10-Q 1 forr-10q_20200331.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

FOR THE QUARTERLY PERIOD ENDED March 31, 2020

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

COMMISSION FILE NUMBER: 000-21433

FORRESTER RESEARCH, INC.

(Exact name of registrant as specified in its charter)

Delaware |  | 04-2797789
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
60 Acorn Park Drive CAMBRIDGE, Massachusetts |  | 02140 (Zip Code)
(Address of principal executive offices) |  |

(617) 613-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class |  | Trading Symbol(s) |  | Name of Each Exchange on Which Registered
Common Stock, $.01 Par Value |  | FORR |  | Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer |  | ☐ |  | Accelerated filer |  | ☒
Non-accelerated filer |  | ☐ |  | Smaller reporting company |  | ☐
Emerging growth company |  | ☐ |  |  |  |

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2020, 18,760,000 shares of the registrant’s common stock were outstanding.

FORRESTER RESEARCH, INC.

INDEX TO FORM 10-Q

|  | Page
PART I | FINANCIAL INFORMATION |
Item 1. | Financial Statements (Unaudited) | 3
| Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 | 3
| Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019 | 4
| Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2020 and 2019 | 5
| Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 | 6
| Notes to Consolidated Financial Statements | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 29
Item 4. | Controls and Procedures | 29
PART II | OTHER INFORMATION |
Item 1A. | Risk Factors | 30
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 30
Item 6. | Exhibits | 31

2

PART I.

ITEM 1. FINANCIAL STATEMENTS

FORRESTER RESEARCH, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data, unaudited)

|  | March 31, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
ASSETS |  |  |  |  |  |  |  |
Current Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 69,815 |  |  | $ | 67,904 |
Accounts receivable, net of allowance for expected credit losses of $1,144 and $628 as of March 31, 2020 and December 31, 2019, respectively |  |  | 59,505 |  |  |  | 84,605 |
Deferred commissions |  |  | 18,603 |  |  |  | 20,326 |
Prepaid expenses and other current assets |  |  | 24,980 |  |  |  | 19,201 |
Total current assets |  |  | 172,903 |  |  |  | 192,036 |
Property and equipment, net |  |  | 28,748 |  |  |  | 29,937 |
Operating lease right-of-use assets |  |  | 64,220 |  |  |  | 69,100 |
Goodwill |  |  | 242,690 |  |  |  | 243,895 |
Intangible assets, net |  |  | 92,655 |  |  |  | 97,363 |
Other assets |  |  | 7,082 |  |  |  | 6,829 |
Total assets |  | $ | 608,298 |  |  | $ | 639,160 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |
Current Liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 352 |  |  | $ | 505 |
Accrued expenses and other current liabilities |  |  | 51,450 |  |  |  | 79,857 |
Current portion of long-term debt |  |  | 10,156 |  |  |  | 9,375 |
Deferred revenue |  |  | 195,399 |  |  |  | 179,194 |
Total current liabilities |  |  | 257,357 |  |  |  | 268,931 |
Long-term debt, net of deferred financing fees |  |  | 104,202 |  |  |  | 121,170 |
Non-current operating lease liabilities |  |  | 63,840 |  |  |  | 67,062 |
Other non-current liabilities |  |  | 24,727 |  |  |  | 23,909 |
Total liabilities |  |  | 450,126 |  |  |  | 481,072 |
Stockholders' Equity (Note 12): |  |  |  |  |  |  |  |
Preferred stock, $0.01 par value |  |  |  |  |  |  |  |
Authorized - 500 shares; issued and outstanding - none |  |  | — |  |  |  | — |
Common stock, $0.01 par value |  |  |  |  |  |  |  |
Authorized - 125,000 shares |  |  |  |  |  |  |  |
Issued - 23,389 and 23,275 shares as of March 31, 2020 and December 31, 2019, respectively |  |  |  |  |  |  |  |
Outstanding - 18,758 and 18,644 shares as of March 31, 2020 and December 31, 2019, respectively |  |  | 234 |  |  |  | 233 |
Additional paid-in capital |  |  | 220,308 |  |  |  | 216,454 |
Retained earnings |  |  | 117,477 |  |  |  | 118,147 |
Treasury stock - 4,631 shares as of March 31, 2020 and December 31, 2019, at cost |  |  | (171,889 | ) |  |  | (171,889 | )
Accumulated other comprehensive loss |  |  | (7,958 | ) |  |  | (4,857 | )
Total stockholders’ equity |  |  | 158,172 |  |  |  | 158,088 |
Total liabilities and stockholders’ equity |  | $ | 608,298 |  |  | $ | 639,160 |

The accompanying notes are an integral part of these consolidated financial statements.

