George Colony - Chairman, President, CEO Mike Doyle - CFO, Treasurer Mike Morhardt - Chief Sales Officer.

Tim McHugh - William Blair Bill Sutherland - Emerging Growth Vince Colicchio - Noble Financial.

Good afternoon, 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 to Q&A. A replay of this call will be available until May 29, 2015 and can be accessed by dialing 1-888-843-7419 or internationally 1-630-652-3042. Please reference the pass code 9233923#.

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 forward-looking 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. You may begin..

Thanks very much. Good afternoon and thanks for joining the call.

I will speak for a few minutes and give you an update on the start of our year, Mike Morhardt, our Chief Sales Officer will give a short briefing on his organization; Mike Doyle, Forrester's CFO will then give a financial review of the first quarter and three of us will then take questions.

Our plan for 2015 is to expand the company's operating margin, bookings, revenue and earnings per share. I'm pleased to announce that we are off to a good start and on track to hit our goals for the year.

On a macro level Forrester's strategy are helping our clients' win, so to retain customers is resonating globally and I wanted to give a little color from my recent travels. I visited large U.S. auto insurer last week that is looking to serve mobile customers. Forrester is helping the company identify, design and implement what we call mobile moments.

When customers need service and want instant connection through their mobile devices. I was recently with the CIO and CMO of one of the top-rated financial services company's in the U.S.

The company is using Forrester's research in consulting to increase the collaboration between its marketing and technology team, a structure we often find in high performing customer-obsessed corporate cultures.

I was at a large bank in Singapore a few weeks ago that has extensively used Forrester’s research to revamp and rebuild its customer experience, digital and in branch. The bank has increased its growth rate and financial results as its customer experience has improved.

The bank's Chief Executive Officer told me that CX is one of its top three priorities. The punch line in all of this is that Forrester's services are needed by leading companies as a used technology to expand market share. Our strategy has put us at the right-hand of our clients as they transform to thrive in the age of the customer.

Now, in the first quarter we saw progress across the core segments of our business. The research organization led by Cliff Condon is hitting its stride producing a consistent and rich portfolio of content for marketing strategy and technology executives. Research document production was up 50% as compared with Q1 2014.

Leadership was up 5% year-over-year and we continue to see the role view business accelerate.

Research highlights from the quarter included a sober assessment of salesforce.com's future prospects, advice to retailers to focus less on millennial buyers and more on shoppers over the age of 45 and a warning to marketers in China that they are woefully lagging consumer mobile adoption in that country.

Forrester's customer experience index is our newest syndicated data product. It measures the brand experiences of 935 companies and governmental organizations across 18 industries in the U.S., Europe and Asia.

Importantly our service built around the CX index informs clients on which knobs to turn and which levers to pull to improve their customer experience relative to competitors and best in class companies. The CS index is entering the market at the right time as customer experience has become an important priority for many companies.

CEOs from Anthem Blue Cross, Citibank, Delta Airlines and Sprint reported on their customer experience efforts during recent calls with their investors. Companies with higher CX index scores consistently outperform lower ranked companies in stock price appreciation.

Our consulting business grew double digits year-over-year, while we certainly have more to do tuning consulting operations it is becoming an integrated part of our overall business. As Mike and Michael speak about in a few minutes some of the basic measures of our business progressed forward in Q1.

Quarterly and rolling 12 months retention rates on a company and dollar basis both moved upward. In addition, our overall client count increased by 33 companies. Sales attrition dropped to its lowest level in four years, while the sales force is now larger than any time in the company's history.

Our new business sales team beat plan in the quarter as did our premier accounts grew. Finally, sales through our worldwide partner channel remained strong and this is a trend that has persisted over the last three quarters.

Europe continues to present its challenges including FX continuing sluggish economic growth and the ramp of new sales leadership in the region.

While Forrester is growing at double digits in Asia, the business environment in China remains complex as the government there continues to challenge multinational technology companies and many of them are our clients operating in that country.

