10-Q: Forrester Research Q1 2026 Financial Results

Forrester Research reports a net loss of $21.8 million for Q1 2026, driven by a $10.8 million goodwill impairment charge and declining consulting revenues.

Summary

• Total revenue for Q1 2026 was $85.5 million, a 5% decrease from $89.9 million in Q1 2025.
• Net loss for the quarter was $21.8 million, compared to a net loss of $87.3 million in the prior year period.
• The company recorded a $10.8 million goodwill impairment charge related to its Research reporting unit.
• Contract value (CV) decreased by 3% year-over-year to $285.3 million.
• Operating expenses totaled $104.1 million, significantly impacted by the goodwill impairment and restructuring costs.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative report, reflecting ongoing structural challenges, revenue contraction, and continued impairment charges despite minor improvements in retention metrics.

Positives

• Client retention improved by 5 percentage points to 78% compared to the prior year period.
• Wallet retention increased by 3 percentage points to 89% year-over-year.
• The company successfully amended its credit facility to extend maturity to March 2029 and reduce costs.
• Cash and cash equivalents increased to $73.9 million as of March 31, 2026, from $63.3 million at year-end 2025.

Negatives

• Consulting revenue declined by 13% year-over-year to $18.6 million.
• Total revenue fell 5% to $85.5 million.
• The company recorded a $10.8 million goodwill impairment charge.
• Number of clients decreased by 3% to 1,760.
• Restructuring costs of $2.1 million were incurred during the quarter.

Risks

• Continued decline in stock price and market capitalization may trigger further goodwill impairment charges.
• Potential for further revenue declines in the consulting segment following the discontinuation of strategy consulting.
• Dependence on key personnel and the ability to retain qualified professional staff.
• Macroeconomic uncertainty and potential changes in U.S. trade policies impacting technology spending.
• Risks associated with the use of Generative AI by clients and competitors.

Future Outlook

The company expects 2026 consulting revenues to decline in the low 20 percent range due to the cessation of strategy consulting. It anticipates an effective tax rate between negative 5% and negative 10% for the full year 2026 and expects to incur $21.0 million to $22.0 million in capital expenditures for office renovations during the remainder of 2026.

Management Comments

• Management attributes the increase in client retention to ongoing retention initiatives and the launch of the AI Access product.
• Management notes that the discontinuation of strategy consulting is intended to align the cost structure with the revenue outlook.

Industry Context

StockSavvy.ai notes that Forrester is navigating a challenging transition period common among legacy research firms, as they pivot away from traditional strategy consulting toward AI-integrated subscription models to combat declining client counts and revenue pressure.

Comparison to Industry Standards

• Revenue decline of 5% reflects broader industry headwinds in discretionary technology spending.
• The shift toward higher-margin subscription products (CV) is consistent with industry trends seen at competitors like Gartner.
• Goodwill impairment charges highlight the valuation pressure currently facing professional services firms with significant historical acquisitions.

Corporate Governance

Legal Proceedings

• The company currently has no material pending litigation.

Stakeholder Impact

• Shareholders face continued earnings pressure due to impairment charges and revenue declines.
• Employees are impacted by the 8% workforce reduction implemented in February 2026.
• Customers may see changes in service offerings as the company discontinues strategy consulting.

Next Steps

• Complete the fulfillment of the backlog of strategy consulting engagements during 2026.
• Continue office renovations in Cambridge, Massachusetts.
• Complete annual goodwill impairment test as of November 30, 2026.

Key Dates

Recommendation

The combination of declining revenue, shrinking client base, and recurring goodwill impairments suggests fundamental business model challenges that outweigh the modest improvements in retention metrics.

Keywords

Forrester Research, Market Research, Consulting, Goodwill Impairment, Financial Results, 10-Q