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What changed in FORRESTER RESEARCH, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FORRESTER RESEARCH, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+148 added−143 removedSource: 10-K (2023-12-31) vs 10-K (2022-12-31)

Top changes in FORRESTER RESEARCH, INC.'s 2023 10-K

148 paragraphs added · 143 removed · 111 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur customer success organization conducts post-sale engagement activities that are designed to align to client outcomes, accelerate time to value, and drive higher retention. As of December 31, 2022, our products and services were delivered to more than 2,700 client companies. No single client company accounted for more than 4% of our 2022 revenues.
Biggest changeAs of December 31, 2023, our products and services were delivered to more than 2,400 client companies. No single client company accounted for more than 4% of our 2023 revenues. Pricing and Contracts We report our revenue from client contracts in three categories of revenue: (1) research, (2) consulting, and (3) events.
Our consulting projects include conducting maturity assessments, prioritizing best practices, developing strategies, building business cases, selecting technology vendors, structuring organizations, developing content marketing strategies and collateral, and sales tools.
Our consulting projects include conducting maturity assessments, prioritizing best practices, developing strategies, building business cases, selecting technology vendors, structuring organizations, and developing content marketing strategies and collateral, and sales tools.
We rely on a combination of copyright, trademark, trade secret, confidentiality, and other contractual provisions to protect our intellectual property. We actively monitor compliance by our employees, clients and third parties with our policies and agreements relating to confidentiality, ownership, and the use and protection of Forrester’s intellectual property.
We rely on a combination of copyright, trademark, trade secret, confidentiality, and other contractual provisions to protect our intellectual 5 property. We actively monitor compliance by our employees, clients and third parties with our policies and agreements relating to confidentiality, ownership, and the use and protection of Forrester’s intellectual property.
There can be no assurance that we will be able to continue to compete successfully against existing or new competitors. 5 Intellectual Property Our proprietary research, methodologies and other intellectual property play a significant role in the success of our business.
There can be no assurance that we will be able to continue to compete successfully against existing or new competitors. Intellectual Property Our proprietary research, methodologies and other intellectual property play a significant role in the success of our business.
Diversity and Inclusion (D&I) . We focus on attracting, hiring, and the inclusion of all backgrounds and perspectives, with the goals of improving employee retention and engagement, strengthening the quality of our research, and improving client retention and customer experience. We field regular all-employee surveys to measure our progress against our goals.
We focus on attracting, hiring, and the inclusion of all backgrounds and perspectives, with the goals of improving employee retention and engagement, strengthening the quality of our research, and improving client retention and customer experience. We field regular all-employee surveys to measure our progress against our goals.
Market Overview We believe that market dynamics — from empowered customers to the COVID-19 pandemic — have fundamentally changed business and technology. These dynamics continue to change stakeholder expectations. Consumers and buyers have new demands and requirements. To win, serve, and retain customers in this environment, we believe that companies require a higher level of customer obsession.
Market Overview We believe that market dynamics — from empowered customers to the emergence of generative AI — have fundamentally changed business and technology. These dynamics continue to change stakeholder expectations. Consumers and buyers have new demands and requirements. To win, serve, and retain customers in this environment, we believe that companies require a higher level of customer obsession.
We track contract value as a significant business indicator. Contract value is defined as the value attributable to all of our recurring research-related contracts. Contract value is calculated as the annualized value of all contracts in effect at a specific point in time, without regard to how much revenue has already been recognized.
Contract value is defined as the value attributable to all of our recurring research-related contracts. Contract value is calculated as the annualized value of all contracts in effect at a specific point in time, without regard to how much revenue has already been recognized.
Our Premier groups focus on our largest vendor and end user clients across the globe while our Core group focuses on small to mid-sized vendor clients. Our European and Asia Pacific groups focus on both end user and vendor clients in their respective geographies.
Our Premier 4 groups focus on our largest vendor and end user clients across the globe while our Emerging and Mid-Size Tech group focuses on small to mid-sized vendor clients. Our European and Asia Pacific groups focus on both end user and vendor clients in their respective geographies.
Employees Attracting, retaining, and developing the best and brightest talent around the globe is critical to the ongoing success of our company. As of December 31, 2022, we employed a total of 2,033 persons. Of these employees, 1,487 were in the United States and Canada; 298 in Europe, Middle East and Africa (“EMEA”); and 248 in the Asia Pacific region.
Employees Attracting, retaining, and developing the best and brightest talent around the globe is critical to the ongoing success of our company. As of December 31, 2023, we employed a total of 1,744 persons. Of these employees, 1,257 were in the United States and Canada; 282 in Europe, Middle East and Africa (“EMEA”); and 205 in the Asia Pacific region.
We intend to migrate our existing clients that purchase Forrester Research and SiriusDecisions Research products to the Forrester Decisions products, and as of January 1, 2023, Forrester Decisions will be our only subscription research product that will be available for most new clients. As of December 31, 2022, approximately 32% of our CV was composed of Forrester Decisions products.
We intend to migrate our existing clients that purchase Forrester Research and SiriusDecisions Research products to the Forrester Decisions products, and as of January 1, 2023, Forrester Decisions became our only subscription research product available for most new clients. As of January 1, 2024, approximately 66% of our CV was composed of Forrester Decisions products.
Sales and Marketing We believe we have a strong alignment across our sales, marketing and product functions. 4 We sell our products and services through our direct sales force in various locations in North America, Europe and the Asia Pacific region. Our sales organization is organized into groups based on client size, geography, and market potential.
We sell our products and services through our direct sales force in various locations in North America, Europe and the Asia Pacific region. Our sales organization is organized into groups based on client size, geography, and market potential.
We classify revenue from tickets to and sponsorships of events as events revenue. Contract pricing for annual subscription-based products is principally a function of the number of licensed users at the client. Pricing of contracts is a fixed fee for the consulting project or shorter-term advisory service. We periodically review and increase the list prices for our products and services.
Contract pricing for annual subscription-based products is principally a function of the number of licensed users at the client. Pricing of contracts is a fixed fee for the consulting project or shorter-term advisory service. We periodically review and increase the list prices for our products and services. We track contract value as a significant business indicator.
Contract value increased 3% to $353.4 million at December 31, 2022 from $343.0 million at December 31, 2021. Competition We believe our focus on helping business and technology leaders use customer obsession to drive growth sets us apart from our competition.
Contract value decreased 4% to $332.1 million at December 31, 2023 from $345.4 million at December 31, 2022. Competition We believe our focus on helping business and technology leaders use customer obsession to drive growth sets us apart from our competition.
Our International Business Development group sells our products and services through independent sales representatives in select international locations. We also have a group dedicated to event sales. We employed 709 sales personnel as of December 31, 2022 compared to 637 sales personnel employed as of December 31, 2021. We also sell select Research products directly online through our website.
Our International Business Development group sells our products and services through independent sales representatives in select international locations. We also have teams focused on new business, revenue development, and event sales. We employed 601 sales personnel as of December 31, 2023 compared to 709 sales personnel employed as of December 31, 2022.
Our primary subscription research services include Forrester Decisions, Forrester Research, and SiriusDecisions Research. This portfolio of research services is designed to provide business and technology leaders with a proven path to growth through customer obsession.
We adhere to rigorous, unbiased research methodologies that are transparent and publicly available to ensure consistent research quality across markets, technologies, and geographies. Our primary subscription research services include Forrester Decisions, Forrester Research, and SiriusDecisions Research. This portfolio of research services is designed to provide business and technology leaders with a proven path to growth through customer obsession.
Pricing and Contracts We report our revenue from client contracts in three categories of revenue: (1) research, (2) consulting, and (3) events. We classify revenue from subscriptions to, and licenses of, our research products and services as research revenue. We classify revenue from our consulting projects and standalone advisory services as consulting revenue.
We classify revenue from subscriptions to, and licenses of, our research products and services as research revenue. We classify revenue from our consulting projects and standalone advisory services as consulting revenue. We classify revenue from tickets to and sponsorships of events as events revenue.
We deliver our products and services globally through three business segments – Research, Consulting and Events. Research For 40 years, Forrester has been providing objective, independent and data-driven research insights utilizing both qualitative and quantitative data. We adhere to rigorous, unbiased research methodologies that are transparent and publicly available to ensure consistent research quality across markets, technologies, and geographies.