So to conclude, we are off to a good start for the year, the sales force is growing and maturing, renewals rates are improving and new business sales are increasing.

We have recently rebranded the company, our unique value proposition now reads as follows; we work with technology and business professionals to do develop customer obsessed strategies that drive growth. We are different and are pointed to where our clients most need research and advice.

I'm going to be out in the road this quarter with Mike Doyle and I hope to see many of you over the next few months. Now, I'm going to turn the call over to Mike Morhardt, Forrester's Head of Sales.

Mike?.

Thanks George. In Q1 the sales organization continued to demonstrate strong progress towards our goal of consistent double-digit bookings growth. We continued to hear from our clients that the age of the customer go to market dynamic is changing their business models in the need for Forrester products and services continues to expand.

Q1 is now our second largest quarter for the year from a bookings perspective for the quarter, we saw five of seven sales teams achieve solid year-over-year growth. We saw a good performance in our large account team, the premier team, in our East Group and another strong performance in our partners' organization.

Our North American new business team had a very strong quarter with significant improvement in year-over-year performance and logo acquisition. We saw unbalanced performance in our teams in Europe and in Canada.

In each region we saw strong performances by some teams offset by under plan performances by other teams that brought down the overall performances in these regions.

Europe continues to be a work in progress under our new sales leader Jon McNerney, while Canada experienced delayed deals that pushed into Q1 that should recover by the end of the quarter. From a metrics perspective, we saw a continued progress. Client retention was up again for the sixth quarter in a row.

Sales attrition was down again with the last two quarters being two of the lowest in recent memory. Sales productivity improved quarter-over-quarter. We continued our sales expansion efforts in Q1 up 9% in quota bearing head count year-over-year.

Our goal is to grow by 10% in 2015 and potentially accelerate that expansion if the opportunity presents itself. We are continuing to expand the sales organization geographically which supports our goal of getting closer to our clients and prospects.

We also believe that we are under penetrated in most of our accounts and by adding new sales people we were able to drop the average number of accounts per rep which leads to better client retention, better cross-sell and stronger overall account growth. In 2015, as we mentioned earlier our sales strategy is not changing.

We are continuing to drive for improved productivity, focus on improving client retention rates and expand our sales organization through localization strategy as well as an inside model. With that I will turn it over to Mike Doyle for the financial update.

Great. Thanks very much Mike. I will now begin my review of Forrester's financial performance for the first quarter of 2015 including a look at our financial results, the balance sheet of March 31, our first quarter metrics and the outlook for the second quarter and full year of 2015.

Please note that the income statement numbers I'm reporting are pro forma and exclude the follow items, stock-based compensation expense, amortization of intangibles, reorganization costs, and net gains and losses from investments. Also for 2015, we continued to utilize an effective tax rate 38% for pro forma purposes.

For the first quarter of 2015, Forrester net revenue and pro forma operating margin guidance and exceeded the top-end of our earnings per share guidance.

This performance came despite significant foreign exchange headwinds and our organizational realignment in February, which eliminated approximately 50 positions to fund expansion of our sales and delivery resources.

We are seeing healthy growth in our key sales regions and products which is building the foundation for double-digit growth in revenue and pro forma operating margins in 2016. Now, let me turn to a more detailed review of our first quarter results.

Forrester's first quarter revenue increased by 3% to $75.2 million from $73.1 million in the first quarter of 2014. On an FX neutral basis we grew at 6%, however, the continued strength in the U.S. dollar resulted in the 3% negative impact to our overall revenue growth.

First quarter research services revenue increased 2% to $51.9 million from $50.8 million last year and represented 69% of total revenue for the quarter. On an FX neutral basis, research services revenue grew by 6% driven by a research and data offerings.

Our first quarter advisory services and event revenue increased 5% to $23.3 million from $22.3 million in the first quarter of 2014 and represented 31% of total revenue for the quarter. On an FX neutral basis, advisory services and events revenue grew by 8% led by our now fully ramped consulting group.

