Forrester Research, Inc.
Q2 2008 Earnings Call Transcript

Published: 31 Jul 2008

[Operator:]

Good day, ladies and gentlemen. And welcome to the Q2 2008 Forrester Research Earnings Conference Call. At this time all participants are in listen-only mode. (Operator instructions) I would now like to turn the call over to Karyl Levinson, Vice President and Corporate Communications. Please proceed, ma'am.

[Karyl Levinson:]

Good morning, and thank you for joining our second quarter 2008 call. With me today are George Colony, Forrester's Chairman of the board and Chief Executive Officer, Charles Rutstein, Forrester's Chief Operating Officer, and Mike Doyle, Forrester's Chief Financial Officer. Mike will open the call and provide detail on our financial results for the quarter. George will follow Mike and provide a strategic update on the business and our role-based strategy. After George completes his review, we'll open the call up for Q&A. A replay of this call will be available until August 13, 2008 and can be accessed by dialing 888-286-8010. Please reference the pass code 28361250. This call is also available via webcast and will be archived in the investor section at Forrester.com. 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 “expect”, “believe”, “anticipate”, “intend”, “plan”, “estimate”, 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. Some of the important factors that could cause actual future activities and results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. I'll now hand the call over to Mike Doyle.

[Mike Doyle:]

Thanks, Karyl, and good morning. I'll now begin my review of the financial performance for Forrester's second quarter and year-to-date results, the balance sheet of June 30th, our second quarter metrics and the outlook for the third quarter and full-year 2008. Please note that the income statement numbers I'm reporting are pro forma and exclude the following items. Amortization of intangibles, non-cash stock-based compensation expense, professional fees related to the stock option investigation and restatement of the company's historical financial statements, net realized gains from securities and non-marketable investments. Also, we continue to book an effective tax rate at 39% for pro forma purposes. The anticipated effective tax rate for 2008 is approximately 40%. As we reviewed in our last call, we began the year with good momentum, finishing the first quarter in line with our plan. Today, I'm happy to report that we have continued to maintain the positive momentum and achieved strong results for the second quarter 2008. We also announced today the acquisition of JupiterResearch which will continue to strengthen our syndicated business. With today's release, we're reporting second quarter 2008 revenues of $63.5 million and pro forma operating margin of 20%. Revenue increased 15% versus prior year with 2% attributable to foreign exchange. Operating margin performance was at the upper end of our guidance and two points above prior year. Pro forma earnings per share came in at $0.37 per share, just above the upper end of our guidance, and up 19% versus year ago. For the six months ended June 30th, 2008, we're reporting revenues of $118.5 million, up 16% from the same period a year ago. Pro forma operating margin increased 1% to 17% for the six month period ended June 30th, from 16% during 2007. Pro forma earnings per share were $0.63, an increase of $0.12 from 2007. Now, let me turn to a more detailed review of our second quarter results. Forrester's second quarter revenue increased 15% to $63.5 million from $55.2 million in the second quarter last year. Second quarter research services revenue increased 18% to $37.9 million from $32.1 million last year. Research services revenue comprise 60% of total revenue for the quarter versus 58% in the second quarter of 2007. We are pleased with the healthy increase in our research services revenue which is in line with our objective of driving a higher percentage of our total revenue from research services, what we call Q during 2008. Second quarter advisory services and other revenue increased 11% to $25.6 million from $23.1 million in the second quarter of 2007 and represented 40% of total revenue for the quarter. The increase in advisory services and other revenue was driven by strong performance at all the five events held during the second quarter. International revenues were 29% for the second quarter compared to 30% in the second quarter last year as business continues to grow faster domestically than in Europe and Asia-Pacific. I would now like to take you through the activity behind our revenue and review progress for each of our products starting with research. In the second quarter, 477 new research documents were added to roll view. 56,885 clients have now chosen a role. The top three roles are application development and program management professionals with 6,533 clients, enterprise architecture with 6,225 clients, and business process and application with 5,803 clients. During the second quarter, we refined our roles to become more relevant and focused on the individuals we strive to make successful every day. The Market