Good afternoon, and thank you for standing by. Welcome to Forrester's Third Quarter 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to Vice President of Corporate Development and Investor Relations, Ed Bryce Morris. Please go ahead.

Thank you, and hello, everyone. Thanks for joining today's call. Earlier this afternoon, we issued our press release for the third quarter of 2025. If you need a copy, you can find one on our website in the Investors section. Here with us today to discuss our results are George Colony, Forrester's Chief Executive Officer and Chairman; and Chris Finn, Chief Financial Officer. Carrie Johnson, our Chief Product Officer; and Nate Swan, our Chief Sales Officer, are also here with us for the Q&A section of the call. 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 expects, believes, anticipates, intends, 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. Factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission, and the company undertakes no obligations to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Lastly, consistent with our previous calls, today, we will be discussing our performance on an adjusted basis, which excludes items affecting comparability. While reporting on an adjusted basis is not in accordance with GAAP, we believe that reporting numbers on this adjusted basis provides a meaningful comparison and an appropriate basis for our discussion. You can find a detailed list of items excluded from these adjusted results in our press release. And with that, I'll hand it over to George.

Good afternoon, and thank you for joining Forrester's 2025 Q3 Investor Call. Today, I'd like to cover the following topics: one, our Q3 performance; two, an update on our go-to-market approach; three, the launch of the new AI access product; four, the research business in the age of AI; and five, feedback from our Board of clients. The macroeconomic environment continued to be challenging in Q3, highlighted by the rolling U.S. federal government pullback from consulting. Q3 is historically the largest bookings quarter for our government consulting business. We were well below our target and overall consulting revenue declined 8% from the prior year. In addition, research revenue declined 6% in the quarter, driven by bookings and challenges from previous quarters. Total revenue declined 8% from the prior year. Wallet retention was up 1 point to 86% and client retention held at 74% compared to Q2. Chris will give more detail on the quarter in a few moments. In the Q1 and Q2 calls, I noted that the final step in the product transition is transforming our sales engine to consistently sign new Forrester Decisions clients and grow existing accounts. We made progress in the quarter on several fronts. One, average time to hire reps is running at 55 days, improving on our goal of 60 days, and there's very good sales talent available in the market. Two, the sales force continues to adopt the Forrester Agile Sales Technique or FAST sales methodology. We ended the quarter with the highest percentage of reps certified and with all managers now qualified to run fast deal clinics. And three, our demand marketing engine continues to improve, driven by stronger alignment between our sales and marketing teams. The result has been increased prospect follow-up and a higher rate of opportunity creation from marketing…

Thanks, George, and good afternoon, everyone. The third quarter saw an exciting product launch with AI Access. We experienced immediate market validation with bookings and a landmark large enterprise deal incorporating this new product just weeks after its release. Although the ongoing dynamics in the marketplace continue to negatively impact all three lines of business, we delivered operating margin and EPS above consensus. And we continue to see stabilization in the research business with research revenue down 4%, excluding the divestiture of FeedbackNow, an improvement on the last quarter's performance. It is early in the sales cycle, but we are anticipating our new AI Access product to have a positive impact on Q4 and 2026 CV performance. Our Consulting and Events businesses continue to face headwinds in a tough selling environment. The consulting business has been meaningfully impacted by the cost-cutting measures enacted in the U.S. federal government, and we see these challenges continuing next year. The shift in the timing of one of our larger events negatively impacted results this quarter, and we see ongoing impediments for that business over the medium term as new leadership is evolving our offering and go-to-market motion. The fourth quarter is our largest bookings period, and we are positive of our pipeline. However, we are downward adjusting our revenue guidance based on the performance of Consulting and Events. This revenue adjustment flows through to a modestly lower margin and EPS guide for the year. Q3 saw a 7% CV decline. This is a continuation of the last 2 quarters' performance. We anticipate improved performance in the fourth quarter to come from the growing pipeline for the new AI access product. Therefore, even with the continuing uncertainty in the market, we are expecting CV to improve to a low single-digit decline for the year.…

Thank you, Chris. To summarize, the company is excited to be introducing the AI Access product, and we are pleased with the early market reaction. It widens the Forrester Decisions portfolio, makes it easier for our clients to get trusted advice fast and it democratizes access to our research. Thank you for joining the call, and we will now take questions.

[Operator Instructions] And I show our first question comes from the line of Andrew Nicholas from William Blair.

This is Tom Roesch on for Andrew Nicholas. I really appreciate the color you guys gave on AI during the prepared remarks. But I was just wondering if you could expand on your thoughts on the perceived disruption from AI, specifically as it relates to the -- just the research part of the business of like without the guide access like those type of licenses. And also, I'm just curious like what is the typical customer demographic that chooses to go with just the research access and not the guide level? Or like what's the reasoning usually behind it when that's kind of like the sale that you do?

It's probably a little bit too early, Tom, to make that call. I mean AI Access has only been available for a couple of weeks. So I would expect the demographic to be lower, to be a younger demographic for AI Access, but it's really too early if that was your question. What I would say is if you don't have AI Access to your product, you're going to have a hard time attracting that younger demographic. So another good reason why we like having the product.