3

FORRESTER RESEARCH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |
Research services |  | $ | 72,796 |  |  | $ | 68,609 |
Advisory services and events |  |  | 33,549 |  |  |  | 32,040 |
Total revenues |  |  | 106,345 |  |  |  | 100,649 |
Operating expenses: |  |  |  |  |  |  |  |
Cost of services and fulfillment |  |  | 43,353 |  |  |  | 45,110 |
Selling and marketing |  |  | 40,273 |  |  |  | 42,033 |
General and administrative |  |  | 12,005 |  |  |  | 13,190 |
Depreciation |  |  | 2,406 |  |  |  | 2,023 |
Amortization of intangible assets |  |  | 4,712 |  |  |  | 6,210 |
Acquisition and integration costs |  |  | 2,875 |  |  |  | 2,967 |
Total operating expenses |  |  | 105,624 |  |  |  | 111,533 |
Income (loss) from operations |  |  | 721 |  |  |  | (10,884 | )
Interest expense |  |  | (1,538 | ) |  |  | (2,352 | )
Other income (expense), net |  |  | 310 |  |  |  | (270 | )
Gain (loss) on investments, net |  |  | 13 |  |  |  | (36 | )
Loss before income taxes |  |  | (494 | ) |  |  | (13,542 | )
Income tax expense (benefit) |  |  | 19 |  |  |  | (226 | )
Net loss |  | $ | (513 | ) |  | $ | (13,316 | )
Basic loss per common share |  | $ | (0.03 | ) |  | $ | (0.73 | )
Diluted loss per common share |  | $ | (0.03 | ) |  | $ | (0.73 | )
Basic weighted average common shares outstanding |  |  | 18,705 |  |  |  | 18,363 |
Diluted weighted average common shares outstanding |  |  | 18,705 |  |  |  | 18,363 |

The accompanying notes are an integral part of these consolidated financial statements.

4

FORRESTER RESEARCH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, unaudited)

| Three Months Ended |
| March 31, |
| 2020 |  |  | 2019 |
Net loss | $ | (513 | ) |  | $ | (13,316 | )
Other comprehensive loss, net of taxes: |  |  |  |  |  |  |
Foreign currency translation |  | (1,920 | ) |  |  | (430 | )
Net change in market value of interest rate swap |  | (1,181 | ) |  |  | — |
Other comprehensive loss |  | (3,101 | ) |  |  | (430 | )
Comprehensive loss | $ | (3,614 | ) |  | $ | (13,746 | )

The accompanying notes are an integral part of these consolidated financial statements.