Research professional was split into two separate roles. Consumer Market Research professional and the B-to-B Market Research professional. The eBusiness channel and Product Management professional was divided into the Consumer Product Strategy professionals and the eBusiness and Channel Strategy professional. We hosted 106 teleconferences in the second quarter with the total attendance of 4,482 participants. All 19 roles were represented. Forrester Leadership Boards, our peer offering for senior executives continues to perform well. Five boards focused on IT roles now have a total of 816 members. Technology Industry boards include the analysts relations and technology marketing councils with a total membership of 334. Finally, the marketing and strategy boards which include the CMO Group, the database marketing council, and the interactive marketing council now have a total membership of 230. At the end of the second quarter, the Forrester Leadership Boards had 1,380 members, an increase of 93 from March 31st 2008. The FLB business achieved year-over-year revenue growth of 49% in the second quarter of 2008. In our data business, we continue to add and renew an impressive list of clients. We added or renewed 22 1B+ companies in the second quarter including Toro [ph], Cisco, Proctor & Gamble, Google and Rabobank. Demand for our consulting services continues to be strong in the second quarter with growth coming in the areas of traditional strength. IT projects focused on IT strategy reviews, vendor selection, and assessment, RFP reviews and contract negotiation support and security assessments. Our Marketing and Strategy projects focused on customer market strategy, interactive marketing and customer experience. And our tech industry project centered on Total Economic Impact studies or TEI and market assessments. Our events business had another strong quarter with substantial growth in both sponsorship and attendee sales. As mentioned previously, we hosted five events. Three IT events and two marketing strategy in the second quarter. Specifically, the Europe Security Forum, the U.S. IT Forum, the Europe IT Forum, the Marketing Forum and Financial Services Forum for Marketing and Strategy professionals. In the third quarter of 2008, we'll be hosting two IT events. Security Forum and the Business and Technology Leadership Forum. Let me turn to second quarter operating expenses and operating income. Operating expenses for the second quarter were $51.1 million, up 13% from $45.3 million in the second quarter of last year. The operating expense increase was primarily driven by higher net head count in both sales and research. Operating income was $12.4 million or 20% of revenue compared with $9.9 million or 18% of revenue last year. The improved margin performance, year-over-year reflects leveraging of our expense base as revenues are growing faster than expenses and improvements in our events performance. Net income increased 18% to $8.6 million, and earnings per share were up 19% to $0.37 a share on diluted weighted average shares outstanding of 23.6 million compared with net income of $7.3 million and earnings per share of $0.31 on 23.8 million weighted average shares outstanding in the second quarter of last year. Looking at our results for the first six months, total revenue for the six month period ending June 30th, 2008 increased 16% to $118.4 million from $102.5 million last year. For year-to-date 2008, research services revenue increased by $10.5 million or 16% to $73.8 million. Research services revenue was 62% of the total year-to-date revenue consistent with 2007. Operating income for the six month period was $20.5 million or 17% of revenue compared with operating income of $15.9 million or 16% of revenue in 2007. This is in line with our long-term goal of targeting operating margin in the range of 17% to 19% while growing revenues at the rate of 15% to 20%. Net income on a year-to-date basis increased 22% to $14.8 million from $12.1 million last year and earnings per share for 2008 increased 24% to $0.63 on diluted weighted average shares outstanding of 23.6 million compared with $0.51 and 23.8 million weighted average shares outstanding last year. Now, I'd like to review the balance sheet. Our balance sheet remains strong. Our cash and marketable securities at June 30th were $278.7 million, up $29.7 million from our year-end 2007 balances. The portion of our marketable securities relating to auction rate securities has been reclassified as a long-term asset on the balance sheet. This is a result of the current liquidity issues in the auction rate marketplace. We fully expect these securities to redeem at par value. During the second quarter, we redeemed $11 million of these securities at par value which leaves $49.9 million remaining in our portfolio. We generated $37.5 million in cash from operations during the first half of 2008 which is up $11.4 million from prior year, due primarily to net income improvement and strong cash collections. We've also received $12.8 million in cash from options exercise in the first six months of the year. During the first half of 2008, we repurchased 722,000 shares at a total