Forrester Research Inc 2026 Q3 Earnings Call

Please go ahead. Thank you, and hello, everyone.

Thanks for joining today's call. Earlier this afternoon, we issued our press release for the third quarter 2026. If you need a copy, you can find one on our website in the Investors section. Here with us today to discuss our results are George Colony, Forrester's Chief Executive Officer and Chairman, and Chris Finn, Chief Financial Officer. Carrie Johnson, our Chief Product Officer, and Christophe Favre, our Chief Sales Officer, are also here with us for the Q&A section of the call. Before we begin, I'd like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expects, believes, anticipates, intends, plans, estimates, or similar expressions are intended to identify these forward-looking statements.

These statements are based on the company's current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission, and the company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. Lastly, consistent with our previous calls, today we'll be discussing our performance on an adjusted basis. This excludes items affecting comparability. While reporting on an adjusted basis is not in accordance with GAAP, we believe that reporting numbers on this adjusted basis provides a meaningful comparison and an appropriate basis for our discussion.

You can find a detailed list of items excluded from these adjusted results in our press release. With that, I'll hand it over to George.

Hello and thank you for joining Forrester's Q3 2026 investor call. Today I will be discussing four key topics. One, our third quarter performance and outlook for the remainder of the year. Two, new products announced in Q3. Three, the adoption and usage of Forrester AI. Four, important research that the company released in the third quarter. Third quarter CV declined 3.5% year-over-year, while our retention was in line with the previous two quarters at 89%, up from 86% in the previous year. Client retention returned to Q1 levels up to 78%, a one-point increase from the previous quarter and a four-point increase from the previous year. Total revenue decreased 9%, consistent with the prior quarter. Research revenue was down 3%, an improvement from last quarter, driven by strength in the technology vertical.

Consulting was down 31%, driven by continuing market uncertainty, along with our exit of the strategic consulting business earlier in the year. In Q3, we hosted sold-out events in APAC and EMEA with our B2B Forum in London and our AI Forums in Singapore and Sydney. The B2B Forum focused on the go-to-market singularity, the point where AI and changing buyer behaviors permanently reshape how companies win, serve, and retain B2B customers. The AI Forums mapped how clients can scale their generative and agentic deployments and how to use these new systems to drive revenue growth. Overall, Q3 performance was in line with our expectations with consensus beats on revenue, margin, and EPS. Turning now to product expansion. In Q3, we introduced a new research product, Team Solutions, that makes it easier for teams to collaborate and complete transformations faster.

Because our research is unsiloed, teams get the analysis, data, and frameworks to see all facets of a problem and to make decisions that will positively impact a wide range of business outcomes. Along with Team Solutions, we expanded our portfolio of AI products with the introduction of AI Access Plus. This offering enables clients to access our research via AI and schedule quarterly inquiry sessions with Forrester analysts. AI Access Plus will further democratize Forrester's research and advisory, reaching a broader range of executives within the organizations we serve. We continue to expand our product line, giving clients more choice and optionality, enabling Forrester to drive upsell within our client base. Turning now to an update on Forrester AI.

As I have talked about on previous calls, generative AI technology has fulfilled a dream for the company, enabling our clients to get advice and guidance faster and to empower them to create something new and original from our data. This is not theory. In a recent client survey of Forrester AI users, more than 70% of respondents told us that the tools helped them get more value from Forrester. Engagement with Forrester AI continues to grow, with the number of prompts in the third quarter increasing 13% quarter-over-quarter and 142% year-over-year. Total users of Forrester AI increased 6% quarter-over-quarter and 65% year-over-year. Here is a quote from a Forrester AI customer. "I use it all the time. It is a great way to summarize the research and to get instant answers.

It's a time saver and a game changer." Forrester continues to lead this space, and we see AI as a major driver of CV growth. In addition to enhancing the Forrester AI platform, we are making it available in more places, and we call this the Where You Work strategy. While the majority of clients access Forrester AI through the Forrester website, a growing number now use Forrester AI from within their corporate Microsoft Teams and Microsoft Copilot environments. In Q3, we have expanded the Where You Work program to include Anthropic's Claude. The Forrester AI plugin for Claude brings Forrester's trusted research, proprietary data, and analyst expertise directly into a client's Claude environment. We are not yet in full release on this product, launching the Claude plugin through a limited early adopter program.

Forrester clients value frictionless access to our research, and we are committed to delivering that promise. We are actively exploring a number of other platforms, including Slack and Gemini. I wanted to spend a few moments highlighting some recent groundbreaking research from Forrester. In the early spring of this year, we launched a research project to quantify how AI is going to disrupt specific sectors of the technology market. We built the Forrester AI Disruption Model and ran it against 17 business categories comprising 205 technology and service markets. Our model showed how AI will accelerate, disrupt, reshape, or destroy specific markets. Here are some of the conclusions. Providers of infrastructure, data, cybersecurity, and identity will benefit from AI deployment at scale. Labor-intensive knowledge work will face extensive disruption.

Transformation services, technology implementation, software development, and other similar markets will experience pressure as AI substitutes activities previously performed by people. Many enterprise software categories are more likely to be reshaped than replaced. Business applications, governance, process automation, customer experience, and others will evolve as AI continues to proliferate. Obstacles like switching costs, regulatory requirements, and accumulated trust will prevent wholesale destruction in this space, at least in the 2-3 year timeframe. In the third quarter, there was a groundswell of AI doomsday scenarios swirling through the media. Many of these claims were being propagated by the leaders of the frontier model companies. The self-serving motivation behind these declarations is noteworthy. With the frontier labs preparing IPOs, advocating regulation protects their competitive edge, making it harder for challengers to form and grow.

Our research team convened to analyze the warnings and technology, resulting in several new reports for our clients. Forrester is counseling clients to remain composed, patient, and relentlessly rational in the face of the doomsday narratives. While risk can never be fully eliminated, AI models do not independently have the resources to inflict serious societal damage. Frontier labs could create safeguards, but companies should not rely on them to do so. Instead, firms need to maintain a disciplined approach grounded in reality and not science fiction conjecture. They must learn how AI exposes and exploits weaknesses in software and take steps to bridge those security gaps. Companies can't assume any model is inherently safe, but they should also not shy away from this opportunity, especially based on the views of CEOs who may be more intent on protecting their leads than on facilitating safe implementations of AI in large companies.

Corporations should be planning and implementing their own private models that will serve their customers in a trusted and secure way. We also believe that the frontier model producers should be held legally liable for damages their products may inflict on companies, governments, or individuals. I wanted to highlight this moment because it demonstrates Forrester's value: imparting an objective and unbiased view, unafraid to draw different conclusions than the received wisdom being propagated by tech companies, the media, investment banks, and venture capitalists. Thank you for listening, and I will now hand the call over to our CFO, Chris Finn.