Good afternoon and thank you for joining today's call. With me today are George Colony, Forrester's Chairman of the Board and CEO; Carrie Johnson, Forrester's Chief Research Officer; and Mike Doyle, Forrester's Chief Financial Officer.

George will open the call, Carrie will follow George to discuss the research and Mike Doyle will discuss our financials. Kelley Hippler, Forrester's Chief Sales Officer, will join the presenters, and we will then open the call for Q&A.

A replay of this call will be available until June 7, 2020 and can be accessed by dialing (855) 859-2056, (440) 453-73406. Please reference the conference ID 7788755. 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 expect, believe, anticipate, intend, 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 obligations to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

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

research, consulting and event. I'd like to highlight a few client wins through the close of Q1. Our largest growth deal in the quarter came from $1.3 million enrichment with the National Oceanic and Atmospheric Administration. Our new business teams have shown surprisingly strong momentum as we enter Q2.

An example of a $100,000 win was Fairview Health Services late in Q1. Growing our multiyear deals has become a key priority of our sales organization. For example, Cognizant recently signed a multiyear deal for $1.2 million. And in the quarter, in Q1, we closed 45 different global deals with Microsoft for a total of $4.5 million.

And as a final note, I wanted to talk about Forrester's financial position. We continue to retire debt incurred with the SiriusDecisions acquisition. In Q1, we paid the remaining $14 million on our revolver while maintaining full access to the $75 million facility. We have $70 million in cash.

In Q1, we generated $22 million in cash, and we expect to have positive cash flow for the year. So to conclude, I wanted to reiterate my earlier points. One, we will manage our way through this pandemic and recession. Two, companies are accelerating digital transformation. This is in Forrester's sweet spot.

And three, the company will emerge in a stronger position. I hope that you and your families are staying healthy and well through these times. And now I'm going to pass the call over to Carrie Johnson, Forrester's Chief Research Officer.

Carrie?.

Thank you, George, and good afternoon, everyone. As a quick introduction to me, I'm coming up on 22 years at Forrester, where I've served nearly every role in the research organization, including 10 years as an analyst covering digital retailing. I then went on to lead research teams and the content portfolio for all of our research.

I've been part of most strategic transformations of Forrester's business and I've led many clients through them as well, pivoting Forrester's research products and services in response to customers' needs. I'd like now to build on some of George's comments about engagement with our research.

Although COVID-19 has negatively impacted businesses on a global scale, the pandemic has pushed many customers test transformations and initiatives into the spotlight for our clients. From remote employee and call center activation to digital transformation acceleration. Customer obsession right now is critical to survival for firms.

Here are some examples of how our research and our events products are delivering high-value for clients and where we're seeing increased engagement levels. First, our research product. As George mentioned, this is truly proving to be a golden age for research.

Our research teams have had a fast, coordinated response to COVID-19, publishing our first guide to pandemic planning back in early March. Our security and risk team first wrote this pandemic research 10 years ago. Our expertise and experience is very deep here.

We also launched a first of its kind employee experience survey that we feel that every two weeks to take the pulse of business employees worldwide as they cope with this pandemic.

We've used our new digital platform as a hub to publish short-form content daily that help our clients respond thoughtfully and quickly in critical areas like leadership, business continuity, customer experience, collaboration tech, virtual care and yes, virtual events.

We're demonstrating the value of research and insights embedded into our clients' operations. The results have been higher-than-average engagement levels with our clients. What we're finding is that with clients at home, they're needing advice on working through this uncharted territory. And they're engaging with us at record levels.

Here are some details. Site visits to read our research has increased year-over-year, and they continue to rise. COVID-19 blog post have led to a 40% increase in blog traffic. Posts on communications and then one by George on the four phases of the pandemic, have led to the highest ever views in Forrester history.

Demand for our time with our analysts has also increased. The pandemic has led to an increase in request for inquiry, which are our 30-minute calls with analysts. And client attendance at our analyst-led webinars hit a record high in April. They're up over 100%.

And finally, virtual sessions with our exclusive executive communities have seen a more than 50% increase in attendance. Now on to events. Our two biggest events are in Q2. One is North American Summit, which George talked a bit about. This is the must-attend event for sales, marketing and product professionals. And the other is CX North America in June.

