Forrester Research Reports Second-Quarter Financial Results

Business Wire, July 31, 2008

Company Also Announces Acquisition Of JupiterResearch

CAMBRIDGE, Mass. -- Forrester Research, Inc. (Nasdaq: FORR) today announced its second-quarter, ended June 30, 2008, financial results.

Second-Quarter Financial Performance

* Total revenues were $63.5 million, compared with $55.2 million for the second quarter of last year.

* On a GAAP-reported basis, which reflects an effective tax rate of 37 percent, Forrester reported net income of $8.6 million or $0.37 per diluted share, compared with net income of $4.5 million, or $0.19 per diluted share for the same period last year.

* On a pro forma basis, net income was $8.6 million, or $0.37 per diluted share, for the second quarter of 2008, which excludes non-cash stock-based compensation of $1.3 million, amortization of $23,000 of acquisition-related intangible assets, net gains on marketable and non-marketable investments of $1.6 million, and expenses related to the stock option investigation and restatement of the Company's historical financial statements of $666,000, and which reflects a pro forma effective tax rate of 39 percent. This compares with pro forma net income of $7.3 million, or $0.31 per diluted share, for the same period in 2007, which excludes non-cash stock-based compensation of $1.7 million, amortization of $293,000 of acquisition-related intangible assets, net impairments from non-marketable investments of $2.0 million, and expenses related to the stock option investigation and restatement of the Company's historical financial statements of $1.1 million, and which reflects a pro forma effective tax rate of 39 percent.

Six-Month Period Ended June 30, 2008 Financial Performance

* Total revenues were $118.4 million, compared with $102.5 million for the same period last year.

* On a GAAP-reported basis, which reflects an effective tax rate of 40 percent, Forrester reported net income of $13.7 million, or $0.58 per diluted share, for the six months ended June 30, 2008, compared with net income of $6.5 million, or $0.27 per diluted share, for the same period last year.

* On a pro forma basis, net income was $14.8 million, or $0.63 per diluted share, for the six months ended June 30, 2008, which excludes non-cash stock-based compensation of $2.7 million, amortization of acquisition-related intangible assets of $194,000, net gains on marketable and non-marketable investments of $2.1 million, and expenses related to the stock option investigation and restatement of the Company's historical financial statements of $597,000, and which reflects a pro forma effective tax rate of 39 percent. This compares with pro forma net income of $12.1 million, or $0.51 per diluted share, for the same period in 2007, which excludes non-cash stock-based compensation of $4.3 million, amortization of $685,000 of acquisition-related intangible assets, net impairments from non-marketable investments of $1.8 million, and expenses related to the stock option investigation and restatement of the Company's historical financial statements of $2.8 million, and which reflects a pro forma effective tax rate of 39 percent.

A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.

"Forrester's second-quarter financial performance met our expectations," said George F. Colony, Forrester's chairman of the board and chief executive officer. "We performed particularly well in revenue growth, deferred revenue growth, and improved margin. The percentage of our syndicated business is moving in the right direction, and our role-based strategy continues to produce positive results. Overall, we are pleased with our performance in the second quarter and the first half of the year."

Forrester is providing third-quarter 2008 financial guidance as follows:

Third-Quarter 2008 (GAAP):

* Total revenues of approximately $59.0 million to $62.0 million.

* Operating margin of approximately 10 percent to 16 percent.

* Other income of approximately $1.6 million.

* An effective tax rate of approximately 40 percent.

* Diluted weighted average shares outstanding of approximately 23.6 million.

* Diluted earnings per share of approximately $0.21 to $0.27.

Third-Quarter 2008 (Pro Forma):

Pro forma financial guidance for the third quarter of 2008 excludes non-cash stock-based compensation expense of approximately $1.2 million to $1.5 million, amortization of intangible assets of $500,000 to $1.0 million, any gains or impairment charges related to marketable and non-marketable investments and any expenses related to the stock option investigation and restatement of the company's historical financial statements.

* Pro forma operating margin of approximately 15 percent to 17 percent.

* Pro forma effective tax rate of 39 percent.

* Pro forma diluted earnings per share of approximately $0.27 to $0.31.

Forrester is revising full-year 2008 guidance as follows:

Full-Year 2008 (GAAP):

* Total revenues of approximately $246 million to $252 million.

* Operating margin of approximately 13 percent to 15 percent.