5

FORRESTER RESEARCH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

| Three Months Ended |
| March 31, |
| 2020 |  |  | 2019 |
Cash flows from operating activities: |  |  |  |  |  |  |
Net loss | $ | (513 | ) |  | $ | (13,316 | )
Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |  |  |  |  |
Depreciation |  | 2,406 |  |  |  | 2,023 |
Impairment of property and equipment |  | 626 |  |  |  | — |
Amortization of intangible assets |  | 4,712 |  |  |  | 6,210 |
Net (gains) losses from investments |  | (13 | ) |  |  | 36 |
Deferred income taxes |  | (251 | ) |  |  | (10,529 | )
Stock-based compensation |  | 2,802 |  |  |  | 2,685 |
Operating lease right-of-use asset amortization and impairments |  | 4,535 |  |  |  | 3,225 |
Amortization of deferred financing fees |  | 244 |  |  |  | 230 |
Foreign currency (gains) losses |  | (229 | ) |  |  | 330 |
Changes in assets and liabilities, net of acquisitions: |  |  |  |  |  |  |
Accounts receivable |  | 24,556 |  |  |  | 19,239 |
Deferred commissions |  | 1,723 |  |  |  | (1,577 | )
Prepaid expenses and other current assets |  | (6,943 | ) |  |  | (1,945 | )
Accounts payable |  | (143 | ) |  |  | 902 |
Accrued expenses and other liabilities |  | (27,264 | ) |  |  | (7,244 | )
Deferred revenue |  | 18,574 |  |  |  | 29,108 |
Operating lease liabilities |  | (2,999 | ) |  |  | (3,389 | )
Net cash provided by operating activities |  | 21,823 |  |  |  | 25,988 |
Cash flows from investing activities: |  |  |  |  |  |  |
Acquisitions, net of cash acquired |  | — |  |  |  | (238,943 | )
Purchases of property and equipment |  | (2,401 | ) |  |  | (2,772 | )
Net cash used in investing activities |  | (2,401 | ) |  |  | (241,715 | )
Cash flows from financing activities: |  |  |  |  |  |  |
Proceeds from borrowings, net of costs |  | — |  |  |  | 171,275 |
Payments on borrowings |  | (16,344 | ) |  |  | (21,563 | )
Payment of debt issuance costs |  | — |  |  |  | (857 | )
Deferred acquisition payments |  | — |  |  |  | (766 | )
Proceeds from issuance of common stock under employee equity incentive plans |  | 1,955 |  |  |  | 3,361 |
Taxes paid related to net share settlements of stock-based compensation awards |  | (902 | ) |  |  | (89 | )
Net cash provided by (used in) financing activities |  | (15,291 | ) |  |  | 151,361 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |  | (2,683 | ) |  |  | 438 |
Net change in cash, cash equivalents and restricted cash |  | 1,448 |  |  |  | (63,928 | )
Cash, cash equivalents and restricted cash, beginning of period |  | 69,192 |  |  |  | 140,296 |
Cash, cash equivalents and restricted cash, end of period | $ | 70,640 |  |  | $ | 76,368 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |
Cash paid for interest | $ | 1,286 |  |  | $ | 1,948 |
Cash paid for income taxes | $ | 1,356 |  |  | $ | 849 |

Non-cash financing activities for the three months ended March 31, 2019 include $3.7 million of debt issuance costs deducted directly from the proceeds of borrowings by the lender. Refer to Note 4 – Debt for further information.

The accompanying notes are an integral part of these consolidated financial statements.

6

FORRESTER RESEARCH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Interim Consolidated Financial Statements

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. It is recommended that these financial statements be read in conjunction with the consolidated financial statements and related notes that appear in the Forrester Research, Inc. (“Forrester”) Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the financial position, results of operations, comprehensive loss and cash flows as of the dates and for the periods presented have been included. The results of operations for the three months ended March 31, 2020 may not be indicative of the results for the year ending December 31, 2020, or any other period.

Liquidity and Impact of COVID-19

The global spread of the novel coronavirus (COVID-19), which has been declared by the World Health Organization to be a “pandemic”, has spread to many countries and is impacting worldwide economic activity. Many governments have implemented policies intended to stop or slow the further spread of the disease, such as shelter-in-place orders, resulting in the temporary closure of non-essential businesses, and these measures may remain in place for a significant period of time. Due to COVID-19 materially impacting our business beginning only in the last month of the quarter, the impact on our business in the first quarter of 2020 is primarily limited to March customer contract bookings and the amount of consulting projects delivered. While the duration and severity of this pandemic is uncertain, the Company currently expects that its results of operations in the second quarter of 2020 will have the most significant impact of the effects of COVID-19, and that subsequent periods will also be negatively impacted. The Company typically generates a significant portion of its Events revenues in the second quarter of the year, including revenues from its two flagship events, the SiriusDecisions Summit and CX North America, both of which will be held as virtual events, resulting in a significant reduction in revenues and profits from these two events. In addition, the Company cancelled two smaller events originally scheduled for the second quarter of the year. The Company also expects a reduction in its subscription Research, Connect and Analytics revenues and a reduction in Consulting revenues during the second quarter due to reduced customer contract booking activity in March, which is expected to continue through at least the second quarter of 2020. The extent to which the COVID-19 pandemic ultimately impacts the Company’s business, financial condition, results of operations, cash flows, and liquidity may differ from the Company’s current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

The Company has implemented several cost-reduction measures that include reductions to travel, new hiring, and employee incentive compensation programs. The Company will continue to proactively respond to the situation and may take further actions that alter the Company’s business operations as may be required by governmental authorities, or that the Company determines are in the best interests of its employees and customers.

