George Colony - Chairman and CEO Michael Morhardt - Chief Sales Officer Mike Doyle - Chief Financial Officer.

Bill Sutherland - Emerging Growth Equities Vincent Colicchio - Noble Financial Matt Hill - William Blair.

Good afternoon and thank you for joining today's call. With me today are George Colony, Forrester's Chairman of the Board and CEO; Michael Morhardt, Forrester's Chief Sales Officer; and Mike Doyle, Forrester's Chief Financial Officer. George will open the call. Mike Morhardt will follow George to discuss sales.

Mike Doyle will then follow Mike Morhardt to discuss our financials. We will then open the call for Q&A. A replay of this call will be available until November 28, 2014 and can be accessed by dialing 1-888-843-7419 or internationally 1-630-652-3042 and please reference the pass code 9233923 pound.

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.

Some of the important factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The Company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.

I'll now hand the call over to George Colony..

one, to understand our customers; two, to market and sell to those customers; and three, to build the technology to win those customers. And these three activities are highly interlocked and related. While others may take on one aspect of that work, Forrester uniquely connects all three.

So to conclude, while I am pleased with our direction, we've not yet achieved consistent performance across all parts of the business. We still have work to do. However, I'm encouraged by our progress so far in 2014, most especially with the coherence and power and market resonance of our strategy.

And that strategy will keep us on a steady long term goal of achieving 15% to 20% growth rates and 70% to 90% operating margins. Thank you very much. Now I'd like to turn the call over to Mike Morhardt, Forrester's Head of Sales.

Mike?.

Great. Thanks, George. Q3 represented continued progress on our path to double-digit growth. We continue to see signs and results for each of the key areas of focus for Forrester sales. As George mentioned, in Q3 four of our eight sales teams hit plan and five achieved year-over-year growth.

We saw continued improvement and significant year-over-year growth in our largest accounts and our largest sales teams, Premier in North American East and West.

After investments in the first half of the year, we saw improvement in our partner organization or our international business development team which is made up of non-direct sales teams in our emerging markets. We saw continued gains in our key verticals like government, financial services, healthcare, retail and our agency business.

And as George mentioned, we saw more wins coming as a result of our Age of the Customer go to market strategy. Key metrics also improved. Client retention rates were up for the third quarter in row. Discounting was down for the seventh quarter in a row.

Sales productivity is on track and the overall percentage of reps hitting their plan for the first three quarters is up 17 points over 2013 and at historical highs for the past four years. While we continue to see improvements in many areas of our business, we still have areas where we need to -- where we're working to change the results.

In Europe we saw improved results and year-over-year growth, but still not at expectation levels. We're encouraged by the performance of the teams with the new sales leaders and also excited about our new Head of European Sales starting this past week.

Our North American new business team continues to rebuild after attrition losses from earlier this year. We took the opportunity with these changes to improve our cost of sales metrics and coverage by introducing inside sales teams to both focused on our user and vendor markets.

And sales attrition was up in Q3 primarily driven by our continued focus on performance management and also our annual compensation plan which has encouraged low performers to self-select out. Sales expansion plans remain on track for the year. We did have a slowdown in July and August due to the accelerated attrition I just mentioned.

While we were down for the quarter, this is just noise as we expect to be on track for the year with more sales people added in various geographies to get us closer to our clients.

From recruiting to territory creation, the sales expansion engine is running as planned and we continue to see improvements in sales rep productivity for those reps who have joined us over the past 18 months. As we enter our Q4, our focus will be the same, thoughtful geographic sales expansion and a relentless focus on improving productivity.

We’re pleased with the progress we’ve made for the first three quarters of the year, but we still have a long list of areas we need to improve and we will turn our attention to those areas in Q4 and throughout 2015. And with that, I’ll turn it over to Mike Doyle for the financial update..

total revenues of approximately 310 million to 314 million; pro forma operating margin of approximately 9% to 10%; pro forma effective tax rate of 38%; and pro forma diluted earnings per share of approximately $0.94 to $0.98. We have provided guidance on a GAAP basis for the fourth quarter and full year 2014 in our press release and 8-K filed today.

Thanks very much. And now I'm going to turn the call over to the operator for the Q&A portion of the call..

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question here comes from Mr. Bill Sutherland from Emerging Growth Equities. Please go ahead..