Got you. And then switching gears, I was wondering if you could kind of expand on what you're seeing in the sales pipeline in the fourth quarter. And then also, I believe last quarter, you had mentioned kind of underperforming on conversion rates. So it sounds like you guys have been making strides in your go-to-market strategy. So I was wondering if you've seen any improvement on conversion as well.

Yes. Great question, Tom. So we are seeing some improvement, specifically our emerging tech team. We just did a global call with our sales organization today where we called out their conversion rates dropping by 27% year-over-year -- sorry, their time to conversion. That was a misstatement on there, time to conversion dropping 27%. So they are seeing really good conversion. And what they're doing is what we call a social contract, where they are confirming with the buyer early on in the sales cycle that they would like to be evaluating Forrester. It's an opportunity to hold the client accountable, hold ourselves accountable to the steps to walk through a sales process and seeing really, really good process -- progress with that. Time to close one for that team in particular, dropped from roughly 80 days down to about 59 days, so a significant decrease. And the rest of our teams are also in that rough 80 days. Now they are working with some larger clients typically in some other teams. So we don't expect to have those type of dramatic results, but we do expect to see some pipeline acceleration as our teams are really coaching in this type of methodology to drive faster conversion. As far as size of pipeline, we are roughly the same size year-over-year, so plus about a couple of percent on there. But we're seeing a better conversion. So we're very hopeful that in Q4, we will see continued improvement in conversion, one, speed; two, and I think to echo both George and Chris' comments on AI Access. AI Access is opening doors for us. So we're seeing more clients respond. They want alternatives out there. They want to be able to spread research out to larger parts of the organization. Not every person in an organization needs to have the guidance that we give. But if they have guidance at the top of the organization and access to the same research throughout, that really creates alignment for our clients and has been really well received. So not just on our large government deal, we're seeing it around the world. The international team has done a fantastic job securing winbacks from clients that like this model. And so we think there's a lot of momentum from that. We're very hopeful that Q4 will drive some more business.

If I could just slip in one quick follow-up. Just on like the large language models, have they come up at all in customer conversations you guys have had? Or have you gotten any pushbacks from clients that have tried to use maybe one of the public -- switch the public one or a different type of large language model?

Yes, absolutely. I think a lot of customers bring it up and say, I can use things like ChatGPT or Claude, et cetera, and I get really good answers. And while I say they get really good answers, do you really trust where they're coming from? I am certainly not an analyst. I'd let George and Carrie probably answer more on that. But a lot of that information is not coming from reliable sources that have models, data and research that Forrester has. In fact, none of them have what Forrester has. So just to be clear about that, they're not backed by those things. And so if you're going to make million dollar, multimillion or $100 million decisions, going out there and trusting ChatGPT or other sources, while that is good information to get, I really don't think that's a reliable way to make a decision for your business model. And so you're going to need a trusted source like Forrester to be able to do that.

If I could -- this is Carrie. If I could add one thing on to Nate's comments. For every pushback or client or prospect conversation that we have asking to compare us to the public models, we have more than that asking to actually put our data and insights into their employee environment where they're getting trusted insights to empower their employees. That's actually where most of our conversations are happening, where they're seeing this opportunity to say, "Hey, we've been tasked with providing a world-class set of insights to our employees to make decisions, to go win deals. How can we make sure that Forrester data and insights are in our protected environments because we don't want our employees relying on the public models to make business decisions. So more opportunity than threat on this front because we think that companies understand the impact and the importance of trusted data sources.

Just to add on to Carrie, as she brings up an excellent point. I've been involved in several conversations. I know Carrie has, I know George has with clients that are looking to do exactly that, and they're very excited when they see what the previous Izola feature and now AI Access does and allows them to do. The reaction has been incredible. I mean, I've sat in a meeting with a Chief Digital Officer from a large brand agency and they were -- they wanted to go to commercials almost immediately as they saw this. So we are seeing some very good response from clients. So we're excited about that. I mean, there's going to be a lot of AI used just as there's a lot -- the moment reminds me a little bit of 2002 when people would say, well, we don't need Forrester anymore. We're going to use Google. And my come back with that was always great, glad that's your plan. You're going to make a $100 million technology decision. Tell me how that board meeting is going to go. When you tell them the research I did to make this decision was made on Google. So obviously, Internet search helps a lot. AI search will help a lot. But at the end of the day, when these are critical decisions which will require critical data and trusted data, and that's where Forrester, as I described, that will be our place in this future.

And I show our next question comes from the line of Michael Mathison from Sidoti & Company.

My first question is whether there are any particular verticals or industries where you're seeing better success at gaining new clients or deepening client relationships?