cost of $20 million and will continue to be active with the buyback at selected price points. Accounts Receivable at June 30th was $44.9 million compared to $37.8 million as of June 30th 2007. Our Days Sales outstanding at June 30th was 79 days, up from 78 days last June 30th 2007. And Accounts Receivable over 90 days was 13% at June 30th 2008 consistent with both prior year and in line with our targeted range. Both DSO and Accounts Receivable over 90 days improved versus the first quarter this year. DSO for the second quarter of 79 days was down from 84 days in the first quarter and Accounts Receivable over 90 for the second quarter of 13% was down from 21% in the first quarter of this year. Net property and equipment stayed flat at $6.6 million at June 30th this year. And our capital spending for the first six months of 2008 was approximately $1.7 million. Deferred revenue at June 30th was $108.1 million, up 17.5% over June 30th 2007. Our future Accounts Receivable balances are amounts to be invoiced in the future for clients with multiyear deals or scheduled payment terms. Deferred revenue plus future AR grew 15.3% year-over-year which is reflective in part to the favorable mix shift towards our syndicated business. And now I'll review Forrester's second quarter metrics. Agreement Value or AV, this represents the total value of all contracts for research and advisory services in place without regard to the amount of revenue that's already been recognized or is yet to be recognized, and was $200.1 million at June 30th, a 15% increase from last year. At June 30th, Forrester's retention rate for client companies was 75% and our dollar retention rate during the same time period was 86%. Our enrichment rate was 105% for the 12-month period ended June 30. Client and dollar retention rates and enrichment rates are calculated on a rolling 12-month basis. At the end of the second quarter, our total for client companies was 2,544, up 76 from year-end and 54 from the end of the first quarter. For head count, at the end of the second quarter, Forrester had a total staff of 967, up from 935 at the end of the first quarter. Current head count includes a research staff of 353, up 7 from March 31st, and sales staff of 343, up 16 from March 31st. We continue to monitor sales attrition and are pleased to see year-over-year improvement. We'll continue to add resources to the sales organization as the year progresses. As discussed in our first quarter conference call, we have introduced a new metric -- Roles per client. This metric captures the number of unique roles in each of our clients for the agreements in place at the end of each quarter. We believe this additional metric coupled with enrichment provides greater insight into the performance of role-based strategy. The metric for the first quarter was 3.2 roles per client. As of June 30th there are 3.3 roles per client. We'll continue to provide this metric on a quarterly basis going forward. The last topic I'd like to cover today is our business outlook for the third quarter and full year 2008. In summary, we're very pleased with our first half performance, in particular, the success of driving our research revenue. In addition, I'm excited about the acquisition of the Jupiter business. It will add value to Forrester by strengthening our role-based strategy, adding greater depth and breadth to our syndicated products and bringing us a talented research and sales organization. For the remainder of 2008, we are anticipating the impact of Jupiter to be slightly dilutive. As we look forward to 2009, we expect the acquisition to be accretive to earnings per share. Our pro forma guidance for the third quarter and full year reflects our early plans for integrating the JupiterResearch business and incorporates Jupiter business result effective August 1st, 2008. Our guidance excludes the following. The amortization of intangible assets which we expect to be approximately $500,000 to $1 million for the third quarter and $1 million to $2 million for the full year 2008 and non-cash stock-based compensation expense of $1.2 million to $1.5 million for the third quarter and $5 million to $6 million for 2008. Costs associated with the stock option investigation and restatement of our historical financial statements and gains and impairments on sales of marketable securities and unmarketable investments. For the third quarter, we're aiming to achieve total revenues of approximately $59 million to $62 million, and operating margin in the range of 15% to 17%, other income of approximately $1.6 million, pro forma income tax rate of 39% and pro forma diluted earnings per share of approximately $0.27 to $0.31. Our pro forma full year guidance is as follows. Total revenues of approximately $246 million to $252 million, a pro forma operating margin of approximately 17% to 18%, interest income of approximately $7 million, a pro forma income tax rate of 39%, and pro forma diluted earnings per share of $1.28 to $1.34. We have provided guidance on a GAAP basis for the third quarter and full year 2008 in our press release and 8-K filed this morning. Thank you. And I'll now turn the floor over to George.

