Forrester Restructures as AI Adoption Surges Amid Revenue Decline

Date of Call: Feb 12, 2026

Financials Results

• Revenue: Q4: $101.1M, down 6% YOY. Full Year: $396.9M, down 8% YOY.
• EPS: Q4: $0.17 per share, down 53% YOY. Full Year: $1.16 per share, down 21% YOY.
• Operating Margin: Q4: 4.1% of revenue, down from 8.3% YOY. Full Year: 7.6% of revenue, down from 8.9% YOY.

Guidance:

• Revenue for 2026 expected to be $345M-$360M, down 9%-13% YOY.
• Research revenue expected to decline mid-single-digits; consulting revenue expected to decline low twenties; events revenue expected to decline high teens.
• Operating margin expected to be 6%-6.5%.
• EPS expected to be $0.72-$0.82.
• Research to represent ~80% of total revenue, up from ~75% in 2025.
• Strategy consulting revenue impact of ~$6M in 2026.
• Interest expense expected to be $2.3M; tax rate guided at 29%.
• CV (Research Contract Value) expected to show modest growth as year exits.

Business Commentary:

AI Product Growth and Impact:

• Forrester reported that unique users of Forrester AI increased by 55% year-over-year, and the number of prompts rose by 65% year-over-year in Q4.
• AI Access generated over $5 million in bookings for 2025, contributing positively to client retention and count.
• The growth was driven by increased demand for AI products that enhance research accessibility and enable clients to create original content.

Financial Performance and Challenges:

• Forrester's Q4 revenue declined by 6% year-over-year, with a full-year decline of 8%.
• Consulting revenue was down 9%, and events revenue decreased by 29% for the full year.
• The declines were attributed to macroeconomic uncertainties, the impact of U.S. government strategy consulting pullback, and instability in the events portfolio.

Restructuring and Focus on Core Research:

• Forrester announced a restructuring affecting 8% of employees, including exiting the strategy consulting business and major changes in the events business.
• The restructuring aims to align costs with revenue and focus on expanding research contract value.
• The decision was driven by the need to address ongoing instability and competitive pressures in certain business lines.

Product and Service Enhancements:

• Forrester plans to introduce new versions of Forrester Decisions and expand Forrester AI capabilities in 2026.
• The company will prioritize actionable research and invest in additional proprietary data.
• These efforts are intended to enhance product offerings and drive growth in research contract value.

Sentiment Analysis:

Overall Tone: Neutral

• Management expresses disappointment with Q4 and full-year 2025 results, acknowledging challenges and underperformance in consulting and events. However, they highlight positive momentum: improved client retention, increased client count, strong free cash flow, and early success with AI Access. The tone is forward-looking and focused on executing 2026 initiatives to return to growth.

Q&A:

• Question from Andrew Nicholas (William Blair): Can you bucket the different pieces of the consulting business you are exiting versus continuing? Is the mid- to high-60s $ million number a good base for 2027 and beyond?
  Response: The sunsetting of strategy consulting will impact revenue by ~$6M, with a backlog of ~$8M to be serviced through 2026. The high-50s to low-60s range for consulting revenue is about right for 2026.

• Question from Andrew Nicholas (William Blair): Can you add color on lower wallet retention and reasons for cancellation (macro vs. seat-related)?
  Response: Volatility and uncertainty in the U.S. government and U.S. business sectors are impacting retention, though there is momentum internationally and in high-tech.

• Question from Anya Soderstrom (Sidoti): Can you elaborate on the product pipeline for 2026?
  Response: Focus is on providing more ways to buy and be embedded in clients' work, with a backlog of product improvements and announcements planned, including AI enhancements.

• Question from Anya Soderstrom (Sidoti): Are there any initiatives to improve the revenue stream from events beyond schedule changes?
  Response: Initiatives include rebuilding the sponsorship sales organization and shifting to a new strategy of smaller, more localized events for better engagement.

• Question from Vincent Colicchio (Barrington Research): Why the ongoing disconnect between the value of your research versus LLM models, and when may this change?
  Response: Churn is not due to AI replacements; Forrester's AI solutions offer proprietary data and human expert support. There is an opportunity as mistrust grows in public LLM content, with a future shift expected toward private models.

• Question from Vincent Colicchio (Barrington Research): With new sales leadership, will there be any change in the sales process?
  Response: Changes include reorganizing North American sales around industries, developing a business development mindset, sharpening execution on the retention lifecycle, and measuring sales with a balanced scorecard.