As of March 31, 2020, the Company is in compliance with its financial covenants under its Credit Agreement (refer to Note 4 – Debt). The Company currently forecasts that it will be in compliance with its financial covenants for at least one year from the issuance of these interim financial statements, after taking into consideration the measures noted above. If the impact of COVID-19 is more severe than currently forecasted this may impact the Company’s ability to comply with its financial covenants which could have a material adverse effect on the Company.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to it and the unknown future impacts COVID-19 as of March 31, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, the allowance for expected credit losses, the carrying value of our goodwill and other long-lived assets, valuation allowances for tax assets and revenue recognition. While there was not a material impact to the consolidated financial statements as of and for the quarter ended March 31, 2020 resulting from the Company’s assessments, the Company’s future assessment of its current expectations of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to its consolidated financial statements in future reporting periods.

7

Presentation of Restricted Cash

The following table summarizes the end-of-period cash and cash equivalents from the Company's Consolidated Balance Sheets and the total cash, cash equivalents and restricted cash as presented in the accompanying Consolidated Statements of Cash Flows (in thousands).

| Three Months Ended March 31, |
| 2020 |  |  | 2019 |
Cash and cash equivalents | $ | 69,815 |  |  | $ | 75,012 |
Restricted cash classified in (1): |  |  |  |  |  |  |
Prepaid expenses and other current assets |  | 787 |  |  |  | 208 |
Other assets |  | 38 |  |  |  | 1,148 |
Cash, cash equivalents and restricted cash shown in statement of cash flows | $ | 70,640 |  |  | $ | 76,368 |

(1) | Restricted cash consists primarily of collateral required for letters of credit. The short-term or long-term classification is determined in accordance with the expiration of the underlying lease as the letters of credit are non-cancellable while the leases are in effect.

Adoption of New Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (“Topic 326”). The standard amends the existing financial instrument incurred loss impairment model by requiring entities to use a forward-looking approach based on expected losses and to consider a broader range of reasonable and supportable information to estimate credit losses on certain types of financial instruments, including trade receivables. On January 1, 2020, the Company adopted the standard using the modified retrospective method in which prior periods are not adjusted and recorded a cumulative effect adjustment of $0.2 million to decrease retained earnings. Expected losses are based, in part, on the Company’s historical loss rate experience as well as management’s expectations of future losses as informed by current economic conditions.

The allowance for expected credit losses on accounts receivable for the three months ended March 31, 2020 is summarized as follows (in thousands):

| Total Allowance |
Balance at December 31, 2019 | $ | 628 |
Cumulative effect adjustment of adopting Topic 326 |  | 218 |
Provision for expected credit losses |  | 433 |
Net write-offs |  | (122 | )
Translation adjustments |  | (13 | )
Balance at March 31, 2020 | $ | 1,144 |

The Company adopted the guidance in ASU No. 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment on January 1, 2020. The new standard simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test and requires that instead, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The adoption of this standard did not impact the Company’s financial position or results of operations.

The Company adopted the guidance in ASU No. 2018-13, Fair Value Measurement Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement on January 1, 2020. The new standard modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including changes to fair value transfers and Level 3 fair value measurements. Changes required upon adoption of this standard are included in Note 8 – Fair Value Measurements and did not impact the Company’s financial position or results of operations.

The Company adopted the guidance in ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract on January 1, 2020. The new standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

8

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. The new standard provides guidance to simplify the accounting for income taxes in certain areas, changes the accounting for select income tax transactions and makes other minor improvements. The new standard will be effective for the Company on January 1, 2021. The Company is currently evaluating the potential impact that this standard may have on its financial position and results of operations.