We deliver our products and services globally through three business segments – Research, Consulting and Events. Research For more than 40 years, Forrester has been providing objective, independent and data-driven research insights utilizing both qualitative and quantitative data.
Our marketing activities are designed to elevate the Forrester brand, differentiate and promote Forrester’s products and services, improve the client experience, and drive growth. We achieve these outcomes by combining the value of reputation, demand generation, customer engagement, and sales and customer success enablement programs to deliver multichannel campaigns and high-quality digital experiences.
We achieve these outcomes by combining the value of reputation, demand generation, customer engagement, and sales and customer success enablement programs to deliver multichannel campaigns and high-quality digital experiences. Our customer success organization conducts post-sale engagement activities that are designed to align to client outcomes, accelerate time to value, and drive higher retention.
In addition, we seek to foster a culture where employees can be creative, feel supported and empowered, and are encouraged to think boldly about new ideas. As a reflection of these efforts, in 2022, for the fifth time in six years, Forrester was honored with a Glassdoor Employees’ Choice Award, recognizing the Best Places to Work in 2022.
In addition, we seek to foster a culture where employees can be creative, feel supported and empowered, and are encouraged to think boldly about new ideas. Diversity and Inclusion (D&I) .
Due to the COVID-19 pandemic, in 2020 and 2021 we began offering our events as live virtual experiences. These virtual events allowed us to offer added attendee benefits such as on demand sessions, more networking opportunities and more content, leading to higher attendee engagement.
We hold all of our events as hybrid events, consisting of both in-person and virtual experiences that allow us to offer added attendee benefits such as on demand sessions, more networking opportunities and more content, leading to higher attendee engagement. Sales and Marketing We believe we have a strong alignment across our sales, marketing and product functions.
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In 2022 we held all of our events as hybrid events, consisting of both in-person and virtual experiences. We currently plan to hold all of our events in 2023 and beyond as hybrid events.
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We also sell select Research products directly online through our website. Our marketing activities are designed to elevate the Forrester brand, differentiate and promote Forrester’s products and services, improve the client experience, and drive growth.
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In 2022, in addition to the ongoing activities of our D&I Council and regional D&I Networks, examples of our efforts with respect to D&I included: • launching companywide inclusion training for employees and managers; • expanding our global and regional D&I events and celebrating diversity heritage and awareness months through events and discussions; and • our continuation of various partnerships to attract and access more talent from underrepresented groups.
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In 2023, in addition to the ongoing training to equip employees to play an active role in fostering a safe, respectful, productive, and inclusive work environment, examples of our efforts with respect to D&I included: • introducing a new D&I Leadership Advisory Council to help accelerate our D&I goals; • increasing employee self-identification within human resource system profiles; • ensuring that our events and digital experiences are inclusive and accessible to all; and • our continuation of various partnerships to attract and access more talent from underrepresented groups.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur failure to do so would adversely affect our ability to maintain a competitive position in our market and continue to grow our business. Loss of Key Management . Our future success will depend in large part upon the continued services of a number of our key management employees. The loss of any one of them, in particular George F.
Biggest changeOur future success will depend in large part upon the continued services of a number of our key management employees. The loss of any one of them, in particular George F. Colony, our founder, Chairman of the Board and Chief Executive Officer, could adversely affect our business. 7 The Ability to Attract and Retain Qualified Professional Staff.
Colony to strongly influence or effectively control matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation, adoption or amendment of equity plans, and approval of significant transactions such as mergers, acquisitions, consolidations, and sales or 8 purchases of assets. This concentration of ownership may also limit the liquidity of our stock.
Colony to strongly influence or effectively control matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation, adoption or amendment of equity plans, and approval of significant transactions such as mergers, acquisitions, consolidations, and sales or purchases of assets. This concentration of ownership may also limit the liquidity of our stock.
Our success depends in large part upon retaining (on both a client company and dollar basis) and enriching existing subscriptions for our Research products and services, including the migration of our existing clients from our legacy Forrester Research and SiriusDecisions products into our new Forrester Decisions portfolio of services.
Our success depends in large part upon retaining (on both a client company and dollar basis) and enriching existing subscriptions for our Research products and services, including the migration of our existing clients from our legacy Forrester Research and SiriusDecisions products into our Forrester Decisions portfolio of services.
If we lose professionals or are unable to attract new talent, we will not be able to maintain our position in the market or grow our business. 7 Failure to Anticipate and Respond to Market Trends.
If we lose professionals or are unable to attract new talent, we will not be able to maintain our position in the market or grow our business. Failure to Anticipate and Respond to Market Trends.
Concentration of Ownership . Our largest stockholder is our Chairman and CEO, George F. Colony, who owns approximately 39% of our outstanding stock. This concentration of ownership enables Mr.
Concentration of Ownership . Our largest stockholder is our Chairman and CEO, George F. Colony, who owns approximately 38% of our outstanding stock. This concentration of ownership enables Mr.
Consulting revenues comprised 28% of our total revenues in 2022 and 32% of our total revenues in 2021. Consulting engagements generally are project-based and non-recurring. A decline in our ability to fulfill existing or generate new consulting engagements could have an adverse effect on our results of operations and financial condition.
Consulting revenues comprised 25% of our total revenues in 2023 and 28% of our total revenues in 2022. Consulting engagements generally are project-based and non-recurring. A decline in our ability to fulfill existing or generate new consulting engagements could have an adverse effect on our results of operations and financial condition.
As of December 31, 2022, we had outstanding debt of $50.0 million under the Facility (refer to Note 4 – Debt in the Notes to Consolidated Financial Statements for further information). The obligations incurred under this Facility could impair our future financial condition and operating results.
As of December 31, 2023, we had outstanding debt of $35.0 million under the Facility (refer to Note 4 – Debt in the Notes to Consolidated Financial Statements for further information). The obligations incurred under this Facility could impair our future financial condition and operating results.
Our International Operations Expose Us to a Variety of Operational Risks which Could Negatively Impact Our Results of Operations. As of December 31, 2022, we have clients in approximately 79 countries and approximately 21% of our revenues come from international sales.
Our International Operations Expose Us to a Variety of Operational Risks which Could Negatively Impact Our Results of Operations. As of December 31, 2023, we have clients in approximately 76 countries and approximately 22% of our revenues come from international sales.
A portion of our income is generated outside of the United States and is taxed at lower rates than rates applicable to income generated in the U.S. or in other jurisdictions in which we do business.
Taxation Risks . We operate in numerous jurisdictions around the world. A portion of our income is generated outside of the United States and is taxed at lower rates than rates applicable to income generated in the U.S. or in other jurisdictions in which we do business.
Our effective tax rate in the future, and accordingly our results of operations and financial position, could be adversely affected by changes in applicable tax law or if more of our income becomes taxable in jurisdictions with higher tax rates. We Face Risks Related to Health Epidemics That Could Adversely Impact Our Business .
Our effective tax rate in the future, and accordingly our results of operations and financial position, could be adversely affected by changes in applicable tax law or if more of our income becomes taxable in jurisdictions with higher tax rates.
Although we do not have any employees or material client relationships in Russia or Ukraine, if the Russian military invasion of Ukraine that commenced in February 2022 were to escalate or spread to other regions, there may be negative effects on both the United States and the global economy that could materially and adversely affect our business.
Although we do not have any employees or material client relationships in Russia or Ukraine and only a limited presence in the Middle East, if the current conflicts in Ukraine and the Middle East were to escalate or spread to other regions, there may be negative effects on both the United States and the global economy that could materially and adversely affect our business.
These factors include, but are not limited to: • Trends in technology and research and advisory services spending in the marketplace and general economic conditions. • The timing and size of new and renewal subscriptions for our products and services from clients. • The utilization of our advisory services by our clients. • The timing of revenue-generating events sponsored by us. • The introduction and marketing of new products and services by us and our competitors. • The hiring and training of new research professionals, consultants, and sales personnel. • Changes in demand for our research and advisory services. • Fluctuations in currency exchange rates. • An increase in the interest rates applicable to our outstanding debt obligations.
