Forrester Research Inc (NASDAQ:FORR) reported financial results for the fourth quarter and full year of 2025 that fell short of analyst expectations, prompting a significant negative reaction in its stock price. The market's response reflects deep concerns over declining revenues, a substantial non-cash goodwill impairment, and a sobering outlook for the year ahead.
Earnings and Revenue Versus Estimates
The company's fourth-quarter performance missed Wall Street's targets on both the top and bottom lines. This shortfall against expectations is a key driver behind the stock's sharp decline following the report.
- Revenue: Forrester reported Q4 revenue of $101.1 million, which came in below the analyst consensus estimate of approximately $105.3 million.
- Adjusted Earnings Per Share (EPS): The company posted adjusted EPS of $0.17 for the quarter, missing the estimated $0.22 per share.
For the full year 2025, total revenues were $396.9 million, down from $432.5 million in 2024. The reported GAAP net loss of $119.4 million was heavily impacted by non-cash goodwill impairment charges totaling $110.7 million. On an adjusted basis, which excludes these and other one-time items, full-year net income was $22.2 million, or $1.16 per diluted share.
Market Reaction and Price Action
The market's verdict was swift and negative. In after-hours trading following the release, Forrester's stock dropped over 12%. This sharp decline extends a period of weakness for the shares, which have fallen approximately 25% over the past month, indicating that investor sentiment had already been deteriorating ahead of the earnings announcement. The post-earnings sell-off suggests the results and guidance confirmed or exacerbated existing concerns.
Key Elements from the Press Release
Beyond the earnings miss, the press release highlighted several critical challenges and strategic responses from management.
- Contract Value Decline: A key performance metric, contract value (CV), decreased by 6% year-over-year to $292.4 million. CEO George Colony acknowledged the financials "fell short of expectations."
- Restructuring and Impairment: The company announced a restructuring plan aimed at improving cost efficiency and focusing on CV growth. The significant goodwill impairment charge indicates a downward revision in the value of certain acquired assets.
- Strategic Focus on AI: Management pointed to the launch of "Forrester AI Access" as an area of momentum and emphasized plans to accelerate AI integration across its product portfolio to address client needs.
- 2026 Financial Guidance: Forrester's outlook for the current year signals continued pressure. The company provided both GAAP and adjusted guidance, forecasting a notable revenue decline and projecting only modest profitability on an adjusted basis.
Outlook Versus Analyst Expectations
The company's provided 2026 guidance stands in stark contrast to current analyst expectations, which likely contributed to the negative market reaction.
- Revenue Guidance: Forrester anticipates full-year 2026 revenues between $345 million and $360 million, representing a decline of 9% to 13% from 2025. This is significantly below the analyst sales estimate of approximately $402.6 million for the year.
- Adjusted EPS Guidance: The company forecasts adjusted diluted EPS in the range of $0.72 to $0.82 for 2026. This guidance is well below the current analyst EPS estimate of $1.36 for the year.
The substantial gap between management's forecast and Wall Street's prior expectations underscores the scale of the transition and challenges Forrester faces in the coming year.
Conclusion
Forrester Research's fourth-quarter earnings report revealed a company in the midst of a difficult transition. Missed estimates, declining contract value, a major impairment charge, and guidance that forecasts a significant revenue drop have shaken investor confidence. The immediate double-digit percentage decline in the stock price reflects the market's reassessment of the company's near-term growth and profitability trajectory. Management's restructuring plan and focus on AI-powered services are central to its strategy for a turnaround, but the provided guidance suggests the path to recovery may be longer than previously hoped.
For a detailed look at Forrester's historical earnings and future analyst estimates, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy or sell any security, or an endorsement of any investment strategy. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