• Question from Vincent Colicchio (Barrington Research): How did AI Access perform versus expectations in Q4 and in the new year?
  Response: Performance exceeded expectations, with unique users up 55% and prompts up 65% YOY. AI Access is helping win new clients and win back former clients, improving deal velocity and client count.

Contradiction Point 1

AI Access Product Performance and Expectations

Contradiction on the product's launch status and performance trajectory.

What was the question from Vincent Colicchio at Barrington Research? - Vincent Colicchio (Barrington Research)

2025Q4: AI Access exceeded expectations in Q4—performance was ~90% better than initial conservative forecasts. - [George Colony](CEO), [Carrie Johnson](CPO), [Chris Finn](CFO)

What explains the ongoing disconnect between your research and LLM model demand, when might this shift, how will new sales leadership affect the sales process, and how did AI Access perform versus expectations in Q4 with its current trend? - Thomas Roesch (William Blair)

20251031-2025 Q3: It is too early to definitively determine the demographic for the new AI Access product, which has only been available for a couple of weeks. - [Nate Swan](CSO)

Contradiction Point 2

Impact of AI on Research Business and Customer Demographics

Contradiction on whether AI is a threat replacing research or an opportunity to attract new clients.

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2025Q4: There is no churn due to AI replacements. Forrester AI Access is differentiated by proprietary data, original ideas, and human expert support, which creates mistrust of public LLM content and positions Forrester as a trusted alternative. - [Christophe Favre](CSO), [George Colony](CEO)

What is the ongoing disconnect between research value and LLM demand, and when might it change? Will new sales leadership alter the sales process? How did AI Access perform in Q4 versus expectations, and what is its current trend? - Thomas Roesch (William Blair)

20251031-2025 Q3: The key point is that not having AI Access will make it difficult to attract that younger demographic. The product is designed to widen the Forrester Decisions portfolio, enabling more executives to use Forrester research without needing continuous guidance from analysts. - [Nate Swan](CSO)

Contradiction Point 3

Consulting Business Restructure and Revenue Impact

Contradiction on the scale and phasing of the consulting business exit.

What is your response to Andrew Nicholas of William Blair? - Andrew Nicholas (William Blair)

2025Q4: The strategy consulting business line will sunset, with a revenue impact of ~$6 million in 2026. There is an approximate $8 million backlog to be serviced through 2026, tapering off by late Q3/Q4. The ~$55–$60 million range for consulting revenue is about right. - [Chris Finn](CFO)

Can you categorize the consulting business segments by size for exiting versus continuing? Is the mid-to-high $60 million number a suitable base for 2027 and beyond? - Thomas Roesch (William Blair & Company L.L.C.)

2025Q3: The sales pipeline is roughly the same size year-over-year... Overall conversion rates are expected to improve in Q4, driven by better process and the momentum from the new AI Access product... - [Nate Swan](CSO)

Contradiction Point 4

Sales Force Composition and Ramp Status

Contradiction on the tenure and stability of the sales organization.

What is Vincent Colicchio's question from Barrington Research? - Vincent Colicchio (Barrington Research)

2025Q4: Sales process changes include reorganizing North American sales around six industries... sharpening execution on the retention lifecycle. - [Christophe Favre](CSO)

Will the sales process change with the new sales leadership? - Vincent Alexander Colicchio (Barrington Research Associates, Inc.)

2025Q2: Approximately 75% of the sales organization has been with the company for over 25 months, indicating a tenured team. Attrition is in line with expectations... - [George F. Colony](CEO)

Contradiction Point 5

Sales Process and Conversion Focus

Contradiction on the primary focus for improving sales performance.

What factors contributed to the Q3 revenue growth? - Vincent Colicchio (Barrington Research)

2025Q4: Sales process changes include... sharpening execution on the retention lifecycle. Sales will be measured on both quantitative and qualitative metrics (pipeline, conversions, velocity, quality). A strong pipeline and win-back campaign are set for 2026. - [Christophe Favre](CSO)

Will the new sales leadership bring changes to the sales process? - Vincent Alexander Colicchio (Barrington Research Associates, Inc.)

2025Q2: The focus is on improving conversion rates by getting managers involved earlier in the sales process and accelerating the movement of deals... - [Nate Swan](CSO)