Good afternoon and thank you for standing by. Welcome to Forrester's Third Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. 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 third quarter 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 Finn, Chief Financial Officer. Carrie Johnson, our Chief Product Officer; and Nate Swan, Chief Sales Officer, are also here 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 Litigation Reform Act of 1995. Words such as expects, believes, anticipates, intends, plans, estimates 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. 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 obligations 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 the 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, Ed. Good afternoon and thank you for joining Forrester's 2024 Q3 Investor Call. Today, I will be covering the following key topics: One, Forrester's third quarter performance; two, enhancements to the Forrester Decisions product and other research changes; three, an overview of our go-to-market strategy; and four, the Forrester Board of clients. We showed progress on several fronts in the third quarter, while challenges in other parts of the business persisted. We are ahead of scheduled on the FD migration with 78% of contract value or CV now in FD. We are projecting that we will finish the year with over 80% of CV in Forrester Decisions. We will move into 2025 with a 4-year migration journey substantially completed. Now that said, we continue to navigate through choppy economic waters with revenue declining 10% in the quarter and CV declining 5%. We now expect full year contract value to be flat to marginally down, a modest adjustment from our previous estimate of CV flat to slightly up by year-end. Other metrics have continued to stabilize. Our wallet retention is 89%, flat from the previous quarter and client retention is up slightly and Chris will go into more detail shortly. Despite the challenges we saw good performance in Premier high-tech, International and government. Large wins of the quarter included a $2.5 million 2-year deal with a large multinational tech company in the Asia Pacific region, our second largest international deal of the year. We also migrated an agency of the U.S. government from a legacy research contract to a $1.6 million Forrester Decisions portfolio. And we won these deals and continue to propel FD through the migration, is the product's research and continuous guidance architecture, a model that provide clients with deep research to improve decision-making, plus periodic sessions…

Thanks, George and good afternoon, everyone. Our third quarter delivered mixed results. Although our CV bookings performed below plan, the Forrester Decisions migration remains on track. Retention metrics are stable and we are maintaining our revenue margin and EPS guidance for the year. The fourth quarter is our largest bookings period and we believe CV is continuing to stabilize and could end in a range of flat to slightly down. In addition, we divested our FeedbackNow product line in the third quarter. FeedbackNow was a real-time customer feedback product that we acquired 6 years ago and was considered noncore through a focus on driving growth in the Forrester Decisions platform. We received $6 million in cash from the sale during the quarter and a note for $9 million that is due in 2025. Furthermore, we retained a small equity stake in the new stand-alone business. Although this product line was not a material portion of the CV business, we have recast our historical CV, retention metrics and client count for better comparability going forward and the metrics discussed today reflect this update. CV declined 5% in Q3 to $315.2 million compared to the 4% decline in Q2. Overall, revenue decreased 10% on par with the prior quarter. For the total company, we generated $102.5 million in revenue compared to $113.4 million in the prior year period. In terms of our revenue breakdown for the quarter, Research revenues decreased 4% compared to the third quarter of 2023, with revenue from our subscription research products, down 1%, coupled with declines in our reprint and other smaller and discontinued products. Overall client retention was 73%, up slightly compared to Q2 and wallet retention was 89%, flat to Q2. While Forrester Decisions specific client retention of 81% and wallet retention of 89% were flat…

Thank you, Chris. As you know, Q4 is a very busy time at Forrester. We booked close to 40% of our business in the quarter. I'm glad to report that the entire company is focused on using the quarter to build a strong platform for 2025 and to make the final push on transitioning our legacy clients over to Forrester Decisions. Thank you for being on the call and I will now turn the call back to the operator for questions and answers.

[Operator Instructions] And I show our first question comes from the line of Andrew Nicholas from William Blair.

I wanted to start by asking on kind of end market health broadly. It sounds like CV bookings were a bit below plan. Just curious if that's primarily an end market issue, if there's anything from an execution standpoint that you'd point to, maybe we start there?

Sure Andrew, it's Nate Swan. Thanks for the question. So we saw really good performances across several sectors and we had some weakness in one particular group where we were not necessarily executing as well as we thought we should be. We've actually made some slight changes in that group and feel like we're on track and actually based on the forecast for Q4 from a bookings standpoint. I think Chris and I are pretty comfortable with where we're headed to. So we're seeing some really good progress. It's -- all progress doesn't happen at the exact same time. So we feel like we are still on track.

Great. And then maybe just from a bigger picture level, do you have a sense or an early sense of what budgets of your clients kind of look like for 2025 compared to maybe what you've seen in the past couple of years?