[George Colony:]

Thanks, Mike. I'd like to welcome everyone to Forrester 2008 Q2 Call. In my remarks, I'd be addressing four topics. Number one, Forrester's three business imperatives, number two, new products, number three, the economy and projected tech spending for the remainder of 2008, and then finally the acquisition and integration plan for JupiterResearch. As Mike had noted, the company's momentum remains strong. Despite macro economic uncertainty, renewals and new business remain on track for the year. As I've referenced on past quarterly calls, Forrester has three business imperatives. Number one, to complete the build out of role-based strategy, two to grow our sales platform, and three to increase the quotient of our business that is syndicated. I'm happy to report that we had much progress on our role-based transition. The company's operational report card which tracks our role progress has moved from C+ to B- to B to B+ over the last four successive quarters. While we have more work to do we feel that the company is successfully navigating its voyage to be 100% focused on roles. The second quarter is our biggest events quarter of the year and roles were much in evidence at these forums, with role-based tracks, role-focused presentations, and Forrester Leadership Board sessions running throughout the five events. The forums all performed according to our plans. Forrester's researching and consulting continues to become more relevant to their focus on roles and roles increased relevancy and higher relevancy will ultimately increase new business win rates and renewal rates. With roles as our focus we are not lacking for market potential. The 4 million executives that are 19 roles represent the revenue potential of $9 billion. To-date we have penetrated less than 5% of our target market. Forrester's second business imperative is to expand our sales platform. Our goal is the 15% to 20% yearly expansion of the sales force. As Mike has already noted, sales attrition did attenuate in the second quarter while hiring accelerated. These factors increased sales force head count to 20% in the second quarter as compared with Q2 of 2007. This puts us on target to achieve our sales force expansion plans for the full year, an important factor in enabling the company to tap its large potential market space. Our final business imperative is to increase the quotient of Forrester's business which is syndicated. And we call this factor Q. Our Q products are role view, boards and data. Non-Q products are events and consulting. Q products are the most profitable and renewable in our product portfolio. In the second quarter of 2007, 58% of our revenue was syndicated, that is now moved to 60% in Q2 of 2008. Our goal is to move Q by 1 to 2 points per year with a long-term goal being Q of 70%. As I talked about on the first quarter call, the commission plan for sales people was changed for 2008 with higher incentives available for the sale of Q products. As in the first quarter, the plan successfully intends the sales force to make its Q plan. While there has certainly been imperative adjustment for the sales team, particularly on the company's seasoned veterans, the new commission plan has been an important factor in moving sales toward syndicated business. While investors do not have visibility on the company's bookings higher Q was translating in the short term into faster deferred revenue growth and in the long-term into a higher mix of syndicated business in reported revenue. In future calls we'll continue to update you on our progress in the three business imperatives. Turning to new launches, at year-end 2007, Forrester covered 17 roles. (inaudible) five in Marketing and Strategy, and four in the technology industry space. As Mike has mentioned, in Q2, we have launched two new roles in the Marketing and Strategy space, Consumer Market Research professionals and Consumer Product Strategy professionals. This now brings the company up to 19 roles, 8 in IT, 7 in Marketing Strategy and 4 in the Technology Industry. I would like to point out that we added these roles to sharpen and tune our role coverage. We do not need to launch new roles on a regular basis to drive our growth. The fastest growing segment of our business has been Forrester Leadership Boards for the last three years and this trend continues as evidenced by FLB's growth of 49% in the second quarter. At the end of 2007, Forrester had 10 boards. In the second quarter, we launched two new FLBs, the Market Resource Council and the Sourcing & Vendor Management Council. Both boards are launching with more than 50 charter members. The company's ultimate goal is to have at least one Forrester Leadership Board for all 19 roles. I'd like to say a few words about prospects for the technology economy. Forrester is now projecting that the second half of 2008 will have slower economic growth than the first. This will have impact on the technology market. We expect technology spend in the U.S. to increase 4% for all of 2008 versus an increase of 6% in 2007 and 2006. We expect weaker growth in computers, peripherals and communications equipment with software services and outsourcing continuing to perform well throughout the year. As Mike has noted, today, we acquired JupiterResearch. I would like to start by saying that all of the Forrester team is very happy to welcome Jupiter employees and clients to the Forrester family. Jupiter is a very well respected research brand and since its launch in the late 1980s, has been the leader in analyzing the impact of the internet on media and business. The combined companies now created unique and differentiated offering for executives in Marketing and Strategy roles. Forrester's leadership in this market now becomes even stronger platform for future growth. We're buying Jupiter for six reasons. Number one, financial. We expect the deal to increase shareholder value and cash flow over the long-term. Two, more content for the M&S roles. Three, new clients. Jupiter comes to us with 350 clients. Four, cross sell. Jupiter's penetration of Marketing and Strategy roles in accounts now gives Forrester the opportunity to cross sell to IT roles and Technology Industry roles in those companies. Five, people. The Jupiter team matches up culturally very well with the Forrester team. Jupiter significantly extends the sales and research coverage of the M&S client group. M&S Research gains 43 people, an increase of 58%, while sales moves up by 27 people, a 41% increase. Our final reason for buying Jupiter is data. Jupiter's pay loads and multiyear online survey portfolio enhances Forrester's data offerings forming a unique and powerful player in that business. Few details on the acquisition. Jupiter was owned by MCG, a publicly traded investment firm. The deal was for all cash and we're planning to fully integrate Jupiter's operations to Forrester's marketing strategy client group by the first quarter of 2009. Integration of Forrester's already begun. (inaudible) the head of Research of the Marketing and Strategy client group as we located to the former Jupiter headquarters and will be working there for the next six months. Dennis van Lingen, managing director of the M&S client group has overall responsibility for the Jupiter acquisition. Present plans are to retain substantially all Jupiter people. The company's former parent handled much of general and administrative work from their headquarters so there is little G&A redundancy at Jupiter. The Jupiter Web site research will continue as is through 2008. Afterwards, the operatings will be integrated with the Forrester side and product line. The uniting of the two leading research brands used by marketing and strategy executives creates a rich offering that will help those executives successfully navigate a world increasingly changed by technology. In addition to Jupiter, we remain very focused on evaluating other acquisition candidates. The economic slowdown and associated credit constraints are both working in our favor vis-à-vis pricing and potential deals. Having readily deployable cash in this market gives us a major bargaining advantage. With this said, I'll reiterate my long stated views and acquisitions. Any deal we do has to get over a very high bar. It has to work financially, culturally and strategically, bringing Forrester good clients, good people, and good fit. In other words, we'll continue to work hard to find only the best deals for Forrester. To conclude, all the Forrester team is pleased with the performance in the second quarter and in the first half of 2008. Our reference to drive Q, grow the sales force, and complete the WebEx transition remain on track. We are very happy to be bringing new value to the fold with Jupiter and expect similar acquisitions to the product line in the near future. Mike and I'll be traveling this quarter to visit with investors and hope to see many of you on the trips. Thanks for listening to the call. I'd now like to welcome Charles Rutstein, Forrester's COO to join Mike and me for questions. We will now take questions.