Let's -- Mike Morhardt, if you maybe can talk about the hiring environment, it sounds like you're potentially going to accelerate a little bit this quarter?.

I think coming out of the summer months, we did see some people, as I mentioned in my comments, self-select out based on sort of the comp plan. We're on an annual comp plan where last year we were on a quarterly comp plan.

And the opportunity right now for us to add headcount in specific geographies and also build out some of these inside sales team is terrific. So working with Mr. Doyle here to plan that out for Q4 and also get a good start on Q1..

So the inside sales effort, can you give us a little color on kind of how that's focused and what you're trying to accomplish there?.

Sure. I think one of the things we're looking to do is look for opportunities to reduce cost of sale, but also improve effectiveness and coverage.

And have some history with inside sales teams and as we look at Forrester's model, it's a perfect model for some of our clients, some of the lower revenue clients whether it's on the user side or the vendor side are frankly better served with an inside model without as much travel and T&E and local support and that helps us in a couple of different ways.

It helps us to centralize the training and the expense associated with a sales team, but it also allows us to apply some of those dollars towards our sales expansion effort. So we're trying to do those in combination..

Has the portion of fully ramped reps as a percentage of your total increased at this point?.

It's up 4% year-over-year. But you're sort of chasing your tail a little bit. We're adding sales people as we go along.

As I mentioned, I'm really pleased to see the percentage of reps that are at plan and participating and that's usually a good sign for improving our tenure and which is something that we were talking about a year ago is trying to ensure that we have a strong tenure as we go into next year. So yes, so the ramping is coming along.

We're not improving I think on the speed of ramp, but we still have a lot of work to do there as well..

And finally, Mike, for you on Europe.

Do you have a sense of how receptive that market's going to be going forward and do you sense any headwinds?.

I'm sure there are pockets within countries and you know more of the economic trends than I do. But from what I'm hearing, our opportunity in Europe is large. It's a function of execution internally. Our message resonates over there. And I don't look at it materially differently than I look at the U.S.

I think we were missing a key ingredient and I think that is leadership. And so we're excited about our new Head of European Sales and we've made some changes in leadership over there in the last year and continue to monitor that and I think that's where the opportunity lies. I'm not worried about the sort of macroeconomic trends going on in Europe.

We've got enough opportunity even if there was a little bit of a downturn..

Bill, I was there last week and I should be there twice more before Christmas. We talked about this at the Board Meeting yesterday. But it appears to us the UK recovery continues to look pretty good, Benelux is good, Nordic is good, France a little bit, Germany is the worry.

Germany as you know was leading the continent, but it's -- they're zero or a little bit negative right now. So Germany is the worry. Strangely enough Spain appears to be recovering, Italy not as well. So it's sort of country-by-country at this point with the biggest worry being Germany. But our biggest market in Europe is the UK..

So George, there's -- you've obviously gotten a lot of the plan in place here, at least what you've telegraphed to us. And you're showing some modest improvement towards those goals of growth and getting back to the operating margins.

So how should we think about the pace of that based on what you're seeing and with all the internal things going on?.

We're not going to get there in 2015, Bill. But I think we'll make a good move in that direction in 2015..

It's Mike Doyle. We've got to get rid of the two Mike thing. But I'm not going to ask you to choose right now, because you might choose the other one.

I think that our goal next year is that obviously that we will grow revenue faster next year than we did this year, that we get margin expansion and obviously as a result we’ll get I think meaningful EPS improvement.

I know that’s vague and we’re obviously going to get more granular with the February call, but our intent is that next year we’re going to continue to probably hire at a faster pace in sales than we did this year. But that’s going to sort of bring more expense on the P&L. We’ll balance that with being smarter about our spending in other areas.

And I think the challenge as you look at it with ramp headcount growing at 4%, that’s the headcount that’s really going to drive growth in the first part of the year if you think about it, so that’s key.

We’re going to continue to hire the folks who bring onboard balance to this year and early next year, we get some benefit revenue wise in the last half of the year, but more importantly we'll look to see EV continue to sort of move up and move because that's a reflection of our bookings activity.

I think as George has pointed, I don’t think getting back to 15% to 20% revenue growth next year and 17% plus margins, but we want to make a good move next year towards getting us there. And then I think it accelerates at a faster rate as you get into healthy double-digit bookings, because then revenue is moving at a faster pace.

