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The call presented a mix of near-term financial headwinds (quarterly revenue decline, negative Q1 net income, and consulting exits) alongside strong strategic progress: significant Forrester AI adoption, product integrations (Teams and Copilot), improved retention metrics, solid cash generation, and early sales momentum. Management raised confidence in guidance and emphasized initiatives expected to drive sustained CV growth, indicating a constructive outlook despite short-term profitability pressure.
For 2026 the company raised the low end of its revenue guidance and now expects full‑year revenue of $350–$360 million (down ~9%–12% versus 2025), with research expected to decline mid‑single digits, consulting down in the low‑20s, and events down in the mid‑to‑high‑teens; management still targets operating margins of 6.0%–6.5%, interest expense of $2.3 million, a full‑year tax rate of 29%, and EPS of $0.72–$0.82. In Q1 the business generated $85.5 million of revenue (down 5% year‑over‑year), saw CV decline 3% in the quarter but expects CV to be slightly up for the year, delivered $19 million of free cash flow (≈$25 million excluding a $5.4 million one‑time HQ CapEx), ended the quarter with cash >$145 million and debt of $35 million, and reported KPIs including client retention of 78%, wallet retention of 89%, multiyear deals representing 72% of CV, CV per client roughly $160k–$180k, and AI Access making up just under 5% of mix (targeting ~10% by year‑end).
Wallet retention improved 2 points sequentially to 89% (up 3 points YoY). Client retention rose 1 point sequentially to 78% (up 5 points YoY). These retention gains were cited as evidence of stronger engagement and improved onboarding.
Forrester AI usage hit an all-time high in Q1 with overall usage up 55% YoY and prompt volume up 65% YoY. Company upgraded to a new Forrester AI model (conversational, transparent reasoning, 197 languages) and launched integrations in Microsoft Teams and Microsoft Copilot, increasing access where clients work.
Generated $19 million in free cash flow for the quarter (approximately $25 million excluding one-time Cambridge HQ CapEx of $5.4M). Cash at quarter-end was over $145 million with only $35 million of debt and an extended credit facility maturity to March 2029.
Q1 CV productivity per rep was 6% higher than a year ago. AI Access adoption is accelerating (just under 5% of CV currently, expected to approach ~10% by year-end), and 40% of sales reps have sold AI Access. Event sponsorship bookings and attendee metrics improved (B2B event attendees up 10%).
Released over 420 research reports and datasets in Q1 and created 70 initiative blueprints (actionable, step-by-step guidance). Launched Forrester AI Use Case Catalog with 900+ use cases to help clients prioritize AI investments.
Management increased the low end of 2026 revenue guidance and provided a narrowed full-year revenue range of $350M to $360M (down 9% to 12% vs 2025), citing improving metrics and stronger sponsorship bookings. Full-year operating margin guidance of 6%–6.5% and EPS guidance of $0.72–$0.82 were reiterated.
Progress on strategic initiatives: executed retention life cycle improvements (faster onboarding), embedded AI where clients work, restructured sales territories and training to focus on growth industries (North America organized into six industries), and expanded product optionality (AI Access).
Adjusted operating expenses decreased 1% in Q1, headcount down 8%, and real estate costs reduced, contributing to improved operating leverage despite some one-time items.
Good afternoon, and thank you for standing by. Welcome to Forrester Research, Inc.'s first quarter 2026 conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to the Vice President of Corporate Development and Investor Relations, Edward Bryce Morris. Please go ahead.
Thank you, and hello, everyone. Thanks for joining today's call. Earlier this afternoon, we issued our press release for the first quarter 2026. If you need a copy, you can find one on the website in the Investors section. Here with us today to discuss our results are George F. Colony, Forrester Research, Inc.'s chief executive officer and chairman, and Chris Finn, chief financial officer. Carrie Johnson, our chief product officer, and Christophe Favre, chief sales officer, are also here with us for the Q&A section of the call. Before we begin, I would like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Words such as “expects,” “believes,” “anticipates,” “intends,” “plans,” “estimates,” or similar expressions are intended to identify these forward-looking statements. These statements are based on the company's current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statemen...