International revenue mix was 23% for the period ending March 31, 2015 compared to 27% in the same quarter of last year. Adjusted for foreign exchange 25% of the revenue was generated outside of the U.S. reflecting higher growth rates in the U.S. compared to Europe and Asia Pacific.

I would now like to take you through the activity behind our revenue starting with research. Forrester had 59 playbooks at the end of the first quarter and we added 500 new documents to our role view library. In addition, we hosted 37 webnairs for our clients during the first quarter.

And as of March 31, 2015, the top three research roles, the CIO role with 8725 members, application development and delivery with 6137 members and the CMO with 4406 members. Forrester leadership boards a pure offering for senior executives remains a focused area following the reorganization effort that commenced earlier in the year.

As of March 31, 2015 Forrester leadership boards had a total of 1522 members down 15% compared to the same time last year with declines in both BT and M&S driven mainly by our efforts to right-size geographically and to align our counsels to the opportunity we continue to see in the marketplace.

Our data products provide our B2B and B2C clients with actionable insights that complement our research and consulting services in a way that cannot be duplicated. On a year-over-year basis revenue increased by 4% for the first quarter and 8% on an FX neutral basis driven by our CX index offering.

We are very encouraged by the initial client response to this product which continues to gain traction in the marketplace. In our advisory and consulting businesses, total revenue for the first quarter increased by 8% compared to the prior year and 11% on a FX neutral basis.

Each quarter an increase in amount of delivery ships to our consulting organization from our analysts. As George mentioned, the benefits to this strategy are becoming more visible in both the quantity and the quality of our research production and in the response from our clients to our new consulting practices.

In our events business, we held two forums in the first quarter of 2015, in Scottsdale the forum for sales enabling professionals and in Shanghai, the summit for marketing leaders. Events revenue declined on a year-over-year basis by 12% in the first quarter due to lower attendance at both events.

As we mentioned in our Q4 call, we brought in a new leader for the events sales team and she has made changes which will impact near-term results. We are confident as we build this team, we will return to healthy growth rates in the event business. I will now highlight the expense and income portions of the income statement.

Operating expenses for the first quarter were $70.1 million up 1% from $69.7 million in the prior year and up 4% on an FX neutral basis.

Cost of services and fulfillment increased by 4% or 7% on an FX neutral basis due mainly to higher headcount in our consulting group and also due to annual merit increases, higher incentive bonuses and higher survey cost.

Selling and marketing expenses decreased by 1% but increased 2% on a constant currency basis compared to the same period last year. Higher headcount and sales as well as annual merit and higher commissions were partially offset by a non-recurring fee in Q1 of 2014 to terminate a contract within an independent sales partner.

General and administrative costs increased by 2% or 5% on an FX neutral basis due to higher headcount, annual merit and higher incentive bonuses and partially offset by lower technology and recruiting costs.

Overall, headcount was essentially flat compared to the first quarter of 2014 though it decreased by 3% compared to the fourth quarter as a result of reorganization that we previously announced. At the end of the first quarter, we had a total staff of 1305 including a research and consulting staff of 485 and sales staff of 508.

Research and consulting headcount was down 1% year-over-year and down 6% sequentially. Sales headcount increased by 3% versus prior year and it was essentially flat sequentially. Sales rep headcount increased by 9% compared to the first quarter of 2014 and by 2% sequentially.

Operating income was $5.1 million or 6.8% of revenue compared with $3.4 million or 4.6% of revenue in the first quarter of 2014. This is an increase of 52% year-over-year. Other income for the quarter was $282,000 compared to a negative $64,000 in the first quarter of 2014.

Net income for the first quarter was $3.3 million and earnings per share was $0.18 on diluted weighted average shares outstanding of $18.4 million compared with net income of $2 million and earnings per share of $0.10 on $20.2 million diluted weighted average shares outstanding in the first quarter of last year.

Now, I will review Forrester's first quarter metrics to provide more perspective on the operating results for the quarter.