And with the exception of sales, the rest of the organization doesn’t need to grow at the rates of revenue. Right now we’re in this rebuilding mode and when you’re in low single digits and you’re rebuilding, it’s tough to get traction. But that changes as we continue to accelerate next year..

I mean if you’re able to obviously you’ll lift your -- sounds like you’re going to lift your sales hiring goals from this mid single digit level or the net growth and headcount and get more productivity. So, all right, we’ll wait for the details. I’ll let someone else ask. Thanks, guys..

Thank you. Our next question here comes from Vincent Colicchio from Noble Financial. Please go ahead, sir..

Mike Morhardt, you’ve obviously made some nice progress.

I'm just curious how far along you are in terms of -- maybe what inning is how you could put it – in terms of transition to the local model?.

With the seventh game tonight, that's a great analogy, Vince. To be fair, I think we’re probably in maybe the third or fourth inning here. I think there's lots of other opportunities.

Right now we’re just putting people into specific geographies to gain a level of coverage and we’ve sort of doubled down in certain markets and in certain cities where we’re adding two, three, four additional people to gain some scale.

The opportunity comes -- it gets greater as we can get to some scale within particular markets where we can start to focus on subsidiaries of some our larger companies and start to look at them in a local way. So there is a lot more down the road.

I am really pleased with what we’ve been able to do and the speed we’ve been able to do it at relative to our geographic expansion. But now as you start to build out these territories, you have to be very thoughtful about how productive they can be and how quickly we can get to that level of production.

And if we don’t want to make any missteps as we go along to put too many people in one particular town before the town is ready for it..

One comment here, Vince, and I don’t know, I don’t recall if we’ve talked about it on a call, but we’ve talked about it internally. When Mike came onboard, what he told us was getting to regional was at least a three to four year proposition that you didn't want to do it dramatically because it would disrupt too many client relationships.

So we always knew this part of the strategy would a little slower. So it feels like we’re kind of right where we thought we would be at this time..

And we're being opportunistic too. As I mentioned before, we had some folks self-select out, which was fine. But if that does happen, that allows us to move in a direction of localization more quickly..

Has the feedback on localization been as positive as you would expect?.

Yes, across the board. From a client perspective, a client may have seen a particular Forrester sales person two or three times a year. Given the circumstances, they might see him two or three times a week.

So those relationships lead to better enrichment opportunities, stronger renewal conversations, allows for what George mentioned on the cross sell side because we’re leveraging those into cross-selling opportunities and reference selling.

So when we're able to have that take place and it’s great, the clients love it and we’ve seen it in our retention rate for those types of clients..

I was at a event in DC, Vince, at a large large government organization and I went into the CIO's, he has a big floor there, and there actually was a desk on the floor where the Forrester sales person sits every week. So it’s amazing to see that and we can see the impact on those contracts..

In terms of Leadership Boards, you were down 2%.

Do you expect that to rebound going forward?.

I think, Vince, we saw soft bookings in the first half of year. But I like what’s going on with FLB right now and I think across the board in all syndicated products.

I think we’re working hard to – and this includes both RoleView and FLB as well as Data -- we’re seeing, which you don’t see yet, but we’re seeing more recent bookings activity moving back up, which is encouraging. So I think we're starting to get the right kind of traction there.

And I'm with George, his comments about more work to do, I think it's really in those areas, but progress already and that's where there's a pretty healthy sustained focus in the product organization on building those back.

We put a lot of energy getting consulting up and running and now a lot of that energy has shifted over towards syndicated products..

And Mike Morhardt, I'm sorry if I missed it.

Did you say how you performed versus plan in all regions?.

No, I did not. As I mentioned -- well I mentioned four of our eight sales teams..

Yeah, and we typically don't talk about our performance to plan, we typically talk about it relative to prior year. So you can give some....

Well, I think every quarter you were comparing it for all the regions versus the prior year then..

Yeah. So five of the eight sales regions were above year-over-year. As I mentioned earlier, we're really happy to see what took place in Europe. They grew year-over-year, but again not at levels we expected. We saw a slight miss in the Asia-Pac team, but that was really driven by some consulting deals and I'm not overly concerned about that.

I think Mike spoke a little bit about the events team which is one of the eight sales teams. And then the final part was the North American new business team. As I mentioned, we were out running some attrition there. We've rebuilt the team. We have a great group of people there I think that will be back on track.