These factors include, but are not limited to: • Trends in technology and research and advisory services spending in the marketplace and general economic conditions. • The timing and size of new and renewal subscriptions for our products and services from clients. • The utilization of our advisory services by our clients. • The timing of revenue-generating events sponsored by us. • The introduction and marketing of new products and services by us and our competitors. • The hiring and training of new research professionals, consultants, and sales personnel. • Changes in demand for our research and advisory services. • Fluctuations in currency exchange rates. • An increase in the interest rates applicable to our outstanding debt obligations. 8 As a result, our operating results in future quarters may be below the expectations of securities analysts and investors, which could have an adverse effect on the market price for our common stock.
Thus, our future operating results will be largely dependent upon our ability to retain the services of these individuals and to attract additional professionals from a limited pool of qualified candidates. Our future success will also depend in part upon the effectiveness of our sales leadership in hiring and retaining sales personnel and in improving sales productivity.
Our future success will depend in large measure upon the continued contributions of our senior management team, research professionals, consultants, and experienced sales and marketing personnel. Thus, our future operating results will be largely dependent upon our ability to retain the services of these individuals and to attract additional professionals from a limited pool of qualified candidates.
Compliance with these laws, or changing interpretations and application of these laws, could cause us to incur substantial costs or require us to take action in a manner that would be adverse to our business. Taxation Risks . We operate in numerous jurisdictions around the world.
Several other U.S. states have passed similar data privacy laws, most of which either went into effect in 2023 or will become effective in 2024. Compliance with these laws, or changing interpretations and application of these laws, could cause us to incur substantial costs or require us to take action in a manner that would be adverse to our business.
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Colony, our founder, Chairman of the Board and Chief Executive Officer, could adversely affect our business. The Ability to Attract and Retain Qualified Professional Staff. Our future success will depend in large measure upon the continued contributions of our senior management team, research professionals, consultants, and experienced sales and marketing personnel.
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Our failure to do so would adversely affect our ability to maintain a competitive position in our market and continue to grow our business. The Use of Generative AI in our Business and by Our Clients and Competitors Could Negatively Affect our Business and Reputation.
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As a result, our operating results in future quarters may be below the expectations of securities analysts and investors, which could have an adverse effect on the market price for our common stock.
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In October of 2023, we introduced Izola, a generative AI tool that allows our clients to query our research database. We are also in the process of implementing various other generative AI initiatives within our company.
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Our business and operations could be adversely affected by health epidemics, including the recent COVID-19 pandemic, impacting the markets and communities in which we and our clients operate.
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While we believe that generative AI technologies offer significant opportunities, they are rapidly evolving and the integration of generative AI technologies into our and our vendors’ systems (potentially without the vendor disclosing such use to us) poses novel risks that could result in negative consequences to our business, reputation and financial results.
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The COVID-19 pandemic has caused significant disruption to the business and financial markets, and there remains uncertainty about the duration of this disruption on both a nationwide and global level, as well as the ongoing effect on our business.
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These risks include the potential for factual errors or inaccuracies, unintentional distribution of confidential information, ethical concerns, data privacy or security risks, and risks related to intellectual property rights.
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The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are uncertain and unpredictable. We continue to monitor the COVID-19 situation and potential effects on our business and operations.
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In addition, third parties may be able to use generative AI to compete with and reduce demand for our products and services or may load our proprietary research into large language models in violation of our terms of use, which could reduce the value of our services and our ability to protect our intellectual property. Loss of Key Management .
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While the spread and impact of COVID-19 has stabilized, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur.
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Our future success will also depend in part upon the effectiveness of our sales leadership in hiring and retaining sales personnel and in improving sales productivity.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also rent office space in San Francisco, New York City, McLean (VA), Nashville, Norwalk (CT), London, New Delhi, Singapore, and Sydney.
Biggest changeThe lease term of this facility expires February 28, 2027. 10 We also rent office space in San Francisco, New York City, McLean (VA), Norwalk (CT), London, New Delhi, Singapore, and Sydney. In addition, we lease office space on a relatively short-term basis in various other locations in North America, Europe, and Asia.
Item 2. P roperties Our corporate headquarters building is comprised of approximately 190,000 square feet of office space in Cambridge, Massachusetts, substantially all of which is currently occupied by the Company. This facility accommodates research, marketing, sales, consulting, technology, and operations personnel. The lease term of this facility expires February 28, 2027.
Item 2. P roperties Our corporate headquarters building is comprised of approximately 190,000 square feet of office space in Cambridge, Massachusetts, substantially all of which is currently occupied by the Company. This facility accommodates research, marketing, sales, consulting, technology, and operations personnel.
In addition, we lease office space on a relatively short-term basis in various other locations in North America, Europe, and Asia. 9 We believe that our existing facilities are adequate for our current needs and that additional facilities are available for lease to meet future needs.
We believe that our existing facilities are adequate for our current needs and that additional facilities are available for lease to meet future needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 4. Mine Saf ety Disclosures Not applicable. 10 PART II
Biggest changeItem 4. Mine Saf ety Disclosures Not applicable. 11 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market For Registrant’s Common Equity, Related Stoc kholder Matters, and Issuer Purchases of Equity Securities Our common stock is listed on the Nasdaq Global Select Market under the symbol “FORR”. On November 27, 2018, in conjunction with the announcement of the acquisition of SiriusDecisions, Forrester announced the indefinite suspension of its quarterly dividend program beginning in 2019.
Biggest changeItem 5. Market For Registrant’s Common Equity, Related Stoc kholder Matters, and Issuer Purchases of Equity Securities Our common stock is listed on the Nasdaq Global Select Market under the symbol “FORR”. We did not declare or pay any dividends during the years ended December 31, 2022 and 2023.
During the quarter ended December 31, 2022, we did not purchase any shares of our common stock under the stock repurchase program. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ” for information on our equity compensation plans.
During the quarter ended December 31, 2023, we did not purchase any shares of our common stock under the stock repurchase program. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ” for information on our equity compensation plans.
The following graph contains the cumulative stockholder return on our common stock during the period from December 31, 2017 through December 31, 2022 with the cumulative return during the same period for the Russell 2000 and the S&P 600 Small Cap Information Technology Index, and assumes that the dividends, if any, were reinvested. 11 Item 6. [Reserved] 12
The following graph contains the cumulative stockholder return on our common stock during the period from December 31, 2018 through December 31, 2023 with the cumulative return during the same period for the Russell 2000 and the S&P 600 Small Cap Information Technology Index, and assumes that the dividends, if any, were reinvested. 12 Item 6. [Reserved] 13
The actual declaration of any potential future dividends, and the establishment of the per share amount and payment dates for any such future dividends, are subject to the discretion of the Board of Directors. As of March 6, 2023 there were approximately 24 stockholders of record of our common stock.
The actual declaration of any potential future dividends, and the establishment of the per share amount and payment dates for any such future dividends, are subject to the discretion of the Board of Directors. As of March 4, 2024 there were approximately 25 stockholders of record of our common stock.
On March 6, 2023 the closing price of our common stock was $34.09 per share. As of December 31, 2022, our Board of Directors authorized an aggregate $585.0 million to purchase common stock under our stock repurchase program. As of December 31, 2022, we had repurchased approximately 17.0 million shares of common stock at an aggregate cost of $510.0 million.
On March 4, 2024 the closing price of our common stock was $19.55 per share. As of December 31, 2023, our Board of Directors authorized an aggregate $585.0 million to purchase common stock under our stock repurchase program. As of December 31, 2023, we had repurchased approximately 17.1 million shares of common stock at an aggregate cost of $514.1 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

61 edited+28 added−23 removed33 unchanged
Biggest changeThe increase was primarily due to (1) a $8.9 million increase in event expenses due to the return of in-person attendance at our events, (2) a $7.4 million increase in compensation and benefit costs due to an increase in headcount, benefit costs, and merit increases, which were partially offset by lower incentive bonus costs, (3) a $2.4 million increase in stock compensation expense, (4) a $1.7 million increase in travel and entertainment expenses due to the return of in-person attendance at our events and increased general business travel, and (5) a $0.8 million increase in professional services costs primarily due to an increase in contractor costs. 17 Selling and Marketing Absolute Percentage Increase Increase 2022 2021 (Decrease) (Decrease) Selling and marketing expenses (dollars in millions) $ 181.9 $ 170.9 $ 11.0 6 % Selling and marketing expenses as a percentage of total revenues 34 % 35 % (1) point — Selling and marketing employees (at end of period) 804 720 84 12 % Selling and marketing expenses increased 6% in 2022 compared to 2021, and increased by 8% when excluding the effect of changes in foreign currencies.