As George said, rather than canceling, we decided to be bold, the customer stuff and we pivoted fast to virtual events with innovative and immersive experiences. North American Summit concluded today and the results are quite positive. George mentioned we match the in-person attendance from 2019.

The virtual North America Summit proved to be an engaging experience, hosting nearly 150 live stream presentations, including keynotes by Brene Brown and also a concert series featuring Adam Levine. We had a lively marketplace that had nearly 50 paid sponsors, many of which have already renewed their spot for our 2021 event.

The virtual showroom floor saw 100,000 visits from attendees. Through this virtual marketplace and also our content marketing products, we've been able to enable clients to generate pipeline and replace demand that vendors, in particular, are losing when they've had to cancel their own in-person events.

To summarize, Forrester clients need our help as they accelerate their customer obsessed initiative, and they're highly engaged with us. We believe that our Herculean efforts to be by our client side was timely, relevant and actionable advice every day will position Forrester well in the future. With that, I'll turn the call over to Mike Doyle..

revenues of $410 million to $430 million; operating margins of 7% to 9%; and effective tax rate of 31%; and diluted earnings per share of between $0.90 to $1.20. As I conclude my prepared remarks, I want to reiterate what George and Carrie have mentioned. Forrester will manage our way through this.

We move swiftly to enact expense reductions, which will help offset anticipated revenue softness in 2020. Pandemic will accelerate customer-obsessed digital innovation. As was mentioned by Carrie and George, we are leading by example here and will continue to help our customers do the same. Forrester will be even stronger coming out of this pandemic.

I agree with Carrie and George that Forrester products and services will be in greater demand as a result of the impact of the pandemic on companies whose business models are proving to be inadequate for the new normal. Thanks very much. And now I'm going to turn the call back over to the operator for the Q&A portion..

[Operator Instructions] Your first question is from the line of Andrew Nicholas [William Blair & Company]..

Hi good afternoon. Hope everyone's safe and healthy. Just wanted to start with a little bit more detail on the guidance.

Just wondering what are you implying for the events business? I know that you said it was 25% of the guidance reduction, but are you expecting the rest of the year to be virtual? And if you could make any comment on what that profitability looks like, that would be helpful..

Yes. This is – Andrew, this is George.

Kelley, you want to take that?.

Yes. George, I'll tackle the profitability aspect of it and the guidance aspect of it, which may be better.

Kelley?.

Okay..

Sure. Thank you, Andrew, and thank you, George. So we are prepared to make a pivot to digital if we need to. As of right now, we do still have our full roster of events on the calendar, and we're going to continue to monitor the situation, but having built out this capability, we do now have the option.

So I know as Mike had alluded to, and I'll let him follow-up. We have a couple of different scenarios that we've modeled out. So I'll let him address specifically, which is built into the revised guidance. So Mike, I'll throw it over to you..

Thanks. And thanks for the question, Andrew. The low end of our guidance reflects all of our events going virtual for the full year. And to give you some perspective on that, from a revenue standpoint, that drops revenue, probably we get about 20% – $0.20 on the dollar from a revenue perspective on that when we go virtual.

And again, we're still learning this. To the points that Carrie made, we had a very strong showing with our virtual event and summit, and we're seeing the same as we come up on CX New York. So low-end reflects all virtual profitability on that. It compresses a significant amount particularly the summit is a very high-margin piece of business for us.

And I would say it probably shrinks our margins down to about maybe the 10% range on the virtual events. But again, still profitable, and more importantly, I think George made the point, it keeps the brand in front of our clients, and it continues to build and helps us build for 2021..

Great. Thank you. That's helpful. And then you mentioned it in your prepared remarks, but retention and enrichment metrics ticked down a bit year-over-year and sequentially.

Just wondering if you could give a bit more color on what drove those declines? Basically how much you might attribute to the pandemic or a slowdown in March specifically? And then if I can squeeze one more on top of that, if there's any material change to those metrics in terms of how they're trending in April?.

Well, I'll give you the – sort of the number side of it, I'll let Kelley give some more color to it. I think and this was – we saw this in the last recession, particularly with smaller vendors, both in our business, but in particular with the legacy SD business we inherit. That absolutely impacts client count.