[Operator:]

(Operator instructions) Your first question comes from the line of Laura Lederman with William Blair. Please proceed with your question.

[Laura Lederman -- William Blair:]

Thank you so much for taking my call and congratulations on the acquisition and a good quarter. Just a few follow-up questions on the acquisition. You mentioned that it's slightly dilutive for this year, can you give us a sense of if that is a penny for the year, just give us a sense. And also revenue, how much would you expect to have in Q4 and that sort of thing? You know, I noticed that they did $4 million last year, can you take that $4 million divide it by four and assume there's $3.5 million revenue in quarter or was there deferred write-off that you would be getting that much revenue addition which is there? Thanks.

[Mike Doyle:]

Laura, it's Mike. Yes. Relative to the dilution, and obviously, there's integration expenses and a variety of things. We anticipate somewhere between $0.01 to $0.02 this year per share. Relative to revenue, we're looking at for, from August 1st forward, approximately $5 million obviously we'll be finalizing a number of things as we work our way in and finalize deferred revenue adjustments and that sort of thing. But we're estimated approximately $5 million.

[Laura Lederman -- William Blair:]

And I wasn't quite sure if I misunderstood the last comment before the Q&A that we would look for similar acquisition soon? Or similar I wasn't quite sure what that statement was.

[George Colony:]

Yes. Laura, this is George. Just saying that we remain very active on the M&A front. I mean we have spent a lot of time in this area right now as you might imagine.

[Laura Lederman -- William Blair:]

Yes. If you look at M&A, would you expect it more to be in the marketing side, the IT side, international versus U.S., can you give us a rough feel or all of the above? I'd say all the above – I mean having now brought Jupiter together with M&SA, that we would do with M&S deal that should speak, any controls there, just I think it's shifts a lot (inaudible) M&S to absorb them over the next 18 months. So…

[Mike Doyle:]

That being said, vote for on the market is on the market.

[George Colony:]

Exactly. Yes.

[Laura Lederman -- William Blair:]

One final question on Jupiter which is -- can you give a sense of how much the revenue grew last year? It was 14 up from what and gives us a sense of the margins that they were running.

[Mike Doyle:]

Laura, their historical revenue growth was I'd say low double digits in terms of a percentage basis. We obviously think over time we are going to increase that. I think we provide resources to the folks at Jupiter. And they're very talented group that I think the combination is going to bode very well for the combined entities. And relative to margin, I think they were -- their margin numbers were below ours, but I'm not going to give you too much color there other than that they were below ours, probably by 5 to 6 points, but again as we combine the companies, I'm very comfortable that as we go into 2009, we're going to have them to the right place just because -- and we're going to get it through -- continue to grow the business. We get our leverage on the top line I think more so that as George mentioned then on the expense side.

[Laura Lederman -- William Blair:]

Okay, I'm shifting gears a little bit. Two more questions and obviously I'll pass it on. Are you looking at all at a price increase in the core business, kind of what are your thoughts on that? And also international growth continues to lag U.S., is that another area that you hope to work on through acquisition or if you don't work on through acquisition, how would you expect to be able to accelerate? Excuse me.

[Charles Rutstein:]

Hey Laura, it's Charles. Let me start with the pricing one. As you know we do tend to look at pricing on a six-month basis. We did do some price increases in January of this year around user group, around data and things kind of around the margin. We did not do a price increase in July of this year. The reason for that is a couple fold. The biggest driver there is we're looking at -- we're doing a major look at pricing and packaging right now. I would say a deeper look than we have done in many, many years. That work was not complete in time for a July change. And therefore we did not do a July change. I would look for a change in the January cycle there on the pricing and packaging front. Last comment, maybe on that one, is in the back half of the year, we are taking a closer look at discounting and trying to get more of the contracts closer to the list price, which of course has the same net affect.

[Laura Lederman -- William Blair:]

Are you talking about new contracts or old contracts?