Note 2 — Acquisitions

Forrester accounts for business combinations in accordance with the acquisition method of accounting as prescribed by Accounts Standards Codification (“ASC”) Topic 805, Business Combinations (“Topic 805”). The acquisition method of accounting requires the Company to record the assets and liabilities acquired based on their estimated fair values as of the acquisition date, with any excess of the consideration transferred over the estimated fair value of the net assets acquired, including identifiable intangible assets, to be recorded to goodwill. The Company did not have any business combinations during the three months ended March 31, 2020.

SiriusDecisions, Inc.

On January 3, 2019, Forrester acquired 100% of the issued and outstanding shares of SiriusDecisions, Inc. (“SiriusDecisions”), a privately-held company based in Wilton, Connecticut with approximately 350 employees globally. SiriusDecisions equips business-to-business (B2B) sales, marketing, and product leaders with the actionable research, frameworks, tools, operational benchmarks and expert advice they need to maximize performance and drive alignment. The acquisition creates several opportunities for the Company, including cross-selling services to the Company’s respective client bases, extending SiriusDecisions’ platform, methodologies, data, and best-practices tools into new roles, and accelerating international and industry growth. The acquisition of SiriusDecisions was determined to be an acquisition of a business under the provisions of Topic 805.

Pursuant to the terms of the merger agreement, the Company paid $246.8 million at closing after certain transaction expense adjustments, which was subject to a working capital adjustment.

SiriusDecisions’ operating results and the related goodwill are reported within the Company’s Products and Research segments, as realigned on January 1, 2020 and further discussed in Note 14 – Operating Segments. During the year ended December 31, 2019, the Company finalized the purchase price allocation and related accounting for the acquisition.

The Company recognized $1.7 million of acquisition costs in the three months ended March 31, 2019 related to the SiriusDecisions acquisition. The costs primarily consisted of investment banker fees and other professional services costs and are included in acquisition and integration costs within the Consolidated Statements of Operations.

Note 3 — Goodwill and Other Intangible Assets

Goodwill

The change in the carrying amount of goodwill for the three months ended March 31, 2020 is summarized as follows (in thousands):

| Total |
Balance at December 31, 2019 | $ | 243,895 |
Translation adjustments |  | (1,205 | )
Balance at March 31, 2020 | $ | 242,690 |

The Company assesses goodwill for impairment annually on November 30, or on an interim basis if an event indicates a specific impairment may exist. As a result of the Company’s segment realignment on January 1, 2020 (refer to Note 14 -Operating Segments for additional information), the Company performed a qualitative assessment of goodwill for all reporting units immediately prior to and after the reporting unit change, which was based on the quantitative assessment performed as of November 30, 2019 and activity in December 2019. The Company concluded that no impairment existed and goodwill was reassigned based on the relative fair values of the product lines transferred to each reporting unit. Approximately $12 million of goodwill is allocated to the Company’s Product reporting unit, which has a negative carrying value as of March 31, 2020.

As of March 31, 2020, the Company had no accumulated goodwill impairment losses.

9

Finite-Lived Intangible Assets

The carrying values of finite-lived intangible assets are as follows (in thousands):

| March 31, 2020 |
| Gross |  |  |  |  |  |  | Net |
| Carrying |  |  | Accumulated |  |  | Carrying |
| Amount |  |  | Amortization |  |  | Amount |
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |
Customer relationships | $ | 109,608 |  |  | $ | 42,100 |  |  | $ | 67,508 |
Technology |  | 16,676 |  |  |  | 7,796 |  |  |  | 8,880 |
Backlog |  | 13,000 |  |  |  | 8,125 |  |  |  | 4,875 |
Trademarks |  | 12,453 |  |  |  | 1,061 |  |  |  | 11,392 |
Total | $ | 151,737 |  |  | $ | 59,082 |  |  | $ | 92,655 |

| December 31, 2019 |
| Gross |  |  |  |  |  |  | Net |
| Carrying |  |  | Accumulated |  |  | Carrying |
| Amount |  |  | Amortization |  |  | Amount |
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |
Customer relationships | $ | 109,825 |  |  | $ | 40,169 |  |  | $ | 69,656 |
Technology |  | 16,661 |  |  |  | 7,051 |  |  |  | 9,610 |
Backlog |  | 13,000 |  |  |  | 6,500 |  |  |  | 6,500 |
Trademarks |  | 12,451 |  |  |  | 854 |  |  |  | 11,597 |
Total | $ | 151,937 |  |  | $ | 54,574 |  |  | $ | 97,363 |

