[Management View]
Forrester's management highlighted persistent macroeconomic pressures, particularly reduced U.S. federal government spending, as key drivers of an 8% YoY revenue decline. Strategic priorities include leveraging the newly launched AI Access product to expand client engagement and democratize research access. The company emphasized its proprietary research assets and differentiated offerings as critical to future growth.

[Outlook]
Forrester revised its full-year revenue guidance to $395–$405 million, reflecting a 6%–9% decline. Operating margin is expected at 7.5%–8.5%, and EPS guidance is adjusted to $1.15–$1.25. Management anticipates improved contract value (CV) performance in Q4 and 2026, driven by the AI Access product pipeline and stabilization in retention rates.

[Financial Performance]
- Total Revenue: $94.3 million, down 8% YoY.
- Research Revenue: $72.7 million, down 6% YoY; core subscription products declined 5%.
- Consulting Revenue: $21.5 million, down 8% YoY, impacted by lower U.S. federal government demand.
- Events Revenue: Insignificant due to a major event shift to Q4.
- Operating Income: $9.9 million, up 21% YoY; operating margin improved to 10.5%.
- Net Income: $7.2 million, up 30% YoY; EPS rose 28% to $0.37.
- Operating Expenses: Declined 11% YoY due to reduced headcount (down 8%).
- Contract Value (CV): Declined 7% QoQ; average CV per client increased 5% to $162,000.

[Q&A Highlights]
Question 1: How does AI Access address perceived disruption from AI in the research business, and what is the typical customer demographic for this product?
Answer: Management noted AI Access is too new to determine specific demographics but anticipates younger users. The product positions Forrester to attract this demographic by offering trusted, proprietary research data, unlike public AI models. Forrester's private AI model, IZOLA, provides reliable insights, which are critical for high-stakes business decisions.

Question 2: What improvements are seen in the sales pipeline and conversion rates heading into Q4?
Answer: Sales pipeline size is stable YoY, but conversion rates have improved. The emerging tech team reduced time-to-conversion by 27%, from 80 to 59 days, using a "social contract" methodology. AI Access is opening new opportunities globally, including win-backs and broader organizational alignment.

Question 3: Are public large language models impacting client decisions, and how does Forrester differentiate its offerings?
Answer: Clients often compare Forrester's proprietary model to public AI models but recognize the importance of trusted data for critical decisions. Forrester's IZOLA and AI Access integrate proprietary insights into secure environments, empowering employees with reliable data. Management sees more opportunities than threats from public AI models.

Question 4: Which industries or verticals are showing better client acquisition or retention?
Answer: Success is noted in international markets, particularly in CPG, manufacturing, and financial services. The U.S. federal government remains challenging but offers significant opportunities, supported by the Carahsoft partnership.

Question 5: When will efforts to increase contract value per client yield stronger results?
Answer: Average CV per client increased 5% YoY to $162,000. Management expects stabilization in retention rates and traction from AI Access to drive improvement in CV during Q4 and into 2026.

Question 6: What is the outlook for the Carahsoft partnership, and are similar partnerships planned?
Answer: Carahsoft is helping Forrester access new government markets and agencies. While results are not yet visible, early traction is promising. Management may explore similar partnerships in other regions or industries.

[Sentiment Analysis]
Analysts expressed cautious optimism about Forrester's strategic adjustments and AI Access launch. Management maintained a confident tone, emphasizing the differentiation of proprietary research assets and the potential of AI Access to drive growth despite macroeconomic challenges.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | YoY Change |
|-------------------------|-----------------|-----------------|------------------|
| Total Revenue | $94.3M | $102.5M | -8% |
| Research Revenue | $72.7M | $77.1M | -6% |
| Consulting Revenue | $21.5M | $23.4M | -8% |
| Operating Income | $9.9M | $8.2M | +21% |
| Net Income | $7.2M | $5.6M | +30% |
| EPS | $0.37 | $0.29 | +28% |
| Operating Expenses | -11% | - | - |
| Contract Value (CV) | -7% QoQ | - | - |

[Risks and Concerns]
- Persistent macroeconomic pressures, including reduced U.S. federal government spending, continue to impact consulting and events revenue.
- Events business faces challenges in sponsorship revenue and leadership transitions.
- Contract value decline and enrichment challenges reflect budgetary uncertainties.

[Final Takeaway]
Forrester's Q3 2025 results reflect ongoing macroeconomic challenges, with revenue declining across key segments. However, the launch of AI Access marks a pivotal strategic shift, offering a differentiated product that leverages proprietary research assets to address client needs in the age of AI. Early traction from AI Access, including a landmark government contract, signals potential for future growth. Management's focus on cost control, sales execution, and product innovation positions Forrester to navigate current headwinds while capitalizing on emerging opportunities.