Biggest changeSelling and Marketing Absolute Percentage Increase Increase 2023 2022 (Decrease) (Decrease) Selling and marketing expenses (dollars in millions) $ 167.4 $ 181.9 $ (14.6 ) (8 %) Selling and marketing expenses as a percentage of total revenues 35 % 34 % 1 point Selling and marketing employees (at end of period) 682 804 (122 ) (15 %) Selling and marketing expenses decreased 8% in 2023 compared to 2022.
We consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a net deferred income tax asset. Judgment is required in considering the relative impact of negative and positive evidence.
We consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or 16 all of a net deferred income tax asset. Judgment is required in considering the relative impact of negative and positive evidence.
Wallet retention is calculated on a percentage basis by dividing the annualized contract value of our current clients, who were also clients a year ago, by the total annualized contract value from a year ago. • Clients — is calculated at the enterprise level as all clients that have an active CV contract.
Wallet retention is calculated on a percentage basis by dividing the annualized contract value of our current clients, who were also clients a year ago, by the total annualized contract value from a year ago. 14 • Clients — is calculated at the enterprise level as all clients that have an active CV contract.
A detailed description and analysis of the fiscal year 2020 year-over-year changes can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021. Liquidity and Capital Resources We have historically financed our operations primarily through funds generated from operations.
A detailed description and analysis of the fiscal year 2021 year-over-year changes can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022. Liquidity and Capital Resources We have historically financed our operations primarily through funds generated from operations.
Judgement is required in determining the use of a qualitative or quantitative assessment, as well as in determining each reporting unit’s estimated fair value as it requires us to make estimates of market conditions and operational performance, including projected financial results, discount rates, control premium, and valuation multiples for key financial metrics.
Judgment is required in determining the use of a qualitative or quantitative assessment, as well as in determining each reporting unit’s estimated fair value as it requires us to make estimates of market conditions and operational performance, including projected financial results, discount rates, control premium, and valuation multiples for key financial metrics.
We believe that our current cash balance and cash flows from operations will satisfy working capital, financing activities, and capital expenditure requirements for the next twelve months and to meet our known long-term cash requirements. As of December 31, 2022, we did not have any significant unrecognized tax benefits for uncertain tax positions.
We believe that our current cash balance and cash flows from operations will satisfy working capital, financing activities, and capital expenditure requirements for the next twelve months and to meet our known long-term cash requirements. As of December 31, 2023, we did not have any significant unrecognized tax benefits for uncertain tax positions.
In addition to the contractual cash commitments included above, we have other payables and liabilities that may be legally enforceable but are not considered contractual commitments. See Note 14 – Certain Balance Sheet Accounts in the Notes to Consolidated Financial Statements for more information on our payables and liabilities.
In addition to the contractual cash commitments included above, we have other payables and liabilities that may be legally enforceable but are not considered contractual commitments. See Note 13 – Certain Balance Sheet Accounts in the Notes to Consolidated Financial Statements for more information on our payables and liabilities.
We obtain the standalone selling prices of our products and services based upon an analysis of standalone sales of these products and services.
We obtain the 15 standalone selling prices of our products and services based upon an analysis of standalone sales of these products and services.
We were in full compliance with the covenants as of December 31, 2022 and expect to continue to be in compliance through the next 12 months. Additional future contractual cash obligations extending over the next 12 months and beyond primarily consist of operating lease payments.
We were in full compliance with the covenants as of December 31, 2023 and expect to continue to be in compliance through the next 12 months. Additional future contractual cash obligations extending over the next 12 months and beyond primarily consist of operating lease payments.
During 2022, we recorded $3.7 million of right-of-use asset impairments and $1.3 million of leasehold improvement impairments related to closing one floor of our offices located at 150 Spear Street, San Francisco, California.
During 2022, we recorded $3.7 million of right-of-use asset impairments and $1.3 million of leasehold improvement impairments related to closing one floor of our offices located at 150 Spear Street, San Francisco, California. • Income Taxes .
Recent Accounting Pronouncements See Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements, including the expected dates of adoption and effects on results of operations and financial condition. 21
Recent Accounting Pronouncements See Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements, including the expected dates of adoption and effects on results of operations and financial condition. 22
Although write-offs of customer receivables have not been significant during the last three years ($0.7 million, $0.3 million, and $0.9 million during 2022, 2021, and 2020, respectively), if our customers' financial condition were to deteriorate unexpectedly, we could experience a significant increase in our expense.
Although write-offs of customer receivables have not been significant during the last three years ($0.7 million, $0.7 million, and $0.3 million during 2023, 2022, and 2021, respectively), if our customers' financial condition were to deteriorate unexpectedly, we could experience a significant increase in our expense.
Contract value also includes our reprint products, as these products are used throughout the year by our clients and are typically renewed. • Client retention — represents the percentage of client companies (defined as all clients that buy a CV product) at the prior year measurement date that have active contracts at the current year measurement date. • Wallet retention — represents a measure of the CV we have retained with clients over a twelve-month period.
Contract value also includes our reprint products, as these products are used throughout the year by our clients and are typically renewed. • Client retention — represents the percentage of client companies (defined as all clients that buy a CV product) at the prior year measurement date that have active contracts at the current year measurement date. • Wallet retention — represents a measure of the CV we have retained with clients over a twelve-month period, including increases or decreases in retained client CV during the period.
Results of Operations for the years ended December 31, 2022 and 2021 The following table sets forth our Consolidated Statements of Income as a percentage of total revenues for the years noted.
Results of Operations for the years ended December 31, 2023 and 2022 The following table sets forth our Consolidated Statements of Operations as a percentage of total revenues for the years noted.
As of December 31, 2022, we had $291.7 million of goodwill and intangible assets with finite lives recorded in our Consolidated Balance Sheets. When acquiring a business, as of the acquisition date, we determine the estimated fair values of the assets acquired and liabilities assumed, which may include a significant amount of intangible assets and goodwill.
As of December 31, 2023, we had $281.9 million of goodwill and intangible assets with finite lives recorded in our Consolidated Balance Sheets. When acquiring a business, as of the acquisition date, we determine the estimated fair values of the assets acquired and liabilities assumed, which may include a significant amount of intangible assets and goodwill.
The accounting policies used by the segments are the same as those used in the consolidated financial statements. We do not review or evaluate assets as part of segment performance.
The accounting policies used by the segments are the same as those used in the consolidated financial statements. We do not review or evaluate assets as part of segment performance. Accordingly, we do not identify or allocate assets by reportable segment.
The decrease in our retention rates and number of clients is primarily attributable 1) macroeconomic conditions affecting our client base including a) funding and budget pressure on our smaller technology clients and b) the uncertain economic conditions caused by high inflation, increasing interest rates, geopolitical turbulence, and the threat of recession, and 2) the ongoing transition of our client base to our Forrester Decisions product platform that was launched in August 2021.
The decrease in our retention rates and number of clients from the prior year period is primarily attributable to 1) macroeconomic conditions affecting our client base including a) funding and budget pressure on our smaller technology clients and the technology industry in general, and b) the uncertain economic conditions caused by inflation, increased interest rates, geopolitical turbulence, and the threat of recession during 2023, and 2) the ongoing transition of our client base to our Forrester Decisions product platform that was launched in August 2021.
Our products and services are delivered through each segment as described below. The Research segment includes the revenues from all of our research products as well as consulting revenues from advisory services (such as speeches and advisory days) delivered by our research organization.
The Research segment includes the revenues from all of our research products as well as consulting revenues from advisory services (such as speeches and advisory days) delivered by our research organization.
We are focusing on CV products as these products are our most profitable products and historically our contracts for CV products have renewed at high rates (as measured by our client retention and wallet retention metrics). Our CV products make up essentially all of our research revenues.
We are focusing on CV products as these products are our most profitable products and historically our contracts for CV products have renewed at high rates (as measured by our client retention and wallet retention metrics).
We have included the recast CV metric below for the year ended December 31, 2021, and we have also provided recast CV amounts dating back to the fourth quarter of 2020, on the investor relations section of our website.