Estimated intangible asset amortization expense for each of the five succeeding years is as follows (in thousands):

2020 (remainder) | $ | 14,133 |
2021 |  | 12,344 |
2022 |  | 11,005 |
2023 |  | 10,830 |
2024 |  | 9,721 |
Thereafter |  | 34,622 |
Total | $ | 92,655 |

Note 4 — Debt

In connection with the acquisition of SiriusDecisions, on January 3, 2019 (the “Closing Date”) the Company entered into a $200.0 million credit agreement (the “Credit Agreement”). The Credit Agreement provides for: (1) senior secured term loans in an aggregate principal amount of $125.0 million (the “Term Loans”) and (2) a senior secured revolving credit facility in an aggregate principal amount of $75.0 million (the “Revolving Credit Facility”). On the Closing Date, the full $125.0 million of the Term Loans and $50.0 million of the Revolving Credit Facility were used to finance a portion of the acquisition of SiriusDecisions and to pay certain fees, costs and expenses incurred in connection with the acquisition and the Credit Agreement. The Credit Agreement is scheduled to mature on January 3, 2024.

The Credit Agreement permits the Company to borrow incremental term loans and/or increase commitments under the Revolving Credit Facility in an aggregate principal amount up to $50.0 million, subject to approval by the administrative agent and certain customary terms and conditions.

The Term Loans and Revolving Credit Facility can be repaid early, in part or in whole, at any time and from time to time, without premium or penalty, other than customary breakage reimbursement requirements for London Interbank Offering Rate (“LIBOR”) based loans. The Term Loans must be prepaid with net cash proceeds of (i) certain debt incurred or issued by Forrester and its restricted subsidiaries and (ii) certain asset sales and condemnation or casualty events, subject to certain reinvestment rights.

10

Amounts borrowed under the Credit Agreement bear interest, at Forrester’s option, at a rate per annum equal to either (i) LIBOR for the a pplicable interest period plus a margin that is between 1.75% and 2.50% based on Forrester’s consolidated total leverage ratio or (ii) the alternate base rate plus a margin that is between 0.75% and 1.50% based on Forrester’s consolidated total leverage ra tio. In addition, the Company pay s a commitment fee that is between 0.25% and 0.3 5% per annum, based on Forrester’s consolidated total leverage ratio, on the average daily unused portion of the Revolving Credit Facility, payable quarterly, in arrears.

The Term Loans require repayment of the outstanding principal balance in quarterly installments each year, commencing on March 31, 2019 with the balance repayable on the maturity date, subject to customary exceptions. The amount payable in each year as of March 31, 2020 is set forth in the table below (in thousands):

2020 (remainder) | $ | 7,031 |
2021 |  | 12,500 |
2022 |  | 12,500 |
2023 |  | 15,625 |
2024 |  | 68,750 |
Total remaining principal payments | $ | 116,406 |

The Revolving Credit Facility does not require repayment prior to maturity, subject to customary exceptions. In addition to financing the acquisition, proceeds from the Revolving Credit Facility can also be used towards working capital and general corporate purposes. Up to $5.0 million of the Revolving Credit Facility is available for the issuance of letters of credit, and any drawings under the letters of credit must be reimbursed within one business day. As of March 31, 2020, $0.9 million in letters of credit were issued under the Revolving Credit Facility.

Forrester incurred $1.8 million in costs related to the Revolving Credit Facility, which are recorded in other assets on the Consolidated Balance Sheets. These costs are being amortized as interest expense on the Consolidated Statements of Operations on a straight-line basis over the five-year term of the Revolving Credit Facility. Forrester incurred $2.8 million in costs related to the Term Loans, which are recorded as a reduction to the face value of long-term debt on the Consolidated Balance Sheets. These costs are being amortized as interest expense on the Consolidated Statements of Operations utilizing the effective interest rate method.