Andrew, it's Carrie Johnson. Sure. We are actually both according to our research and from what we're seeing, we know that tech budgets are increasing in 2025 which plays very nicely to, of course, Forrester's strategy and also our biggest opportunity here is with the technology executives and their teams which is where, in fact, we are seeing the most growth right now. So that's the early read.

Also feels like the vendor world is stabilizing. As you know, there have been about 1 million layoffs in tech in the U.S. in the last 18 months. It feels like that world is stabilizing.

Great. And then maybe if I could just ask one more for Nate or I guess, George, you feel free to answer it as well. But there's all these different things that you've implemented, you feel very -- sounds very confident about kind of all the different procedures in place and these are multiyear kind of platforms for execution. I just wanted to ask about kind of how you measure traction of those go-to-market motions in an environment that's a little bit more challenging? Does it make it harder to know what's working and what's not? And if there's any other color you could give on maybe the top 1 or 2 metrics that are top of mind for you on a daily basis?

Yes, sure. Great question. So we look at really our progress quarter-over-quarter in a variety of areas. We look at our pipelines. We look at our retention. We look at how we're executing various components of what George referred to as our retention life cycle. That's a newer motion for Forrester. And we are really involved in rolling that out across the sales organization. So I look at it in a couple of ways. Number one, are they happening? And they are happening. They're not as happening as frequently as we would like them to but they are definitely happening and we're getting really good anecdotal feedback from both our clients as well as internal stakeholders at Forrester. Both our sales and our customer success teams like the way it is organized and how it helps them stay on track with the right tasks at the right time. And we're finding that while we may have some gaps in how we've been working with things, it's identifying those gaps really, really quickly. So overall, I would say the message is these are new motions for a lot of Forrester folks and new for our clients. Our clients and our Forrester stakeholders are responding really well. We're getting great ecosystem support from across the organization. So our analyst community really leaning in to help us understand what's working at our clients. And so we'll look at retention and we'll look at the execution metrics and see where we're doing well and then see how the results fall from there.

Yes. It's still early days, Andrew. I mean we're looking for $500,000 of rolling pipe per quota-bearing headcount. And we got close to that in Q3. But then we looked a little bit closer at the opportunities and began to analyze those opportunities. And they were just not as solid as we would have wanted. So that's the next turn of the crank is to -- we're actually using a methodology called [indiscernible] to very closely examine all the opportunities to make sure the $500,000 of pipe is strong and is viable. So the systems are in place and the systems are beginning to work and we're feeling good about the progress.

Yes, we feel -- and as George mentioned in the pre-recorded remarks that we -- this is not changing quarter-over-quarter, year-over-year. This is the plan going forward. We are following this plan. And the sales organization knows that the rest of the organization knows that -- this is what we're doing. We're not going to add on 5 new things at the beginning of next year and say we're going in a different direction. We have our plan. We're expecting to execute call high, make sure you have a lot of activities, use our sales methodology and run the retention life cycle.

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

With the new guidance for the contract value bookings, how should we think about the revenue growth for next year?

Anja, it's Chris. Sorry, do you say the -- on conferences or CV?

On a contract value.

On contract value, yes, yes, for next year, sure. Yes. So we're not necessarily providing '25 outlook on the call. I mean, as you know, fourth quarter, it's our largest bookings quarter of the year. December is, by far, the largest bookings month for us. So what I can say is we're encouraged by the ongoing stabilization in CV and our retention metrics. We're very confident in the FD platform as we go forward here and all the go-to-market initiatives that we're implementing. I'd say we have to see where the election goes and where the economy goes in the next year. But we do expect that based on the signs we're seeing, CV will continue to be stable and grow as we move through the year, combined with improving consulting and events bookings performance off of the lows that we've seen. We already talked a little bit about some of the bright spots in consulting. So I'd say for '25, the results will certainly improve from the double-digit revenue declines that we're seeing in this year in '24. But I don't expect significant material growth on revenue just based on how we're going to ramp bookings through the year. And then obviously, we'll provide more detail on the call in February. But I think we're maintaining our positive outlook as far as stabilization is concerned and then we have to get into next year and really get through this quarter. This is a big quarter for us. I can tell you that October looked well. We hit our plan in October which was a great sign. And we've got a big November, December in front of us. We just talked about the pipeline building. And I think Nate and the sales organization feel pretty confident about landing on the quarter. So we have to see how we get through the rest of the period and then we'll give a more detailed guide for next year. But in general, sort of that's what I see for CV performance next year as we ramp and then just a general sense of kind of revenue direction.

Okay. And you've been sort of shedding the smaller clients, when do you think you will be done with that and we will start seeing the client count go up?

Yes, I'll start and maybe Carrie and Chris might want to jump in, Anja. It's Nate. So we're seeing a much smaller impact from that group and we expect in 2025, it will continue to be smaller. We've gone through most of the -- there's really 2 things. There's the migration journey and then there's the smaller client that we are no longer targeting as a specific buying opportunity for us. So we're seeing less and less impact. Our emerging tech team is actually performing pretty well this year with all things considered in the tech market. We feel very confident leadership in that group and what that team is doing. So I feel like next year, that team is going to be on a really good trajectory and we're going to be through the roughest of Cs that we've been with.

Yes. Anja, as you know, the emerging tech sales group sells to vendors over $50 million in size. So we're not playing below $50 million at this point.

Anja, I was just going to add on the sub-50% [ph]. I mean at this juncture, we're going to exit the year, that's going to be less than 60% [ph] of the overall base.

Okay. That was helpful. And then in terms of the sales team, is that fully up and running? Or are they still being trained? Or how -- where do you feel like your sales team is? So when it just picked up?

Yes. Great question, Anja. So the sales organization spent a lot of time on training and development, upscaling. We're targeting our senior executives, as we mentioned. And to do that, we've worked on our sales methodology, trying to really understand how to work better with those senior executives and connect to their initiatives that they're looking for. We will continually do ongoing support for the sales organization to make sure that they can call high and that they can build out those team solutions as well as winning the organization solutions. So we can sell across the whole organization and make sure that we can penetrate. So that kind of change will never stop. It's a continuous development. But the heavy lift of a new sales methodology was rolled out really in -- from the April time frame until the mid-June July time frame. Now it's refreshing, doing clinics and making sure that people are up to speed and then obviously, they'll have new hires that will be joining the organization and that we'll be continuing to ramp them up to join. So the sales organization has been great, really leaning into all these changes around building pipeline, working on the sales methodology and implementing this retention life cycle, really happy with how they've responded to that. I think they see how it helps them do their job better and they want to continually get better. People want to be successful in their roles. And so they're really leaning in to do that.

And I show our next question comes from the line of Vincent Colicchio from Barrington Research.

Yes. Nate, you had mentioned selling hiring [ph] organizations. And the question I'd like to ask you is if you're hitting your ability to penetrate senior people and organizations is meeting your expectations?

Well, Vincent, I think we would all love to go faster in being able to get to more senior executives and make sure that we're selling Forrester to the most senior people that we can in every part of the organization. I think the progress that we've made is good progress. Would I love to go faster? Of course, I'd love to go faster because I think that would mean we would be selling more. But the team has been very responsive. They really like the sales methodology that they're using. The managers are coaching it. We're using deal clinics that are working really well. So I think we're going to continue to see progress. We know that when we're at the most senior levels of organizations, we get great buy-in from them. We get the great buy-in from their teams and then we start to cross-sell in the organization. So people know that, that is the key to being successful. It's not an overnight journey to be able to say, "Hey, now I'm going to start calling high." But that's the journey we're on right now. So I feel good.

And then to be clear, the decline in clients was relatively high this quarter. Was that small clients?

Yes, Vincent. This is Chris. So I think you're seeing that. It was a combination of all small clients but also, we restated the client numbers for the removal of the divestiture of FeedbackNow. And so we restated those client numbers. So that's also part of the reason why you're seeing it come down.

So 250 clients.

Yes, yes.

Does that make sense, Vincent?

Yes, yes.

Both those FeedbackNow clients were small.

Okay. And then, Nate, what's the most common pushback you're hearing from clients that are slow to expand FD seats?

The most common pushback we hear -- certainly, we hear budget is a continual challenge. But we in sales know that when we hear budget as a challenge that we need to do a better job demonstrating value, so budget is an easy way for a client to push back. But if we're connected to those most important initiatives that our clients have. We are a small fraction of what it cost to work with the Bains and McKinseys of the world that work on those same type of challenges and we know we can deliver against that. So when we do that and we show the value and connect out to how we would help them solve on a continuous basis, that continuous guidance that we provide, then we see that we do really well and we've seen some great wins, some really good wins in the last quarter where we had some really big opportunities where we did build out those larger solutions for clients because we connected to their top initiatives of the top leaders.

That concludes our Q&A session. At this time, I would like to turn the conference back to Chris Finn, CFO, for closing remarks.

Yes. Thanks for joining us today, everyone. Any follow-up questions, please call myself or Ed Bryce Morris. Thank you.

Thank you very much.

Thank you. This concludes today's conference call. Thank you for attending. You may all disconnect.