We have included the recast CV and Wallet Retention metrics below for the period ended December 31, 2022, and we have also provided recast CV and Wallet Retention amounts dating back to the fourth quarter of 2021, on the investor relations section of our website.
Research revenues, which constituted 66% of our revenues during 2022, are generally renewable annually and are typically payable in advance. We generated cash from operating activities of $39.4 million and $107.1 million during the years ended December 31, 2022 and 2021, respectively.
Research revenues, which constituted 70% of our revenues during 2023, are generally renewable and are typically payable in advance. We generated cash from operating activities of $21.7 million and $39.4 million during the years ended December 31, 2023 and 2022, respectively.
Other income (expense), net increased by $1.5 million in 2022 compared to 2021 due to a decrease in foreign currency losses and an increase in interest income. Gains on Investments, Net Gains on investments, net primarily represents our share of equity method investment gains and losses from our technology-related investment funds.
Other income (expense), net increased by $2.1 million in 2023 compared to 2022 primarily due to an increase in interest income due to higher interest rates in 2023. Gains on Investments, Net Gains on investments, net primarily represents our share of equity method investment gains and losses from our technology-related investment funds.
When there is an insufficient history of standalone sales, we use judgment to estimate the standalone selling price, taking into consideration available market conditions, factors used to set list prices, pricing of similar products, and internal pricing objectives.
When there is an insufficient history of standalone sales, we use judgment to estimate the standalone selling price, taking into consideration available market conditions, factors used to set list prices, pricing of similar products, and internal pricing objectives. Standalone selling prices are typically analyzed and updated on an annual basis, or as business conditions change.
The project consulting organization delivers a majority of our project consulting revenue and certain advisory services. The Events segment includes the revenues and the costs of the organization responsible for developing and hosting in-person and virtual events.
The project consulting organization delivers a majority of our project consulting revenue and certain advisory services. The Events segment includes the revenues and the costs of the organization responsible for developing and hosting in-person and virtual events. We evaluate reportable segment performance and allocate resources based on segment revenues and expenses.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview We derive revenues from subscriptions to our Research products and services, licensing electronic “reprints” of our Research, performing consulting projects and advisory services, and hosting events. We offer contracts for our Research products that are typically renewable annually and payable in advance.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview We derive revenues from subscriptions to our Research products and services, licensing electronic “reprints” of our Research, performing consulting projects and advisory services, and hosting events.
Critical Accounting Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
The ongoing macroeconomic conditions and product transition are anticipated to pressure our key metrics through 2024. Critical Accounting Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
This method requires the use of judgement in determining the required number of hours to complete the project. We are required to estimate the amount of prepaid performance obligations that will expire unused and recognize revenue for that estimate over the same period the related rights are exercised by our customers.
We are required to estimate the amount of prepaid performance obligations that will expire unused and recognize revenue for that estimate over the same period the related rights are exercised by our customers.
During 2021, we used $49.1 million of cash from financing activities primarily due to $34.4 million of repayments of our debt, which consisted of $9.4 million of required payments on our term loan and $25.0 million of discretionary payments on our revolving credit facility, $20.1 million for purchases of our common stock, as well as $3.4 million in taxes paid related to net share settlements of restricted stock units, partially offset by $9.2 million of net proceeds from the issuance of common stock under our stock-based incentive plans.
During 2023, we used $18.3 million of cash from financing activities primarily due to $15.0 million of discretionary repayments of our revolving credit facility, $4.1 million for purchases of our common stock, and $2.7 million in taxes paid related to net share settlements of restricted stock units, partially offset by $3.5 million of net proceeds from the issuance of common stock under our stock-based incentive plans.
If the cash outside of the U.S. is needed for operations in the U.S., we would be required to accrue and pay U.S. state taxes and may be required to pay withholding taxes to foreign jurisdictions to repatriate these funds.
If the cash outside of the U.S. is needed for operations in the U.S., we would be required to accrue and pay U.S. state taxes and may be required to pay withholding taxes to foreign jurisdictions to repatriate these funds. 21 However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate these funds for our U.S. operations.
Clients purchase consulting projects and advisory services independently and/or to supplement their access to our subscription-based products. Consulting project revenues, which are based upon fixed-fee agreements, are recognized as the services are provided. Advisory service revenues, such as speeches and advisory days, are recognized when the service is complete or the customer receives the agreed upon deliverable.
Consulting project revenues, which are based upon fixed-fee agreements, are recognized as the services are provided. Advisory service revenues, such as speeches and advisory days, are recognized when the service is complete or the customer receives the agreed upon deliverable. Billings attributable to consulting projects and advisory services are initially recorded as deferred revenue.
Remaining lease payments within one year, within two to three years, within four to five years, and after five years from December 31, 2022 are $16.5 million, $30.1 million, $17.7 million, and $8.7 million, respectively.
Remaining lease payments within one year, within two to three years, within four to five years, and after five years from December 31, 2023 are $16.0 million, $26.2 million, $8.6 million, and $6.0 million, respectively.
As of December 31, 2022, we had cash, cash equivalents, and marketable investments of $123.3 million. This balance includes $81.4 million held outside of the U.S.
As of December 31, 2023, we had cash, cash equivalents, and marketable investments of $124.5 million. This balance includes $75.8 million held outside of the U.S.
We completed the annual goodwill impairment testing as of November 30, 2022 utilizing a qualitative assessment to determine if it was more likely than not that the fair values of each of our reporting units was less than their respective carrying values and concluded that no impairments existed.
We completed the annual goodwill impairment testing as of November 30, 2023 utilizing a quantitative assessment to determine if the fair values of each of our reporting units was less than their respective carrying values and concluded that no impairments existed. Future events could cause us to conclude that impairment indicators exist and that goodwill is impaired.
Intangible assets with finite lives as of December 31, 2022 consist of acquired customer relationships, acquired technology, and acquired trademarks and were valued according to the future cash flows they were estimated to produce or the estimated costs to replace the assets.
Any resulting impairment loss could have a material adverse impact on our results of operations. Intangible assets with finite lives as of December 31, 2023 consist of acquired customer relationships, acquired technology, and acquired trademarks and were valued according to the future cash flows they were estimated to produce or the estimated costs to replace the assets.
The Amended Credit Agreement permits an increase in commitments under the Revolving Credit Facility in an aggregate principal amount up to $50.0 million, subject to approval by the Administrative Agent and certain customary terms and conditions. Additional information is provided in Note 4 – Debt in the Notes to Consolidated Financial Statements.
The credit facility permits the Company to increase the revolving credit commitments in an aggregate principal amount up to $50.0 million, subject to approval by the administrative agent and certain customary terms and conditions.
Billings attributable to consulting projects and advisory services are initially recorded as deferred revenue. Events revenues consist of ticket and sponsorship sales for a Forrester-hosted event. Billings for events are also initially recorded as deferred revenue and are recognized as revenue upon completion of each event.
Events revenues consist of ticket and sponsorship sales for a Forrester-hosted event. Billings for events are also initially recorded as deferred revenue and are recognized as revenue upon completion of each event. Our primary operating expenses consist of cost of services and fulfillment, selling and marketing expenses, and general and administrative expenses.
Subscription products are recognized as revenue over the term of the contract. Accordingly, a substantial portion of our billings are initially recorded as deferred revenue. Reprints include an obligation to deliver a customer-selected research document and certain usage data provided through an on-line platform, which represents two performance obligations.
Reprints include an obligation to deliver a customer-selected research document and certain usage data provided through an on-line platform, which represents two performance obligations. We recognize revenue for the performance obligation for the data portion of the reprint ratably over the license term.