Outstanding Borrowings

The following table summarizes the Company’s total outstanding borrowings as of the dates indicated (in thousands):

Description: |  | March 31, 2020 |  |  | December 31, 2019 |
Term loan facility (1) |  | $ | 116,406 |  |  | $ | 118,750 |
Revolving credit facility (2) |  |  | — |  |  |  | 14,000 |
Principal amount outstanding (3) |  |  | 116,406 |  |  |  | 132,750 |
Less: Deferred financing fees |  |  | (2,048 | ) |  |  | (2,205 | )
Net carrying amount |  | $ | 114,358 |  |  | $ | 130,545 |

(1) | The contractual annualized interest rate as of March 31, 2020 on the Term loan facility was 3.00%, which consisted of LIBOR of 1.00% plus a margin of 2.00%. However, the Company has an interest rate swap that effectively converts the floating LIBOR base rates on a portion of the amounts outstanding to a fixed base rate. Refer to Note 7 – Derivatives and Hedging for further information on the swap.

(2) | The Company had $75.0 million of available borrowing capacity on the revolver (not including the expansion feature) as of March 31, 2020.

(3) | The weighted average annual effective rate on the Company's total debt outstanding for the three months ended March 31, 2020, was 3.88%.

The Credit Agreement contains certain customary restrictive loan covenants, including among others, financial covenants that apply a maximum leverage ratio and minimum fixed charge coverage ratio. The maximum leverage ratio is based on total debt outstanding at the measurement date divided by EBITDA (as defined in the Credit Agreement) and the fixed charge coverage ratio is based upon EBITDA, as defined, less capital expenditures, as a ratio to certain fixed charges, including Term Loan amortization, cash interest expense and cash taxes. The negative covenants limit, subject to various exceptions, the Company’s ability to incur additional indebtedness, create liens on assets, merge, consolidate, liquidate or dissolve any part of the Company, sell assets, pay dividends or other payments in respect to capital stock, change fiscal year, or enter into certain transactions with affiliates and subsidiaries. The Credit Agreement also contains customary events of default, representations, and warranties.

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As of March 31, 2020, the Company is in c ompliance with its financial covenants under the Credit Agreement. The Company currently forecasts that it will be in compliance with its financial covenants for at least one year from the issuance of these interim financial statements, after taking into consideration the cost-reduction measures implemented during the first quarter of the year. If the impact of COVID-19 is more severe than currently forecasted this may impact the Company’s ability to comply with its financial covenants, and it is not certa in that the Company would be able to renegotiate the terms of the Credit Agreement in order to provide relief related to the financial covenants. If the Company were unable to meet its financial covenants and then were unable to renegotiate the terms of it s financial covenants, all debt outstanding under the Credit Agreement could become immediately due and payable.

All obligations under the Credit Agreement are unconditionally guaranteed by each of the Company’s existing and future, direct and indirect material wholly-owned domestic subsidiaries, other than certain excluded subsidiaries, and are collateralized by a first priority lien on substantially all tangible and intangible assets including intellectual property and all of the capital stock of the Company and its subsidiaries (limited to 65% of the voting equity of certain subsidiaries).

Note 5 — Leases

All of the Company’s leases are operating leases, the majority of which are for office space. Operating lease right-of-use (“ROU”) assets and non-current operating lease liabilities are included as individual line items on the Consolidated Balance Sheets, while short-term operating lease liabilities are recorded within accrued expenses and other current liabilities. Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets and are not material.

The components of lease expense were as follows (in thousands):

| Three Months Ended |  |  | Three Months Ended |
| March 31, 2020 |  |  | March 31, 2019 |
Operating lease cost | $ | 3,991 |  |  | $ | 3,569 |
Short-term lease cost |  | 81 |  |  |  | 255 |
Variable lease cost |  | 1,356 |  |  |  | 1,234 |
Sublease income |  | (61 | ) |  |  | — |
Total lease cost | $ | 5,367 |  |  | $ | 5,058 |

Additional lease information is summarized in the following table (in thousands, except lease term and discount rate):

| Three Months Ended |  |  | Three Months Ended |
| March 31, 2020 |  |  | March 31, 2019 |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 2,999 |  |  | $ | 3,753 |
Operating right-of-use assets obtained in exchange for lease obligations | $ | 1,466 |  |  | $ | 12,011 |
Weighted-average remaining lease term - operating leases (years) |  | 6.3 |  |  |  | 7.0 |
Weighted-average discount rate - operating leases |  | 5.1 | % |  |  | 5.1 | %