Agreement value which represents the total value of all contracts for research and advisory services in place without regard to the amount of revenue that has already been recognized as of March 31, 2015 agreement value was $232.9 million up 4% from the first quarter of 2014 and up 5% on a constant currency basis.

As of March 31, 2015, our total for client companies was 2464 up 33 from December of 31, 2014 and essentially flat compared to the first quarter of 2014. Client count unlike our retention and enrichment metrics is a point in time metric at the end of each quarter.

Forrester's retention rate for client companies was 79% as of March 31, 2015 up 3 points from the prior quarter and up 5 points compared to last year. Our dollar retention rate increased by 2 points to 90% compared to the prior quarter and by 3 points compared to last year.

Our enrichment rate was 97% for the period ending March 31, 2015, unchanged compared to the prior quarter and compared to last year. We calculate client and dollar retention rate and enrichment rates on a rolling 12-month basis due to the fluctuations which is going to occur between quarters with deals that closed early or slip into the next quarter.

The rolling 12-month methodology properly captures the trend information. Now, I would like to review the balance sheet. Our total cash in marketable securities at March 31 was $111 million which is an increase of $6.5 million from $104.5 million at year end 2014.

Cash from operations was $16.3 million for the quarter as compared to $33 million in the first quarter of last year.

The decrease in cash from operations due primarily to three factors; as we discussed on our Q4 call we shifted the renewal of approximately $10 million of contracts from December 2014 into the first quarter of 2015 due to the use of a year plus contract back in December of 2013.

The shift resulted in a push out of the initial customer invoices related to these contracts and resulted in lower cash collections during the first quarter of 2015.

In addition, we had a degradation in our accounts receivable compared to 2014 and we also had tiny differences on certain employee benefits and other payment which will reserve in later quarters. Overall, we are projecting cash from operations for the full year 2015 to be consistent with the amount generated in 2014.

Moving on to other cash flow activity during the quarter, we received $1.3 million in cash from options exercised and our employees stock purchase plan for the quarter as compared to $1.6 million in the first quarter of last year. We also paid a dividend in the first quarter which amounted to $3.1 million or $0.17 per share.

Accounts receivable at March 31, 2015 was $50 million compared to $49.1 million as of March 31 last year. Our days sales outstanding at March 31, 2015 was 60 days compared to 61 days at March 31, 2014. And accounts receivable over 90 days was 5% at March 31, 2015 compared to 4% at March 31, 2014.

Deferred revenue at March 31, 2015 was $150.4 million down 6% compared to March 31, 2014. Deferred revenue plus future AR was down 4% compared to the prior year. Our future AR balances are amounts to be invoiced in the future for clients with multiyear deals or schedule payment terms.

The year-over-year decrease in deferred revenue plus future AR was due entirely to the effect of foreign exchange. In closing, this was a good start to 2015.

As I mentioned at the beginning of my comments there are few challenges to overcome in the quarter where we still delivered revenue to the guidance levels and delivering operating profit at the upper end of guidance and exceeded earnings per share guidance for the quarter.

We continue to focus our energy on improving areas we have identified on in previous calls. Our European business which is showing progress in key regions and our FLB and event businesses which we are realigning to accelerate growth.

What's most encouraging is both Mike and I highlighted is that we continue to see improving customer retention metrics and our large sales regions and core products are delivering strong performance. The age of the customer strategy is clearly resonating with clients.

Now, let me take you through the specifics of our guidance for the second quarter and full year 2015. And as a reminder, our guidance excludes the following; amortization of intangible assets which we expect to be approximately $200,000 for the second quarter and approximately $1 million for the full year 2015.

Stock-based compensation expense of $1.4 million to $1.6 million for the second quarter and $9 million to $9.5 million for the full year 2015. Reorganization cost of $0.3 million to $0.5 million for the second quarter and $3.7 million to $3.9 million for the full year 2015 and any investment gains and losses.

Forrester's providing second quarter 2015 financial guidance as follows; total revenues of approximately $83.5 million to $86.5 million; pro forma operating margin of approximately 10.5% to 12.5%; pro forma effective tax rate of 38% and pro forma diluted earnings per share of approximately $0.30 to $0.34.

Our full year 2015 guidance is unchanged and is as follows; total revenues of approximately $325 million to $333 million; pro forma operating margin were approximately 9.5% to 10.5%; pro forma effective tax rate of 38%; pro forma diluted earnings per share of approximately $1.05 to $1.13.

We provided guidance on a GAAP basis for the second quarter and full year 2015 in our press release today and our 8-K as well. Thanks very much. And I'm now 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] And our first question comes from Tim McHugh with William Blair..

Yes.

Can you just reconcile for me your comment around the overall sales number again that gets reported and then the sales quota headcount of 9% I guess, what's the difference in the growth rate there?.

Yes. Tim, its Mike. We started to get into the habit of trying to breakout quota carriers versus overall sales headcount because it's Mike adjust and streamline some parts of his operation, the primary driver for bookings and ultimately revenue for us is, are we growing our quota carrying headcount.

So when you look at sales that sort of how we break that out and try and draw attention to the fact that quota carriers are up net 9% versus year ago sort of 2% sequentially and essentially what it implies is that in the support areas and management side that those are growing obviously flatter or in some instances down just a little bit..

Okay. And you talked about the leadership boards and I guess the – you give us metrics they are helpful each quarter in terms of the – I guess the number of members, but, how big of an impact and how much of a drag is that in terms of the growth, the revenue growth that we are seeing now.

I guess I don't have a great sense of how to size that relative to the rest of the business..

I can talk a little bit. This is Mike, Tim. I can talk a little bit about the FLB program in general. I think we mentioned on previous calls that we are in the progress of doing some pricing and packaging changes for our products FLB is one of those. FLB previously was sold in some cases as a bundle.

I mean as you know, FLB has kind of a fixed cost to it and these bundles made the FLBs highly discountable. And so for those particular clients where we found highly discounted FLB, we migrated those clients towards just kind of our core product or core role view product and just head them as members. So we saw a drop there.

But in some cases that was picked up on the role view side..

So the idea is that, on a net basis to the total numbers that's not something we should – I mean, and just moving it around?.

It is moving it around. In many cases we saw that migration where a client would move over to role view. And so the role view number would increase at the expense of the FLB number..

Some of this – this is George here Tim. Some of this is about right sizing FLBs in Europe. We had too many FLBs. I think we have gone from 6 to 4 in Europe. And this is a good thing. This is really a drive for profitability as Mike talked about. So it's looking to right size FLB.

And it’s looking to make FLB put it on a more profitable path as we move forward..

I will tell you Tim that it is look we factored into the fact that it is going to be a little bit of a pull on revenue for us for this year both. And we assume that both for events and FLB because of the work that we were doing. We sort of assume that that was going – in some cases you shrink a little bit to grow more aggressively.

So sort of – you take out some immediate revenues, as you consolidate accounts as to George's point. But, then you concentrate and ideally that's going to accelerate in a big way. But in the near-term it's a little bit of a drag on revenue growth.

That's why I say in the comments, our core products like role view and all are growing at really at a good pace and that's what we want. So we are encouraged by that. And we are confident we are going to get events businesses and FLB back on we consider to be more acceptable aggressive growth tracks..

Okay. And then lastly, just the guidance for the year, I guess you kept it kind of the same but I guess in particular on revenue given the incremental drag on currency versus what you had assumed before.

And I guess looking at where Q1 and Q2 shook out, I guess as I model maybe I'm not accurate here, but it feels like the middle top year-end is tougher given the currency trends you had.

So any comment given currency, I guess where we should be looking within that kind of full year range for revenue?.

Yes. I think that's a fair comment Tim. We did wrestle with that my team and I, which is – that's the more difficult. And we have some offset. So earnings is a little bit easier because here we have a little bit of a natural head with expenses in those countries.