[Charles Rutstein:]

All contracts. As in any portfolio business, you have a distribution, some that are right at list price and some that are not there. So, of course that tells us where we need to focus. With respect to the international question, we saw one point of movement I think Mike in the quarter on the revenue line. I'm not sure that's significant. I think you're just seeing variability there. In fact, I'd say I'm more confident about our international growth and I have been in many years. We saw some strength in the quarter on the bookings front in the overseas business both in Europe as well as elsewhere around the world.

[Mike Doyle:]

Yes. To echo that on the international front, Laura, I would agree, I think relative to our internal targets, we were very happy with the way our European business in particular performed. All three of our client groups were better than what we'd hoped for. So I'm with Charles, I think that's just, I think it's not significant at this stage.

[George Colony:]

Laura, this is George, I think we kind of feel we're on a 70/30 path here, and we'll continue that

[Charles Rutstein:]

Yes.

[Laura Lederman -- William Blair:]

Final question, which is a very broad one. If you look at technology spending, you mentioned that you expect it to weaken a little bit, have you seen any weakness at all, your quarter was good, but any pockets of weakness like financial services would be a obvious suspect or retailers or anything if you just look at the buying segments, where is it strong in your business and where is it not as strong? Excuse me.

[Charles Rutstein:]

Hey Laura, it's Charles again. I would say we saw certainly some uncertainty in the quarter, you saw some longer sales cycles, you saw a need for more signatures as I think you would expect in this environment. I would say it's not necessarily concentrated solely in particular industries. For example, in some of the industries you mentioned, in financial services, in travel, we had reps who concentrate on those spaces who exceeded their plans for the quarter. I guess the way I would characterize it is that we're running the business in a way to accommodate those changes in the environment for the reps to have greater coverage in their pipelines. We're looking for them to get paperwork in front of clients earlier giving us more time to execute within the quarter. And so, that's why we've left the guidance unchanged for the back half of the year.

[Laura Lederman -- William Blair:]

Thank you so much and congratulations again on Jupiter.

[Mike Doyle:]

Thanks, Laura.

[Operator:]

(Operator instructions) Your question comes from Bill Sutherland with Boenning & Scattergood, Inc. Please proceed with your question.

[Michael Roomberg– Boenning & Scattergood:]

Good morning, guys. This is Michael Roomberg [ph] sitting in for Bill. Just a quick question on your third quarter guidance. Looks like your GAAP margins, you're looking at 10 to 16%, I'm just wondering if you could tell me a little bit drill down on that and what's behind that, potential downside to your Q2 performance?

[Mike Doyle:]

Mike, this is Mike Doyle. There's really the couple of things going on there. First, as we mentioned, we've got activities with Jupiter. And so, that's obviously going to suppress our activities a bit and as was the case last year, I mean our third quarter revenues are slightly below our second quarter revenues, which is, again, it's a natural cycle for us. So we get less leverage, so, you know, again we're a people company, people costs, so we're a little bit more fixed and then the last item is really intangibles, which again gets to the concept of bringing Jupiter on board that we've got (inaudible) increase on the amortization side.

[Michael Roomberg– Boenning & Scattergood:]

Right. Okay. And so you don't foresee that as an ongoing contraction of margins going forward?

[Mike Doyle:]

No, I don't. I think that we said this year, I think we're looking at probably $0.01 to $0.02, but what we did is we tightened up our EPS targeted range, we were at $1.20 to $1.36. Last guidance for full year with a $1.28 to $1.34, so we're comfortable this year staying basically within our guidance for earnings per share, and we think that Jupiter's going to be accretive to Forrester in 2009. So, we don't expect that this is going to have an adverse impact over our long-term goals.

[Michael Roomberg– Boenning & Scattergood:]

Great. That's all I got. Thanks.

[Mike Doyle:]

You bet.

[Operator:]

There are no further questions at this time.

[Karyl Levinson:]

Okay. Thank you very much for joining the call. And have a nice day.

[George Colony:]

Thank you very much, everyone.

[Operator:]

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect.