-up on the Izola solution. You mentioned some legacy clients wants to use -- has it been a driver for them to transition to the Forrest Decision platform or still [indiscernible] there?

Yes. I think both Carrie and I can comment on that. Forrester Decisions is where we're making the investment into our products. We're not planning on bringing Izola to our legacy products. And so that is another reason to make that migration. It is a difference maker for people. As Chris stated earlier, we're on our path to getting to 80% by the end of the year, and that is one of the big drivers is making it easier for people to do their jobs. So, I think it really is a differentiator for us, and it shows that we're out front in the market and living what we talk about all the time, which is putting something into action that can really help your business.

Okay. And then in terms of the client's sort of shedding of smaller clients and stick with the land and grab clients. I want to anticipate that to stabilize and we should see client count increase again?

Yes, it's a good question, Anja. I think as we talked about with CV, we're approaching 80% at the end of this year. That's the target. We're certainly on track to get there. And we've said we will start to see CV growth stabilize this year as we get into the back half and then start to grow slightly flat to slightly up as we exit the year. So, our expectation is that we should start to see client growth move in a positive direction as we exit the year along with CV. I'd also note, just on from a legacy perspective, where we have left for CV, it's approximately $50 million that are in the heritage products. We expect about half of that actually migrate successfully. And I do expect the conversations around Izola to be part of those migration discussions. And then the other half, we expect it to either migrate but at lower overall spend or likely not renew at all. And that's obviously built into our expectations and our guide for the year.

Okay. And in terms of the larger clients that you are remaining, are you able to measure the expansion opportunity with them and set targets there and also the target for sort of wallet retention.

Yes. So, there's probably multiple ones of us that can make comments here. I would say from a sales perspective, we are always doing our account planning exercises. The nice thing is that we at Forrester have multiple personas in multiple areas that we can go into. Typically, we believe our biggest opportunity is that growth through account expansion into these accounts. We are typically in 1 to 2 buying centers and have another 3 to 4 that we feel we can comfortably go after. And so, as we do our account modeling our account planning, we look at where is the next most logical place to go based on where we're currently at.

As you know, Forrester Decision was designed for expansion and wallet retention. Nate put a lot of focus on that in the sales force this year.

Okay. And then I have one question about your share buybacks, my expansion there. Given where you're trading now and this being a transition, do you think you're going to be more aggressive or what's your post buybacks?

Yes. I think as we've discussed this in the past, on we obviously evaluate best uses of cash, including keeping positive drive for optionality. And I think we, along with the Board felt there was a good opportunity to purchase shares in the first quarter, and we're comfortable with the current volume. And we're going to continue to look at it and be opportunistic as we move forward in the year.

That's why the Board expanded the buyback.

Exactly.

And next and last question comes from the line of Vincent Colicchio from Barrington Research.

Yes. Curious, how would you characterize the sequential change in the CV business pipeline from last quarter?

CV pipeline is growing. So we put a major focus on it, really [indiscernible] look at the sales organization, the big priorities for us are upscaling so that we can call on those more senior executives now that we're in the middle of that process. We are expecting people to make more calls to higher level executives. So therefore, we expect to generate more pipeline. Sales game is a math game, how much retention do you have? How much growth can you build to start going forward? And so, we are very focused on driving more pipeline in the sales organization. The sales organization is responding really well. They're excited about it. They believe that they have opportunity. And so we believe that the pipeline growth will continue, and we're measuring that on a weekly basis.

And Nate, is the progress towards selling to more senior people meeting your expectations?

Yes, I think so. I think the sales organization is really leaned in. We are moving from this enterprise access to Forrester Decisions. They're excited about that. That's where our analyst community spends their time. That's where they want to be. They've really embraced the methodology change that we've gone to. We're in the midst of that rollout right now. And so, I think they're very excited because salespeople, they want to be successful in their roles, and they know this is how they're going to be successful.

And the methodology change is really focused on helping salespeople be more influential and have more insight on the client, and Nate is very relevant for calling high.

And was consulting weak across the board? Or are there any pockets of strength, such as perhaps Generative AI projects?

We did. Vince, it's Carrie. We did see interest in projects like Generative AI. And of course, they're in these times, clients also come to us to do some cost optimization type of work just looking at their, say, legacy IT portfolio as an example, right, things like that. We do mix our consulting business as a mix of what I would call what we call strategic consulting and then there's some demand Gen work that we do like our TEI. And as you can imagine, in the demand Gen space is where we're heavily dependent on the tech high-tech area, that's where we saw some weaknesses in some of those types of products.

And Chris, any help on the cadence of revenue and earnings through the balance of the year. Q2 is usually a good strong quarter. But just wondering if we should see any pattern different from seasonal trends in the past we've seen in the past?

Yes. Look, I think, Vince, as we talked about from a revenue perspective, we do expect to continue to see declines this year from a top line perspective. I think on the research services line, I think you should start to see that abate. Certainly, as CV stabilizes and we get through the year, and we do expect that slight flat to slightly up by the end of the year, ending Q4. So, you'll start to see that decline start to slow. I think on the consulting business side, I think we're going to remain challenged there for the rest of the year. And then on events, I'd say it's probably the same story as the research line should start to see that those declines start to abate and get better and slower as we get through the end of the year.

Thank you. That concludes our Q&A session. At this time, I'd like to turn the call back to Mr. Chris Finn, CFO, for closing remarks.

Yes. Thanks, everybody, for joining the call today. It was just talking to everyone. If you have any questions, please follow up with myself or Ed. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.