Years Ended December 31, 2022 2021 Revenues: Research revenues 65.9 % 65.8 % Consulting revenues 28.4 31.6 Events revenues 5.7 2.6 Total revenues 100.0 100.0 Operating expenses: Cost of services and fulfillment 41.6 40.8 Selling and marketing 33.8 34.6 General and administrative 12.6 11.7 Depreciation 1.7 1.9 Amortization of intangible assets 2.5 3.1 Integration costs — 0.1 Restructuring costs 1.7 — Income from operations 6.1 7.8 Interest expense (0.5 ) (0.9 ) Other income (expense), net — (0.2 ) Gains on investments, net 0.1 — Income before income taxes 5.7 6.7 Income tax expense 1.6 1.7 Net income 4.1 % 5.0 % 16 2022 compared to 2021 Revenues Absolute Percentage Increase Increase 2022 2021 (Decrease) (Decrease) (dollars in millions) Total revenues $ 537.8 $ 494.3 $ 43.5 9 % Research revenues $ 354.5 $ 325.3 $ 29.1 9 % Consulting revenues $ 152.6 $ 156.1 $ (3.5 ) (2 %) Events revenues $ 30.7 $ 12.9 $ 17.9 139 % Revenues attributable to customers outside of the U.S. $ 111.7 $ 112.7 $ (1.0 ) (1 %) Percentage of revenue attributable to customers outside of the U.S. 21 % 23 % (2) points — Total revenues increased 9% during 2022 compared to 2021, and increased by 10% when excluding the effect of changes in foreign currencies.
Years Ended December 31, 2023 2022 Revenues: Research revenues 69.6 % 65.9 % Consulting revenues 24.6 28.4 Events revenues 5.8 5.7 Total revenues 100.0 100.0 Operating expenses: Cost of services and fulfillment 42.5 41.6 Selling and marketing 34.8 33.8 General and administrative 14.2 12.6 Depreciation 1.8 1.7 Amortization of intangible assets 2.5 2.5 Restructuring costs 2.8 1.7 Income from operations 1.4 6.1 Interest expense (0.6 ) (0.5 ) Other income, net 0.5 — Gains on investments, net — 0.1 Income before income taxes 1.3 5.7 Income tax expense 0.7 1.6 Net income 0.6 % 4.1 % 2023 compared to 2022 Revenues Absolute Percentage Increase Increase 2023 2022 (Decrease) (Decrease) (dollars in millions) Total revenues $ 480.8 $ 537.8 $ (57.0 ) (11 %) Research revenues $ 334.4 $ 354.5 $ (20.1 ) (6 %) Consulting revenues $ 118.2 $ 152.6 $ (34.4 ) (23 %) Events revenues $ 28.2 $ 30.7 $ (2.6 ) (8 %) Revenues attributable to customers outside of the U.S. $ 107.3 $ 111.7 $ (4.4 ) (4 %) Percentage of revenue attributable to customers outside of the U.S. 22 % 21 % 1 point Research revenues are recognized as revenue primarily on a ratable basis over the term of the contracts, which are generally 12 or 24-month periods.
These increases were partially offset by a benefit related to a change in tax legislation during 2022. Segment Results We operate in three segments: Research, Consulting, and Events. These segments, which are also our reportable segments, are based on our management structure and how management uses financial information to evaluate performance and determine how to allocate resources.
Segment Results We operate in three segments: Research, Consulting, and Events. These segments, which are also our reportable segments, are based on our management structure and how management uses financial information to evaluate performance and determine how to allocate resources. Our products and services are delivered through each segment as described below.
Restructuring In the fourth quarter of 2022, we incurred restructuring costs of $9.3 million. Approximately $5.0 million of the costs related to an impairment of the right-of-use asset and leasehold improvements for the closing of one floor of our offices located at 150 Spear Street, San Francisco, California.
We recorded a restructuring charge of $5.0 million during the fourth quarter of 2022 related to closing one floor of our offices in California, of which $3.7 million related to an impairment of a right-of-use asset and $1.3 million related to an impairment of leasehold improvements.
The Revolving Credit Facility matures on December 21, 2026. There was a balance of $50.0 million outstanding on the facility at December 31, 2022. The Amended Credit Agreement contains certain customary restrictive loan covenants, including among others, financial covenants that apply a maximum leverage ratio, minimum interest coverage ratio, and maximum annual capital expenditures.
The credit facility contains certain customary restrictive loan covenants, including among others, financial covenants that apply a maximum leverage ratio, minimum interest coverage ratio, and maximum annual capital expenditures.
The increase in expenses was primarily due to (1) a $3.6 million increase in compensation and benefit costs primarily due to an increase in headcount, benefit costs, and merit increases and (2) a $1.5 million increase in professional services primarily due to an increase in contractor costs. Event segment revenues increased 139% during 2022 compared to 2021.
The decrease in expenses was primarily due to a $2.0 million decrease in professional services primarily due to a decrease in contractor costs and consulting fees, partially offset by a $0.6 million increase in compensation and benefit costs primarily due to merit increases. 20 Consulting segment revenues decreased 19% during 2023 compared to 2022.
General and Administrative Absolute Percentage Increase Increase 2022 2021 (Decrease) (Decrease) General and administrative expenses (dollars in millions) $ 67.7 $ 58.1 $ 9.6 17 % General and administrative expenses as a percentage of total revenues 13 % 12 % 1 point — General and administrative employees (at end of period) 309 239 70 29 % General and administrative expenses increased 17% in 2022 compared to 2021, and increased by 19% when excluding the effect of changes in foreign currencies.
General and Administrative Absolute Percentage Increase Increase 2023 2022 (Decrease) (Decrease) General and administrative expenses (dollars in millions) $ 68.5 $ 67.7 $ 0.8 1 % General and administrative expenses as a percentage of total revenues 14 % 13 % 1 point General and administrative employees (at end of period) 281 309 (28 ) (9 %) General and administrative expenses increased 1% in 2023 compared to 2022.
Standalone selling prices are typically analyzed and updated on an annual basis, or as business conditions change. 14 Consulting project revenues are recognized over time as the services are provided, based on an input method that calculates the total hours expended compared to the estimated hours required to satisfy the performance obligation.
Consulting project revenues are recognized over time as the services are provided, based on an input method that calculates the total hours expended compared to the estimated hours required to satisfy the performance obligation. This method requires the use of judgement in determining the required number of hours to complete the project.
Interest Expense Interest expense consists of interest on our borrowings and realized gains and losses on the related interest rate swap. Interest expense decreased by $1.8 million in 2022 compared to 2021 due to lower average outstanding borrowings. The benefit from lower outstanding borrowings was partially offset by an increase in the annualized interest rate on our borrowings during 2022.
Interest expense increased by $0.6 million in 2023 compared to 2022 due to an increase in the annualized interest rate on our borrowings, which was partially offset by lower average outstanding borrowings. Other Income (Expense), Net Other income (expense), net primarily consists of interest income, gains and losses on foreign currency, and gains and losses on foreign currency forward contracts.
In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified.
In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. As of December 31, 2023 and 2022, we maintained a valuation allowance of $1.1 million and $1.0 million, respectively, primarily relating to foreign net operating loss carryforwards from an acquisition.
We recognize revenue for the performance obligation for the data portion of the reprint ratably over the license term. We recognize revenue for the performance obligation for the research document at the time of providing access to the document. Billings for licensing of reprints are initially recorded as deferred revenue.
We recognize revenue for the performance obligation for the research document at the time of providing access to the document. Billings for licensing of reprints are initially recorded as deferred revenue. Clients purchase consulting projects and advisory services independently and/or to supplement their access to our subscription-based products.
Cost of Services and Fulfillment Absolute Percentage Increase Increase 2022 2021 (Decrease) (Decrease) Cost of services and fulfillment (dollars in millions) $ 223.8 $ 201.8 $ 22.0 11 % Cost of services and fulfillment as a percentage of total revenues 42 % 41 % 1 point — Service and fulfillment employees (at end of period) 920 822 98 12 % Cost of services and fulfillment expenses increased 11% in 2022 compared to 2021, and increased by 13% when excluding the effect of changes in foreign currencies.
Cost of Services and Fulfillment Absolute Percentage Increase Increase 2023 2022 (Decrease) (Decrease) Cost of services and fulfillment (dollars in millions) $ 204.5 $ 223.8 $ (19.3 ) (9 %) Cost of services and fulfillment as a percentage of total revenues 43 % 42 % 1 point Service and fulfillment employees (at end of period) 781 920 (139 ) (15 %) Cost of services and fulfillment expenses decreased 9% in 2023 compared to 2022.
During 2021, we used cash in investing activities of $29.3 million, which consisted of $18.6 million in net purchases of marketable 20 investments and $10.7 million of purchases of property and equipment, primarily consisting of computer software, leasehold improvements and equipment.