Small vendors and actually small business create – tend to move very quickly out of – out of contracts that they're in because, frankly they're getting squeezed. So I think we're seeing churn in small clients, and that's accounting for it.

And we're going to see those retention metrics because they're trailing 12 months, probably come down more before they start moving back up. So that's my quick and dirty perspective. Kelley, I don't know if you have more to add there..

Yes. No. I would agree with that, Mike. Thank you. And I would say from a timing perspective, Andrew, a lot of it was the back end of March, so probably not much of a surprise that the bulk of it was COVID related, and pipeline had been trending up in late February.

And then with the shelter in place across Europe and then into North America, about the middle of March that definitely impacted the renewal retention rate, specifically in March in particular..

Awesome. Thank you. And then if you wouldn't mind, just one more. I think George, you mentioned in terms of revenue impact, there are clients in certain sectors that have had to cut budget, perhaps in some cases, pretty significantly.

Is there any way for us to kind of size up your industry exposure, particularly as it relates to industries that are more directly challenged in this environment, hospitality, travel, recreation, that sort of thing? Thank you..

Yes. And good question, Andrew. Yes, it's about 10%, Andrew, in the most vulnerable category. That would be – the list I gave you with air, hotel, et cetera, about 10%..

Got it. Thank you..

And Andrew, a little color there. The challenge and the opportunity here is how many of those are going to – because they're so distressed they're going to migrate away, how many because they are and who desperately need a digital model will stick with us and find the funds.

And I think that's what we'll – as the year progresses, we look to see how that plays out..

Makes sense..

Thanks Andrew..

Your next question is from Anja Soderstrom [Sidoti & Company]..

Hi, everyone. I hope you're all doing well. A lot of my questions were already asked. But you mentioned the headcount is up, but I noticed the sales force is shrinking.

Could you give some context around that?.

Kelley, you want to take?.

Sure..

I'll let Kelley give – go ahead, Kelley, jump in..

Okay. Anja, I hope that you're doing well. I think what you're seeing in the Q1 numbers is the impact from the attrition that we had back in 2019. So yes, in Q1, the head count was down.

What I'm pleased to say is given the active recruiting that we've been doing, we've actually added more capacity to the sales force, and that will start to ramp as we get further into the year here. So those numbers will be going up sequentially as we have individuals coming off of ramp.

Right now we have 94% capacity on our open territories, which is the highest it's been in over a year..

Okay. And how, I’m sorry, yes..

Anji, one other thing on headcount, because yes it was up and I will say that we took a number of measures to reduce costs, some of which we've identified. We also froze a lot of open head count but we have consciously chosen to continue to invest in sales.

And to some degree, the analyst headcount, in part because, frankly, we see that – we think there's going to be – we're going to come out of this, and we need to be prepared as the second half of the year starts getting better to be able to capitalize on that. So we've consciously not cut headcount in the sales organization, the analyst area..

Okay. Thank you.

And in terms of the hiring salespeople, has the current environment sort of impacted that in either positive or negative way?.

So I would say in the current environment, we have been able to fill positions a little bit more quickly than we have been throughout the course of 2019. And I'm glad to say that we're close to full capacity right now and are focused on ramping up our new hires..

Okay. Thank you. That was all from me..

Thank you..

I'm showing no further questions at this time. I will now turn the call back to Mr. Doyle..

George, do you want to have some closing comments here?.

No. Go ahead..

Okay. First, thanks, everyone for joining the call. We do hope that you are safe and healthy. We plan to be out there in the markets virtually. And if I could reinforce our major points here, we're going to manage our way through this. We've been through this before.

I've been through some of the recessions with George, not the entire pieces, but we're going to find our way through this. I think we know how to do this. We know how to move quickly. We've positioned ourselves to be ready as the economy bounces back.

We think the pandemic has exposed a lot of very weak digital models, which we are frankly, we think, in the best position to maintain. And we're going to come out stronger. We've got a great and very talented employee base, all of whom we've retained, and we're pretty excited about that.

So we're looking forward to working through these challenges with our clients. So thanks very much..

And I would say that – George here, guys. Anyone out there who wants to meet with us via Zoom or Webex, we'd love to meet with you. And thank you for being on the call and everyone stay safe. Thank you..