But the biggest by far I think it represents the most -- the majority of our business, the biggest sales teams which are kind of our global accounts organization which is Premier and our North American East Group and West Group are both growing very well year-over-year..

Yeah. And Vince, just to give you a perspective, that's over 60% of our activity falls within those big three. I didn't want to cut off Mike, but we typically don't give a detailed plan target. So I think overall we feel good about where we are both versus prior year and our internal targets.

It's just we typically don't get too specific on the individual regions..

(Operator Instructions) Our next question here comes from Mr. Matt Hill from William Blair. Please go ahead, sir..

This is Matt in for Tim McHugh. I had a couple of questions around the project consultants. I think you had mentioned that you expect with the headcount built out there could be a moderation in revenue.

So I'm just wondering, going forward, how the pace of that is going to unfold over the next several quarters and how -- I think you mentioned mixed results within some of the teams and how that might maybe impact the growth there as well..

Okay. Yes, actually it's a really good question, Matt. So we're basically near complete in terms of fully staffing out our project consulting organization. We've gone -- just to give you a perspective -- the consulting group from year end, this is overall consulting, has gone from a headcount of about 55 to 110.

So it's essentially doubled and we don't have that many more heads to add to that organization. So, now if you think about what's happened during the course of the year, you have people coming on board and they ramp.

So we're still going to get a lift next year because you're going to have fully ramped consultants performing as well as we're going to get productivity out of the folks who've been here just a bit. It's just not going to be at the kind of levels that we saw this year where you had this quarter you have a 25% or 24% lift. That's going to be atypical.

I think that's more a function of increased headcount. And so next year I think what you're going to see is that that's going to temper a fair amount. We're still going to get a lift because we're going to get ramp improvement and sort of full year annualization.

But overall, I think that you're not going to see that kind of growth and ideally we're going to push more on the research side..

And then with that growth, how -- is there any impact on the margins here that we'll see as this group gets a little bigger and starts sustaining more of the revenue?.

Yeah, I think that's the challenge. Where we look at this is our operating proposition here was that by taking the longer term project consulting away from our research analysts, it would open up their time to both write more and better research and we're already seeing that occur as we speak.

That we think is going to have a very direct effect on our RoleView product and ideally get that back into some very healthy growth rate.

So it was a method to the madness, because on the surface you'd look at it and say if none of that happened then we've added heads and yet there will be some margin erosion because that many more heads delivering essentially consulting. It could have a margin erosion effect. We don't expect that to be the case.

We expect that the benefits of this are going to be driving RoleView research and our syndicated research is our most profitable product, period. And that's where we want to see the growth. And in order to get back to that, what we needed to do was open up the opportunity for our research teams to get away from project consulting.

They still do advisory, the short term one day to two day advisory, but get out of project consulting. So we're still working through and managing the short-term margin challenges. And certainly with this year we added headcount, we had margin erosion. We’ll expand our margins next year, but it’s still a challenge.

RoleView, as we continue to book business, the revenue gets reflected over time. So that will move back a little bit slower. So next year we’ll be feeling some margin pressure. We’ll expand, but we’ll expand in other areas. And I suspect you’re going to see the full model settle in in 2016 and in a reasonably good way..

And then one final one kind of what you’re mentioning there at the end with the RoleView revenue coming through to the syndicated research. Two quarters of agreement value kind of in the 7% to 8% growth range with research up about 2% revenue.

When can you see those growth rates kind of come together a little bit?.

I'd certainly like, Matt, sooner rather than later, right? But I think it’s -- I think we’ll start realizing the benefits of this. You should start seeing it as we roll into next year. A lot depends -- we’re coming up on our biggest bookings quarter. The fourth quarter for us is still about 40% of our bookings activity for the year.

So we’re coming up on a really important quarter. If we finish in a good way particularly on syndicated research, you will see AV move up in a meaningful way. Then we’ll look for -- you will start to see syndicated revenue start getting a little bit closer to that.

Now I would say that included in our AV numbers, we’ve got advisory unit, so that does have an impact, and those are recorded on the advisory side. So a lot depends on the mix of advisory and syndicated research within the package that's sold..

And at this time I am showing no further questions from the audience. I will now turn the call back over to Mr. Doyle for closing remarks..

Okay. Listen, thanks very much everyone for joining the call. And we’ll be reaching out to each of you to set up some schedules to get out on the road. So thanks again and we’ll talk soon..

And thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation and you may now disconnect..