The $17.8 million decrease in cash provided from operations during 2023 was primarily due to an $18.8 million decrease in net income. During 2023, we used cash in investing activities of $36.8 million, which consisted of $31.3 million in net purchases of marketable investments and $5.5 million of purchases of property and equipment, primarily consisting of computer software.
Income Tax Expense Absolute Percentage Increase Increase 2022 2021 (Decrease) (Decrease) Provision for income taxes (dollars in millions) $ 8.9 $ 8.3 $ 0.6 7 % Effective tax rate 29 % 25 % 4 points — The increase in the effective tax rate during 2022 as compared to 2021 was primarily due to increased non-deductible stock compensation, an increase in foreign subsidiary income subject to U.S. tax in 2022, and an increase in non-deductible expenses related to meals and entertainment in 2022 that did not occur in 2021.
Income Tax Expense Absolute Percentage Increase Increase 2023 2022 (Decrease) (Decrease) Provision for income taxes (dollars in millions) $ 3.2 $ 8.9 $ (5.7 ) (64 %) Effective tax rate 51 % 29 % 22 points 19 The increase in the effective tax rate during 2023 as compared to 2022 was primarily due to 1) the impact from the decline in income before taxes to $6.3 million in 2023 from $30.7 million in 2022 and 2) increased non-deductible stock compensation due primarily to the effect from the settlement of share-based awards in 2023.
A summary of our key metrics is as follows (dollars in millions): 13 As of Absolute Percentage December 31, Increase Increase 2022 2021 (Decrease) (Decrease) Contract value $ 353.4 $ 343.0 $ 10.4 3 % Client retention 74 % 78 % (4) points — Wallet retention 94 % 102 % (8) points — Number of clients 2,778 3,005 (227 ) (8 %) Contract value increased 3% during 2022 and this represents an 11-point decrease from the 14% growth in contract value that we generated during 2021.
A summary of our key metrics is as follows (dollars in millions): As of Absolute Percentage December 31, Increase Increase 2023 2022 (Decrease) (Decrease) Contract value $ 332.1 $ 345.4 $ (13.3 ) (4 %) Client retention 73 % 74 % (1) point Wallet retention 87 % 94 % (7) points Number of clients 2,449 2,778 (329 ) (12 %) Contract value during 2023 decreased by 4% compared to 2022 due to lower enrichment of retained customers and a decrease in client count.
All of our events during 2022 were held as hybrid events, consisting of both in-person and virtual experiences, while all of our events during 2021 were held as virtual events. Refer to the “Segment Results” section below for a discussion of revenue and expenses by segment.
Events revenues decreased 8% during 2023 compared to 2022. The decrease in revenues was primarily due to a decrease in sponsorship revenues. 17 Refer to the “Segment Results” section below for a discussion of revenue and expenses by segment.
Accordingly, we do not identify or allocate assets by reportable segment. 19 Research Segment Consulting Segment Events Segment Consolidated Year Ended December 31, 2022 (In thousands, except percentages) Research revenues $ 354,453 $ — $ — $ 354,453 Consulting revenues 41,559 111,028 — 152,587 Events revenues — — 30,747 30,747 Total segment revenues 396,012 111,028 30,747 537,787 Segment expenses (133,566 ) (56,889 ) (21,801 ) (212,256 ) Year over year revenue change 6 % 2 % 139 % 9 % Year over year expense change 13 % 10 % 72 % 16 % Research Segment Consulting Segment Events Segment Consolidated Year Ended December 31, 2021 (In thousands) Research revenues $ 325,340 $ — $ — $ 325,340 Consulting revenues 47,247 108,867 — 156,114 Events revenues — — 12,861 12,861 Total segment revenues 372,587 108,867 12,861 494,315 Segment expenses (118,155 ) (51,770 ) (12,709 ) (182,634 ) Research segment revenues increased 6% during 2022 compared to 2021.
Research Segment Consulting Segment Events Segment Consolidated Year Ended December 31, 2023 (In thousands, except percentages) Research revenues $ 334,396 $ — $ — $ 334,396 Consulting revenues 28,826 89,402 — 118,228 Events revenues — — 28,155 28,155 Total segment revenues 363,222 89,402 28,155 480,779 Segment expenses (132,444 ) (45,028 ) (20,557 ) (198,029 ) Year over year revenue change (8 %) (19 %) (8 %) (11 %) Year over year expense change (1 %) (21 %) (6 %) (7 %) Research Segment Consulting Segment Events Segment Consolidated Year Ended December 31, 2022 (In thousands) Research revenues $ 354,453 $ — $ — $ 354,453 Consulting revenues 41,559 111,028 — 152,587 Events revenues — — 30,747 30,747 Total segment revenues 396,012 111,028 30,747 537,787 Segment expenses (133,566 ) (56,889 ) (21,801 ) (212,256 ) Research segment revenues decreased 8% during 2023 compared to 2022.
Depreciation Depreciation expense was consistent in 2022 compared to 2021. Amortization of Intangible Assets Amortization expense decreased by $2.0 million in 2022 compared to 2021 primarily due to a certain intangible assets becoming fully amortized in 2021. We expect amortization expense related to our intangible assets to be approximately $11.9 million for the year ending December 31, 2023.
Depreciation The fluctuation for depreciation expense was immaterial in 2023 compared to 2022. 18 Amortization of Intangible Assets Amortization expense decreased by $1.2 million in 2023 compared to 2022 primarily due to a decrease in the amortization of a trademark intangible asset.
The increase was primarily due to (1) a $9.4 million increase in compensation and benefit costs due to an increase in headcount, commissions expense, benefit costs, and merit increases, which were partially offset by lower incentive bonus costs, (2) a $1.1 million increase in stock compensation expense, and (3) a $0.9 million decrease in allocated facilities costs.
The decrease was primarily due to (1) an $11.9 million decrease in compensation and benefit costs due to a decrease in commissions expense, headcount, incentive bonus costs, and benefit costs (due to the introduction of the flexible vacation and personal paid time off policy in the United States), (2) a $1.1 million decrease in professional services costs primarily due to a decrease in consulting fees and advertising costs, and (3) a $0.9 million decrease in facilities costs due to a decrease in the number of facilities being leased.
The increase in expenses was primarily due to (1) a $13.5 million increase in compensation and benefit costs primarily due to an increase in headcount, benefit costs, and merit increases and (2) a $1.1 million increase in travel and entertainment expenses.
Event segment revenues decreased 8% during 2023 compared to 2022. The decrease in revenues was primarily due to a decrease in sponsorship revenues. Event segment expenses decreased 6% during 2023 compared to 2022. The decrease in expenses was primarily due to a $1.1 million decrease in compensation and benefits costs primarily due to a decrease in headcount and benefit costs.
We calculate CV at the foreign currency rates used for internal planning purposes each year. For comparative purposes, we have recast historical CV at the current year foreign currency rates.
The revised calculation annualizes the entitlements for contracts greater than one year. In addition, we update CV each year for the foreign currency rates used for internal planning purposes. We have updated our CV for our 2024 plan rates.
In addition, we incurred $4.3 million of costs for severance and related benefits for the termination, in January 2023, of approximately 4% of our employees across various geographies and functions to streamline operations. Approximately all of the $4.3 million of the severance and related benefit costs incurred during 2022 are expected to be paid in 2023.
We expect amortization expense related to our intangible assets to be approximately $10.0 million for the year ending December 31, 2024. Restructuring In January 2023, we implemented a reduction in our workforce of approximately 4% across various geographies and functions to streamline operations.
The increase was primarily due to (1) a $3.5 million increase in compensation and benefit costs due to an increase in headcount, benefit costs, and merit increases, which were partially offset by lower incentive bonus costs, (2) a $3.3 million increase in professional services costs due to an increase in legal and contractor costs, (3) a $1.0 million increase in stock compensation expense, and (4) a $0.9 million increase in software costs.
The decrease was primarily due to (1) a $10.2 million decrease in professional services costs primarily due to a decrease in contractor costs, outsourced expenses, and consulting fees, (2) a $7.7 million decrease in compensation and benefit costs due to a decrease in headcount, incentive bonus costs, and benefit costs (due to the introduction of the flexible vacation and personal paid time off policy in the United States), (3) a $1.0 million decrease in facilities costs due to a decrease in the number of facilities being leased, and (4) a $0.7 million decrease in software costs.