But, I would say yes, I mean I think that to try and think – to stretch to the upper end is going to be – we are really like everyone else out there that has businesses outside the U.S. you are fighting an uphill battle there is no question.

But, we are comfortable leaving full year guidance where it is, I think, yes, to try and get to the upper portion of that guidance that's worth because you are really going to have to be working it a little bit of over time to cover the downside and year on particular for us..

I think its surprising everyone, Tim. I mean the banks – another one tall branch in the euro and our Board member from Europe, we had Board meeting yesterday, he said it will be a parity by the middle of the year, end of the year. So it's surprising everyone..

All right. Okay. Thank you..

Thanks Tim..

And our next question comes from William Sutherland with Emerging Growth. Please go ahead..

Hi. Thanks. Just following up on Tim's question.

Can you kind of size the FX impact for the year, Mike as you guys model it?.

I think that as we looked at our guidance and again I will tell you this is for my end, we are not FX experts. And what I'm realizing by the way the people who they say are on an EBIT, [happen to carry that monitor] [ph] it is a tough yield.

I think that the first quarter FX dropped much quicker than we had expected for the euro in particular and the Canadian dollar. I think that as I look out in rates that we targeted versus what I look at or the experts have as full year.

I think that probably the bulk of the impact is going to be more first half loaded assuming and this is a big assumption Bill that that the euro sort of settles in at $1.05 to $1.06, right?.

Correct. That's all I can do..

Right..

A little bit lower..

Yes. So what battle we fighting we maybe for profit as to maybe $1.5 million to $2 million that we're having to cover just due to FX, the net effect of foreign exchange. I think – and so that's how we think about it as we look at our quarter Bill, it was about net to EPS was probably about $400,000 to $500,000.

So it's difficult to predict though and I think that we are looking for selling at some point, but to George's point, our Board member is a little bit more pessimistic than the current forecast we have. So we will see.

It's for us it's primarily the euro that has the biggest impact but pound and the Canadian dollar also are right up there in terms of their impact both from a revenue and –.

[indiscernible].

Yes..

Well, I mean not the slice of too thin, but by looking at your second quarter guidance, which is at the midpoint pretty close to what you did in the first quarter, you do have a heavier burden in that quarter than the first from FX? So in other words, FX neutral here, you are starting to see a little pick up that quarter and then because I think what everyone is wondering is about the big step up in the back half just backing into back half from the full year..

Right. From a revenue standpoint that's right. I mean think that our expectation is that Mike's plan is built on continued growth in bookings so that we have ideally a good Q2 and we start reaping some of the benefits of that syndicated revenue in the back half of the year and you are right. We are fighting a little bit foreign exchange headwind.

So yes, absolutely..

I guess in your consulting business you don't have enough FX issue, not much do you?.

Well, we still do. We do consult. As we consult out in the U.S. –.

I wasn't sure actually. Okay, okay..

Yes. So we do have a meaningful impact I think for the quarter, it was roughly 3 points that impacted the consulting business when we looked at their revenue. So it is meaningful..

Yes. What was the consulting growth, I missed it as you went through that..

Consulting and advisory I believe though it was 8% and then on FX neutral is at 11% was the number..

Okay.

Did you add consultants again, are you level kind of where you were?.

Actually in the near term the peer consulting headcount from end of year to where we are today is actually down a bit as we right size some of the groups' practices kind of growth where we probably over hired. We over anticipated demand.

And where we are now I think is the net effect is that we will probably you will see us hire as we go now and will be growing that business just not nearly at the rate we grew last year. Last year was let's get them all on board and that was a great rest of year.

But, if you look at just sort of pure consultants Bill, we are down about 15 heads from January of this year as we right-size some areas that –.

That the word full headcount consulting for the plan..

Yes..

Okay.

And on the CX index, is pricing there or is the fail there, more typically a bundle or are you selling that standalone quite a bit?.

It's coming off forms Bill. We have clients that buy the CX index standalone, sometimes they are looking at industry and then many times it's bundled in with consulting. Sometimes analyst workshop does well. So it's kind of coming in all different forms where we are not turning down any of it.

