10-K: Forrester Reports Steep 2025 Net Loss Amid Revenue Declines

Forrester Research, Inc. reported a significant net loss of $119.4 million in 2025, driven by substantial goodwill impairment and declining revenues across all segments.

Summary

• Total revenues decreased by 8% to $396.9 million in 2025 from $432.5 million in 2024.
• The company recorded a net loss of $119.360 million in 2025, a significant increase from a net loss of $5.747 million in 2024.
• Goodwill impairment charges totaled $110.707 million in 2025, primarily affecting the Research reporting unit.
• Contract value (CV) decreased by 6% to $292.4 million at December 31, 2025, from $311.9 million at December 31, 2024.
• Client retention improved by 4 percentage points to 77% in 2025, partly attributed to the launch of the AI Access product.
• Wallet retention decreased by 2 percentage points to 87% in 2025, primarily due to lower enrichment of contracts.
• The number of clients decreased by 7% to 1,797 in 2025 from 1,942 in 2024.
• Consulting revenues declined by 9% and Events revenues by 29% in 2025 compared to 2024.
• The company recorded a credit loss expense on a note receivable of $7.310 million in 2025.
• Cash provided by operating activities improved to $21.1 million in 2025 from a use of $3.9 million in 2024.
• Multiple workforce reductions were implemented: approximately 3% in February 2024, 6% in January 2025, and 8% in February 2026.
• The company will discontinue selling strategy consulting engagements, anticipating a low 20% decline in 2026 consulting revenues.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging period marked by significant financial underperformance, particularly the substantial net loss driven by goodwill impairment and declining revenues across all segments. While some operational improvements like increased client retention and positive cash from operations are noted, the overall financial health and strategic shifts indicate considerable headwinds.

Positives

• Client retention increased by 4 percentage points to 77% in 2025, compared to 73% in 2024, with the AI Access product contributing to this improvement.
• Cash generated from operating activities significantly improved to $21.1 million in 2025, reversing a cash usage of $3.9 million in 2024.
• The credit facility maturity date was extended from December 2026 to March 2029, providing longer-term financial flexibility.
• A tenant improvement allowance of $17.2 million is expected in the first half of 2026 to offset a portion of planned HQ renovation capital expenditures.

Negatives

• Total revenues decreased by 8% to $396.9 million in 2025 from $432.5 million in 2024.
• The company reported a substantial net loss of $119.360 million in 2025, significantly wider than the $5.747 million net loss in 2024.
• Goodwill impairment charges amounted to $110.707 million in 2025, reflecting a re-evaluation of asset values.
• Contract value decreased by 6% to $292.4 million at December 31, 2025.
• Wallet retention declined by 2 percentage points to 87% in 2025, indicating reduced contract enrichment.
• The number of clients decreased by 7% to 1,797 in 2025.
• Consulting revenues decreased by 9% and Events revenues by 29% in 2025.
• A credit loss expense of $7.310 million was recorded on a note receivable in 2025.
• Multiple workforce reductions (3% in Feb 2024, 6% in Jan 2025, 8% in Feb 2026) indicate ongoing cost-cutting measures and potential operational challenges.
• The company is discontinuing strategy consulting engagements, anticipating a low 20% decline in 2026 consulting revenues.

Risks

• A decline in renewals or demand for subscription-based research services could adversely impact results.
• Demand for consulting services is project-based and non-recurring; a decline in new engagements could negatively affect financial condition.
• The business is susceptible to adverse economic conditions, such as inflation, slowing growth, and recession threats, which may decrease technology spending and demand for products.
• International operations expose the company to political and economic instability, regulatory changes, currency fluctuations, and difficulties in enforcing agreements and protecting intellectual property.
• Failure to successfully develop and introduce new products and services, or assimilate acquired ones, could harm competitiveness and growth.
• The use of generative AI poses risks including factual errors, unintentional distribution of confidential information, ethical concerns, data privacy/security risks, and potential competition from third-party AI solutions.
• The loss of key management, particularly founder, Chairman, and CEO George F. Colony, could adversely affect the business.
• Difficulty in attracting and retaining qualified professional staff, including research professionals, consultants, and sales personnel, especially following workforce reductions.
• Failure to anticipate and adapt to rapidly changing technologies and market trends could negatively impact market position and operations.
• Business with the U.S. Government is subject to contracting risks, including appropriation curtailments and contract terminations.
• Outstanding debt of $35.0 million could restrict business and adversely affect financial condition, liquidity, and results of operations, with a risk of acceleration if covenants are not met.
• Intense competition from direct competitors (e.g., Gartner), marketing agencies, consulting firms, and free online information sources (e.g., Google, AI services) could lead to pricing pressure and market share loss.
• Operating results may fluctuate significantly due to various factors, including market spending trends, timing of subscriptions and events, and currency exchange rates.
• Future impairment charges of goodwill or other long-lived assets could negatively impact profitability and financial results.
• Concentration of ownership by Chairman and CEO George F. Colony (approximately 39%) allows him to strongly influence matters requiring stockholder approval and may limit stock liquidity.
• Risks from network disruptions or security breaches could damage reputation and harm business and operating results.
• Challenges in enforcing and protecting intellectual property rights, particularly in jurisdictions with weaker legal protections.
• Compliance with evolving privacy laws (e.g., GDPR, CCPA) and new AI governance regulations (e.g., EU AI Act) could incur substantial costs or adversely affect the business.
• Taxation risks from operating in numerous jurisdictions and potential changes in tax law could adversely affect the effective tax rate and financial position.
• Any weakness identified in the system of internal controls could have an adverse effect on the business or financial results.

Future Outlook

The company anticipates a decline in 2026 consulting revenues in the low 20 percent range due to the discontinuation of strategy consulting engagements. Additional costs of $3.5 million to $4.0 million are expected in 2026 related to the February 2026 workforce reduction, with most severance costs paid in 2026. Capital expenditures of approximately $28.0 million are planned for HQ renovations in the first half of 2026, partially offset by a $17.2 million tenant improvement allowance. Amortization expense for intangible assets is projected to be around $8.3 million in 2026. Management believes current cash and cash flows will cover working capital, financing, and capital expenditure needs for the next twelve months and long-term requirements, with an intent to permanently reinvest foreign earnings outside the U.S. A potential quantitative goodwill impairment test for the Research reporting unit may occur in Q1 2026 if the stock price continues to decline.

Management Comments

• "We empower leaders in technology, customer experience, digital, marketing, sales, and product functions to accelerate growth through customer obsession."
• "Forrester's unique research and continuance guidance model helps executives and their teams achieve their initiatives and outcomes faster and with confidence."
• "We believe that market dynamics — from empowered customers and changing business-to-business buying behaviors to rapid advancements in AI — have fundamentally changed the business and technology landscape."
• "AI and public large language models ('LLMs') are increasingly positioned as decision support partners, despite lacking the accuracy, the human judgment, and the reliability needed to make confident business decisions."
• "We believe that Forrester is well positioned to address this need through its complementary combination of trusted human intelligence ('HI') and AI."
• "We believe that CV growth will result in predictable and profitable revenue streams."
• "We attribute the increase in client retention to our ongoing retention initiatives and to the launch of our AI Access product in the third quarter of 2025."
• "The decline in wallet retention compared to the prior year period was primarily due to lower enrichment of contracts as they renewed during the current year period."
• "In February 2026, we announced that we would discontinue selling strategy consulting engagements and would fulfill our backlog of strategy consulting engagements during 2026. Our ongoing consulting business will consist of content marketing consulting and advisory."
• "We anticipate that, on a year over year basis, our 2026 consulting revenues will decline in the low 20 percent range due primarily to the cessation of strategy consulting in 2026."
• "We believe that our current cash balance and cash flows from operations will satisfy working capital, financing activities, and capital expenditure requirements for the next twelve months and to meet our known long-term cash requirements."

Industry Context

StockSavvy.ai notes that Forrester Research operates in a competitive and rapidly evolving market for research and advisory services, facing established rivals like Gartner, as well as emerging threats from free online information and advanced AI services. The company's strategic focus on 'customer obsession' and integrating AI with human intelligence aims to differentiate it in a landscape where AI is increasingly positioned as a decision support partner, despite acknowledged limitations in accuracy and human judgment. The decline in consulting and events revenue, alongside overall revenue contraction, suggests challenges in adapting to market demands or intensified competition, while the increase in client retention, partly attributed to the AI Access product, indicates some success in its AI integration strategy.

Comparison to Industry Standards

• Gartner, a direct competitor, reported 2023 revenue of $5.9 billion, a 13.5% increase year-over-year, with strong growth in its Research segment (13.9% increase). In contrast, Forrester's total revenue decreased by 8% in 2025, with Research revenue declining by 7%, indicating a significant underperformance relative to a key industry peer.
• Forrester's client retention rate of 77% in 2025, while an improvement from 73% in 2024, remains below industry leaders. Gartner typically reports client retention rates in the high 80s to low 90s for its core research business, suggesting Forrester lags in client stickiness.
• The significant goodwill impairment charges of $110.7 million in 2025 for Forrester's Research reporting unit suggest a substantial re-evaluation of asset values, potentially indicating underperformance relative to initial acquisition expectations or deteriorating market conditions, which is not a common occurrence for consistently growing industry leaders.
• Forrester's decision to discontinue strategy consulting engagements and anticipate a low 20% decline in 2026 consulting revenues contrasts with the broader consulting industry, which generally saw growth in 2023 and 2024, albeit with some slowdowns in specific segments, highlighting a strategic retreat in a segment where competitors may be expanding.

Management Changes

Corporate Governance

Legal Proceedings

• The company is subject to legal proceedings and civil and regulatory claims arising in the ordinary course of business.
• Management believes it has meritorious defenses for current lawsuits and material claims and intends to vigorously contest them.
• The likely results of these legal proceedings are not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows, though the effect could be material for any interim reporting period.
• A $4.8 million expense was accrued in the first quarter of 2023 for a wage-related settlement, which was fully paid in the first quarter of 2024.

Related Party Transactions

• Chairman and CEO, George F. Colony, owns approximately 39% of the company's outstanding common stock, which enables him to strongly influence or effectively control matters requiring stockholder approval, including director elections, corporate amendments, equity plans, and significant transactions.

Stakeholder Impact

• Shareholders: Experienced a significant net loss and declining stock price, potentially impacting shareholder value. The CEO's concentrated ownership may limit liquidity and influence over corporate decisions.
• Employees: Multiple workforce reductions (3% in Feb 2024, 6% in Jan 2025, 8% in Feb 2026) indicate job insecurity and potential impact on morale, despite efforts to attract and retain talent.
• Customers: Decreased contract value and number of clients suggest challenges in customer acquisition and retention. The discontinuation of strategy consulting may affect certain client relationships, while the AI Access product aims to improve client retention.
• Creditors: The credit facility amendment, including a reduction in facility size and a new minimum liquidity covenant, indicates tighter financial management and potential increased scrutiny from lenders.

Next Steps

• Fulfill the backlog of strategy consulting engagements during 2026, as the company discontinues this service.
• Renovate the Cambridge, Massachusetts office space during the first half of 2026, with expected capital expenditures of approximately $28.0 million.
• Incur an additional $3.5 million to $4.0 million of costs during 2026 related to the February 2026 workforce reduction.
• Pay a majority of the severance and related costs for the February 2026 workforce reduction during 2026.
• Close certain smaller offices both inside and outside the United States.
• Potentially perform a quantitative impairment test for goodwill in the Research reporting unit during the first quarter of 2026 if the stock price decline continues.
• Continue to monitor relevant facts and circumstances, including future changes in stock price, for potential future goodwill impairments.
• Update the assessment of expected credit loss on the note receivable quarterly.
• Restore the accrual of interest income on the note receivable only when the borrower is contractually current or the collection of future payments is reasonably assured.

Key Dates

Recommendation

The company reported a substantial net loss of $119.360 million in 2025, primarily driven by over $110 million in goodwill impairment charges, indicating a significant re-evaluation of asset values and potential underlying business challenges. Revenues declined across all segments, with a notable 8% overall decrease and a 6% drop in contract value. While cash from operations improved, the ongoing workforce reductions (including an 8% reduction in February 2026) and the discontinuation of strategy consulting signal strategic shifts under pressure. The continued decline in stock price and the potential for further goodwill impairment suggest persistent headwinds and a challenging outlook, making the stock a "sell" for seasoned investors.

Keywords

Forrester Research, FORR, Annual Report, Financial Results, Net Loss, Goodwill Impairment, Revenue Decline, Contract Value, Client Retention, Workforce Reduction, Consulting Services, Events Business, AI Access, Credit Facility, Risk Factors, Market Research, Advisory Services, Technology Consulting, Corporate Governance