During 2020, we recorded $2.3 million of right-of-use asset impairments and $1.1 million of leasehold improvement impairments related to a facility lease we no longer used as a result of the integration of an acquired entity from 2019. • Income Taxes .
As a result of closing the offices, we recorded restructuring costs of $2.3 million, which included $1.3 million related to right-of-use asset impairments and accelerated amortization and $0.6 million related to impairments of leasehold improvements. We also incurred $0.7 million in contract termination costs.
Consulting product revenues within this segment decreased 12% primarily due to decreased delivery of consulting and advisory services by our research analysts as they shifted more of their efforts to developing and delivering our CV products. Research segment expenses increased 13% during 2022 compared to 2021.
In addition, revenue from our subscription research products was essentially consistent as revenue growth from the Forrester Decisions product was offset by declines in our legacy research products. Consulting product revenues within this segment decreased 31% primarily due to decreased delivery of consulting and advisory services by our research analysts due primarily to lower client bookings for these services.
Removed
Our primary operating expenses consist of cost of services and fulfillment, selling and marketing expenses, and general and administrative expenses.
Added
We offer contracts for our Research products as either multi-year contracts or annual contracts, which are typically payable in advance on an annual basis. Subscription products are recognized as revenue over the term of the contract. Accordingly, a substantial portion of our billings are initially recorded as deferred revenue.
Removed
The decline in our CV growth rate was primarily due to a significant decline in our retention metrics and client count during 2022.
Added
Our CV products make up essentially all of our research revenues, and research revenues as a percentage of total revenues increased from approximately 66% in 2022 to approximately 70% in 2023.
Removed
As of December 31, 2022, approximately 32% of our CV was composed of our Forrester Decisions products, and we anticipate achieving approximately two-thirds of our CV in Forrester Decisions products by the end of 2023. The ongoing macroeconomic conditions and product transition are anticipated to pressure our key metrics through the first half of 2023.
Added
Effective for the fourth quarter of 2023, we made a minor modification to the calculation of CV based on the increasing percentage of multi-year contracts we are signing with clients, and to more closely align CV with the trends in the related bookings and revenue performance.
Removed
Future events could cause us to conclude that impairment indicators exist and that goodwill is impaired. Any resulting impairment loss could have a material adverse impact on our results of operations.
Added
Historically we have annualized the ratable revenue portion of our CV subscription products, while the entitlements included in the subscriptions (representing approximately 10% of the subscription) have been included in CV at their total value, as all entitlements in the contract were available for use during an annual period.
Removed
As of December 31, 2022 and 2021, we maintained a valuation allowance of $1.0 million and $1.1 million, respectively, primarily relating to foreign net operating loss carryforwards from an acquisition and as of December 31, 2021, also from U.S. capital losses from our investment in technology-related private equity funds.
Added
For comparative purposes, we have recast our historical CV and Wallet Retention for both the currency rate update and the annualization of entitlements.
Removed
During 2020, we recognized an income tax benefit in the amount of $1.0 million 15 from the utilization of a capital loss carryforward, and the reversal of the related valuation allowance, due to a sale of an investment within the private equity fund.
Added
Client retention decreased by 1 percentage point and wallet retention decreased by 7 percentage points during 2023 compared to 2022. However, client retention was consistent compared to the prior quarter and wallet retention decreased by 2 percentage points to the prior quarter.
Removed
Revenues from customers outside of the U.S. decreased 1% during 2022 compared to the prior year, and increased by 5% when excluding the effect of changes in foreign currencies. Research revenues are recognized as revenue primarily on a ratable basis over the term of the contracts, which are generally twelve-month periods.
Added
As of December 31, 2023 and January 1, 2024, approximately 62% and 66%, respectively, of our overall CV was in our Forrester Decisions product platform. In the longer term, we anticipate that approximately 80% of our CV will be in our Forrester Decisions product platform. The remaining approximate 20% of CV represents non-Forrester Decisions CV products, primarily reprints.
Removed
Research revenues increased 9% during 2022 compared to 2021, and increased by 10% when excluding the effect of changes in foreign currencies. The increase in revenues was primarily due to the combined effect of strong CV growth of 14% during 2021 and lower CV growth of 3% during 2022.
Added
During 2023, we recorded $1.9 million of right-of-use asset impairments and accelerated amortization and $0.7 million of leasehold improvement impairments related to closing various offices.
Removed
Due to the ongoing macroeconomic conditions and the Forrester Decisions product transition (as discussed under our key metrics above), we anticipate our CV growth rate to further decline in the range of flat to low single digits through the first half of 2023.
Added
Research revenues decreased 6% during 2023 compared to 2022 primarily due to the decrease in CV for the year, as discussed above. From a product perspective, the decrease in revenues was primarily due to a decline in revenue from our reprint product and our other smaller and discontinued products.
Removed
Consulting revenues decreased 2% during 2022 compared to 2021, and decreased by 1% when excluding the effect of changes in foreign currencies.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−1 removed7 unchanged
Biggest changeFor investment securities, the table presents principal cash flows and related weighted-average interest rates by maturity date.
Biggest changeFor investment securities, the table presents principal cash flows and related weighted-average interest rates by maturity date (dollars in thousands): Years Ended December 31, 2024 2025 Corporate obligations $ 16,037 $ 1,940 Federal obligations 1,993 — Total $ 18,030 $ 1,940 Weighted average interest rates 4.44 % 2.53 % 23
During 2022, we entered into several foreign currency forward contracts to mitigate the effects of adverse fluctuations in foreign currency exchange rates and we may continue to enter into hedging agreements in the future. In addition, transactions and account balances between our U.S. and foreign subsidiaries expose us to currency exchange risk.
During 2023, we entered into several foreign currency forward contracts to mitigate the effects of adverse fluctuations in foreign currency exchange rates and we may continue to enter into hedging agreements in the future. In addition, transactions and account balances between our U.S. and foreign subsidiaries expose us to currency exchange risk.
The securities, other than money market funds, are classified as available-for-sale and consequently are recorded on the Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a component of accumulated other comprehensive loss in the Consolidated Balance Sheets.
The securities, other than U.S. money market funds, are classified as available-for-sale and consequently are recorded in the Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a component of accumulated other comprehensive loss in the Consolidated Balance Sheets.
All of our debt outstanding as of December 31, 2022 was based on a floating base rate of interest, which exposes us to increases in interest rates.
All of our debt outstanding as of December 31, 2023 was based on a floating base rate of interest, which exposes us to increases in interest rates.
This exposure may change over time as business practices evolve and could have a material adverse effect on our results of operations. We incurred foreign currency exchange losses of $0.2 million, $1.4 million, and $0.6 million during the years ended December 31, 2022, 2021, and 2020, respectively. Interest Rate Risk .
This exposure may change over time as business practices evolve and could have a material adverse effect on our results of operations. We incurred foreign currency exchange losses of $0.3 million, $0.2 million, and $1.4 million during the years ended December 31, 2023, 2022, and 2021, respectively. Interest Rate Risk .
As of December 31, 2022, we had $50.0 million in total debt principal outstanding. See Note 4 — Debt in the Notes to Consolidated Financial Statements for additional information regarding our outstanding debt obligations.
As of December 31, 2023, we had $35.0 million in total debt principal outstanding. See Note 4 — Debt in the Notes to Consolidated Financial Statements for additional information regarding our outstanding debt obligations.
In addition, given the short maturities and investment grade quality of the portfolio holdings at December 31, 2022, a hypothetical 10% change in interest rates would not materially affect the fair value of our cash and cash equivalents. The following table provides information about our investment portfolio, for which all of the securities are denominated in U.S. dollars.
In addition, given the short maturities and investment grade quality of the portfolio holdings at December 31, 2023, a hypothetical 10% change in interest rates would not materially affect the fair value of our cash and cash equivalents.
Removed
Principal amounts by maturity dates (dollars in thousands): Years Ended December 31, 2023 2024 2025 Corporate obligations $ 11,982 $ 3,815 $ 1,906 Federal obligations — 1,985 — Total $ 11,982 $ 5,800 $ 1,906 Weighted average interest rates 3.45 % 2.88 % 2.53 % 22
Added
The following table provides information about our investment portfolio, excluding our money market funds, for which all of the securities are denominated in U.S. dollars.

Other FORR 10-K year-over-year comparisons