But, it depends on where the client is from a maturity perspective..

The good news is that these are becoming [indiscernible] we got a feedback from the Salesforce as well. It is a very needed product. There is a lot of customer experience work being done in these companies.

But, especially with CEO, CMO asked very good question, how we are measuring this? Exactly, what is the benchmark today and what it looks like next year and so it's a very germane product to every one of our -- at least to clients that I'm visiting..

Do you find as a benchmarking tool that it helps to drive the consulting?.

Absolutely. There is a bigger selling price around CX and we also – the CX analyst group is one of the large groups in the company so their advisors also driven by this work. So it's a -- little bit of synergy here..

FLB in our events, in our research all the different products and services we offer CX is definitely high..

I mentioned this in my remarks, but it's incredible to look at the top 20 CX growing company versus the bottom 20. And look at the start price appreciation differential. It's extraordinary. I mean almost feel like launching hedge funds..

What about that?.

That's not an announcement by the way..

It's incredible to take one of those..

All right. Thanks everybody..

Thanks Bill..

And our next question comes from Vincent Colicchio with Noble Financial..

Yes. If I look at your combined number for research and consulting, if I take out the consulting, right sizing, there was a meaningful drop sequentially. Is that, was there an increase in turnover or was that a right sizing to research as well..

Research as well was down a bit Vince from a headcount standpoint. Consulting was disproportionately larger than the research organization. The year-to-date change I think on our total research headcount was about 5 heads so..

What's going here, headcount research Vince is that as consult -- more consulting moves over to the consulting organization, we are looking to fix -- generally fix headcount in research because it's a syndicated world there obviously and to get higher leverage from the research headcount.

So if you look at even into 2016, we don't see any appreciable bump up in headcount and research..

Okay.

And on the playbooks, I missed the number at the end of the quarter, what was it?.

59..

And that's versus 67 in – if I remember right you are purposefully reducing the numbers, is that right?.

I don't think it was 67. Our target was –.

It was in the 60s, Vince that's right. So I think we are constantly looking at those playbooks and evaluating, again, they are targeted. So it's very much evaluating where we see customer need and demand. So in some instances those are ones that are alive, it doesn't necessarily include those that would be maybe in a refresh mode..

The goal here Vince is that each of the research groups will have approximately 5 playbooks. So 60-ish is the number..

Okay..

That is where it stays for us..

And then in your prepared remarks you mentioned that China is a – it's tough market and then Canada you had some headwinds, I'm just curious, are those – how large are those two markets as a percentage of revenue, I would imagine they are pretty small.

Just wondering if I should be concerned about the impact?.

I would say China less so Canada as a percentage like, it's still not dominating. But, it's a good place market for us. Again, it's not something that's going to completely tilt us off the access here. I mean those are still markets that are just not that big. But, China I would not get overly concerned about right now.

Canada in part was – they have been such a consistently good player. This was a one-off. So the delta, the variance is what really threw us a bit so..

That market was really shocked by energy prices..

Yes..

Sounds like you feel pretty confident about that business coming back..

We do. We absolutely do. I think the team we have in Canada is a good team. And I'm comfortable that they are going to find their way back. I know they are getting a lot of prodding from Mike to get there quicker. And that's a good thing. So one other quick comment Vince actually – and I did not capture this but.

The other place and because they are included in our research number, the FLB headcount that was a meaningful reduction in the February action. So you are right. I mean research per se was not but when you add the FLB team, the advisors that was meaningful number. So that's what's driving that..

Okay. So that's included..

Yes. It is..

Okay, okay. Thanks for that clarification. I will go in the queue. Thanks guys..

Thank you..

Thanks Vince..

We have no further questions at this time. I would like to turn the call back to Mike Doyle..

Okay, great. Thanks everyone for joining the call and as George mentioned we will out on the road. We are making appointments to meet with as many folks as possible. So we appreciate your interest and we will talk to everyone soon. Thank you..

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect..