10-Q: Forrester Research Reports Declining Revenues, Goodwill Impairment

Forrester Research, Inc. (FORR) reported a 10% year-over-year decrease in total revenues for the second quarter of 2026, alongside a significant goodwill impairment charge.

Summary

• Forrester Research, Inc. reported a 10% decrease in total revenues for the three months ended June 30, 2026, totaling $100.2 million, compared to $111.7 million in the prior year period.
• For the six months ended June 30, 2026, total revenues decreased by 8% to $185.7 million from $201.5 million in the same period last year.
• The company recorded a goodwill impairment charge of $10.8 million for the Research reporting unit as of March 31, 2026.
• Restructuring costs amounted to $2.1 million for the three months and $4.2 million for the six months ended June 30, 2026.
• Net loss for the six months ended June 30, 2026, was $6.6 million, a significant improvement from a net loss of $83.4 million in the prior year period, largely due to a prior year goodwill impairment.
• Cash from operating activities increased to $25.0 million for the six months ended June 30, 2026, from $23.1 million in the prior year period.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to declining revenues across all segments, significant goodwill impairment, and ongoing restructuring costs, despite some improvements in client retention metrics.

Positives

• Client retention increased by 3 percentage points to 77% as of June 30, 2026, compared to the prior year.
• Wallet retention increased by 4 percentage points to 89% as of June 30, 2026, compared to the prior year.
• Cash from operating activities increased by $1.9 million to $25.0 million for the six months ended June 30, 2026, compared to the prior year.
• Net loss for the six months ended June 30, 2026, improved to $6.6 million from a net loss of $83.4 million in the prior year period, primarily due to a significant goodwill impairment in the prior year.

Negatives

• Total revenues decreased by 10% to $100.2 million for the three months ended June 30, 2026, and by 8% to $185.7 million for the six months ended June 30, 2026.
• Research revenues decreased by 8% and 5% for the three and six months ended June 30, 2026, respectively.
• Consulting revenues decreased by 15% and 14% for the three and six months ended June 30, 2026, respectively.
• Events revenues decreased by 17% and 18% for the three and six months ended June 30, 2026, respectively.
• A goodwill impairment charge of $10.8 million was recorded for the Research reporting unit as of March 31, 2026.
• Restructuring costs totaled $2.1 million for the three months and $4.2 million for the six months ended June 30, 2026.
• The company anticipates a decline in consulting revenues in the low 20 percent range for 2026 due to the discontinuation of strategy consulting engagements.

Risks

• Adverse economic conditions, including from trade policies and tariffs, that result in a reduction in technology spending or demand for products and services.
• The use of Generative AI in the business and by clients and competitors.
• Dependence on key personnel and the ability to attract and retain qualified professional staff.
• Competition and industry consolidation.
• Potential for future goodwill impairment charges.
• Uncertainty created by changes in United States trade policies.
• Deterioration in the financial condition of customers, potentially requiring additional allowances for credit losses on accounts receivable.

Future Outlook

The company anticipates that, on a year-over-year basis, its 2026 consulting revenues will decline in the low 20 percent range due primarily to the cessation of strategy consulting in 2026. The company expects to continue to satisfy working capital, financing activities, and capital expenditure requirements for the next twelve months and to meet its known long-term cash requirements with its current cash balance and cash flows from operations. The company is forecasting tax expense to be recorded in the remaining six months of the year, resulting in an effective tax rate in the range of negative 10% to negative 20% for the full year.

Management Comments

• "Our CV products make up essentially all our research revenues, and research revenues as a percentage of total revenues increased from approximately 73% for the six months ended June 30, 2025 to approximately 75% for the six months ended June 30, 2026."
• "Client retention increased by 3 percentage points at June 30, 2026 compared to the prior year period, and decreased by 1 percentage point compared to the prior quarter. The increase in client retention compared to prior year period was primarily due to our ongoing retention initiatives and to the launch of our AI Access product in the third quarter of 2025."
• "Wallet retention increased by 4 percentage points at June 30, 2026 compared to the prior year period, and was consistent compared to the prior quarter. The increase in wallet retention compared to the prior year period was primarily due to improved client retention."
• "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 the market research and advisory sector, which is sensitive to overall economic conditions and corporate spending on technology and strategy. The reported decline in revenues and the goodwill impairment suggest challenges in maintaining market share or adapting to evolving client needs, potentially exacerbated by broader economic headwinds or competitive pressures, including the increasing influence of AI.

Legal Proceedings

• The company currently has no material pending litigation.

Stakeholder Impact

• Shareholders may be concerned by the declining revenues, goodwill impairment, and ongoing restructuring costs, which negatively impact profitability and stock valuation.
• Employees may face continued uncertainty due to workforce reductions and restructuring efforts.
• Customers may experience changes in service offerings, particularly with the discontinuation of strategy consulting engagements.

Next Steps

• Continue to monitor relevant facts and circumstances, including future changes in stock price, to determine if another interim goodwill impairment test is required.
• Complete the annual goodwill impairment test as of November 30, 2026.
• Expect to receive the remaining $14.5 million of the tenant improvement allowance in the third quarter of 2026.
• Anticipate spending an additional $10.0 million to $11.0 million during the third quarter of 2026 on the renovation of the headquarters.
• Anticipate purchasing additional shares of common stock in the second half of 2026 under the stock repurchase program.

Key Dates

Recommendation

The persistent decline in revenues across all segments, coupled with a significant goodwill impairment and ongoing restructuring costs, indicates fundamental business challenges. While client retention metrics show some improvement, they are not enough to offset the revenue contraction. The outlook for consulting revenue is also negative. These factors suggest a deteriorating financial position and outlook, warranting a sell recommendation.

Keywords

research, consulting, events, contract value, client retention, wallet retention, goodwill impairment, revenue