Well, yes, absolutely. So number one, while it's been a challenging opportunity in the government, we actually think there's a massive opportunity in the U.S. federal government. So retention challenges this year as agencies were having those come in and cut budgets. But the response to how Forrester is making our offerings available to people and the support that we've gotten from Forrester to go out in front of the government and talk about what we're doing specifically with AI Access, we've had a number of agencies very interested in what we're doing. So we've seen really good success there in the U.S. Again, coming back to the international markets, we're seeing really good success in the international markets on the end user side. So growing that end user business, which is really our goal is to grow the end user business even stronger. We're seeing great success in the international markets, capturing clients from the CPG industry, manufacturing, financial services. So lots of success there. And we're starting to see some breakthroughs as well as some manufacturing opportunities in North America as well. Our end user new business team really struggled for about 6 months, starting to see some raise of sunshine from them as they go into the fourth quarter. We're seeing some net new logo opportunities in financial services as well as manufacturing and CPG.

Okay. Great. Second question, your effort to increase the contract value per client is a major strategic goal. You were still down here a couple of percent this quarter. Can you comment on when you feel like that effort would bear a little bit more fruit?

Yes. Thanks for the question. This is Chris. Yes, look, I think as we move forward here, we're seeing some traction, obviously, with the new product in AI Access and a stabilization of retention rates. And so I think as we move forward, our expectation is we've got a big quarter in front of us in Q4. But as we get into next year, we should start to see some improvement there in the first half, especially as the new product gains traction, and we continue to see stabilization on retention.

Average CV per client has -- just looking at up 5% in the year. Did you get that, Michael? So average CV per client up 5% in the year.

I'm sorry, I didn't have it in front of me, but I'll take your correction.

Yes. So we're up to $162,000 per client.

And I show our next question comes from the line of Vincent Colicchio from Barrington Research.

Yes, Nate, on the better conversion this quarter, can you attribute that to something in particular? Or is that too difficult to do?

No. As I was mentioning, this emerging tech team has been working what we call our social contract for the better part of 9 months, and they're really starting to see some success. And I think the team is gaining confidence in it, Vince. When you first started, it might feel a little bit awkward to you as you go through a sales process. But now that team is really clicking and they're doing it every single time. Anytime they get engaged with a new prospect, they are saying, "Hey, it seems like there's genuine interest. I think we can help you." This is what this process looks like over the next 6 to 8 weeks. Is this something you're interested in doing? This will be something that would cost money, clearly to invest in Forrester. Typically, the budgets would be between X and Y for something like this, although we don't want to predetermine what it would be. And is this something that you're interested in and can provide access to your team who has the initiatives to execute that are part of your priorities for the business. If you are interested in doing that, we are interested in working with you to see if that works. You can disengage at any time. That it's not a commitment to buy. And I think they've gotten really good at that talk track. And we had, as I said, a global call earlier today, really encouraging the rest of the team that you need to do this. This is working. They are having success. They are seeing their -- not just their close won get better, but they're closed lost. Even when a client agrees to go through a social contract, you still don't have the 100% conversion of your Stage 1 opportunities. You're just entering the pipeline. It's just a commitment to look and view and it allows the sales rep to hold the client accountable and the client to hold the sales rep accountable and hold Forrester accountable. So we've seen really good luck in it. And I think that we'll start seeing more of that. When you marry that with our Forrester Agile selling technique, I think it's calling high, making sure that we understand the value sweet spot that we are looking for from our -- for our clients, making sure that there is alignment. And that -- at the end of the day, they don't want to waste their time. We don't want to waste their time. And we believe that we can really drive a better conversion. So dropping our close loss from -- in that group from 130 days to about 105 days is significant. You're not wasting time on opportunities that are never going to close.

And then, George, one for you. Any -- what are your thoughts on the Carahsoft partnership? When do you expect it to start contributing? And what makes you optimistic?

Yes. George -- sorry, Vince, I'll jump in for George because that is part of a sales play. One of my sales leader for the government team, Dana Barnes has done a really nice job. So he has worked with Carahsoft in the past with the government teams. What that allows us to do is in previous software companies that he was with. And what that allows us to do is open up markets. They help with marketing and opening doors and contract vehicles that we might not be able to get on. So we've just gotten started with them. We're starting to see a lot of traction in the government space. And so while it's been really tough sledding in the government market, we had a big win, number one. We've been in front of over 200 buyers at one of the -- I can't remember.

I think through Carahsoft.

Not through Carahsoft, but through a event called FedTalk that we were at when our CTO was there. And Carahsoft is getting us into states that we haven't been doing business in and agencies that we haven't been doing business in. So we haven't seen a return yet, but I expect that we will relatively soon. That was signed in the middle of Q3.

Are there other partnerships like this that may be useful to other parts of your business?

It's a great question. I think we want to see what success looks like. We have our -- where Forrester doesn't have a direct presence, we have our IVD model, and we have gone through partners there. And that business has been really successful. That's been in markets that Forrester is not in, in Latin America and other countries, Middle East, et cetera. So pretty successful on that side. I'm sure that we could explore other partnerships. To start, we thought Carahsoft was a good place for us to go. And they've been really responsive to us.

That concludes our Q&A session. At this time, I would like to turn the conference back to Chris Finn, Chief Financial Officer, for closing remarks.

Yes. Thanks, everyone, for joining today. As always, if you have any questions or follow-up, please reach out to Ed or myself. Thank you.

Thank you very much.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.