Future minimum lease payments under non-cancellable leases as of March 31, 2020 are as follows (in thousands):

2020 (remainder) | $ | 11,828 |
2021 |  | 14,022 |
2022 |  | 13,505 |
2023 |  | 12,974 |
2024 |  | 12,619 |
Thereafter |  | 23,902 |
Total lease payments |  | 88,850 |
Less imputed interest |  | (12,945 | )
Present value of lease liabilities | $ | 75,905 |

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Lease balances as of March 31, 2020 are as follows (in thousands):

Operating lease right-of-use assets | $ | 64,220 |
Short-term operating lease liabilities (1) | $ | 12,065 |
Non-current operating lease liabilities |  | 63,840 |
Total operating lease liabilities | $ | 75,905 |

(1) | Included in accrued expenses and other current liabilities on the Consolidated Balance Sheets.

The Company’s leases do not contain residual value guarantees, material restrictions or covenants, and all sublease transactions are not material. The Company incurred $1.4 million of ROU asset impairments during the three months ended March 31, 2020 related to facility leases from the SiriusDecisions, Inc. acquisition and are recorded in acquisition and integration costs in the Consolidated Statements of Operations.

During the three months ended March 31, 2020, the Company entered into several operating leases for office space which do not commence until later in 2020. These operating leases, which aggregated $17.2 million of undiscounted lease payments, have lease terms of up to ten years. Additionally, the Company could receive a variable incentive payment from its landlord to terminate one of its office space leases early. The range of possible incentive payments is zero to $3.5 million, would be received in late 2020 or the first half of 2021, and is dependent on the Company’s ability to exit the existing facility by the proposed early termination dates.

Note 6 – Contract Assets and Liabilities

Accounts Receivable

Accounts receivable includes amounts billed and currently due from customers. Since the only condition for payment of our invoices is the passage of time, the Company records a receivable on the date the invoice is issued. Also included in accounts receivable are unbilled amounts resulting from revenue exceeding the amount billed to the customer, where the right to payment is unconditional. If the right to payment for services performed was conditional on something other than the passage of time, the unbilled amount would be recorded as a separate contract asset. There were no contract assets as of March 31, 2020 or 2019.

The majority of the Company’s contracts are non-cancellable. However, for contracts that are cancellable by the customer, the Company does not record a receivable when it issues an invoice. The Company records accounts receivable on these contracts only up to the amount of revenue earned but not yet collected.

In addition, since the majority of the Company’s contracts are for a duration of one year and payment is expected within one year from the transfer of products and services, the Company does not adjust its receivables or transaction price for the effects of a significant financing component.

Deferred Revenue

The Company refers to contract liabilities as deferred revenue on the Consolidated Balance Sheets. Payment terms in the Company’s customer contracts vary, but generally require payment in advance of fully satisfying the performance obligation(s). Deferred revenue consists of billings in excess of revenue recognized. Similar to accounts receivable, the Company does not record deferred revenue for invoices issued on a cancellable contract.

The Company recognized revenue of $69.9 and $58.1 million during the three months ended March 31, 2020 and 2019, respectively, related to its deferred revenue balance at the beginning of each such period. To determine revenue recognized in each such period from deferred revenue at the beginning of the period, the Company first allocates revenue to the individual deferred revenue balance outstanding at the beginning of the period, until the revenue equals that balance.

Approximately $343.6 million of revenue is expected to be recognized during the next 12 to 24 months from remaining performance obligations as of March 31, 2020.

Cost to Obtain Contracts

The Company capitalizes commissions paid to internal sales representatives and related fringe benefits costs that are incremental to obtaining customer contracts. These costs are included in deferred commissions on the Consolidated Balance Sheets. The Company accounts for these costs at a portfolio level as the Company’s contracts are similar in nature and the amortization model used closely matches the amortization expense that would be recognized on a contract-by-contract basis. Costs to obtain a contract are amortized to operations as the related revenue is recognized over the initial contract term. Amortization expense related to deferred commissions was $8.1 million and $7.2 million for the three months ended March 31, 2020 and 2019, respectively. The Company evaluates the recoverability of deferred commissions at each balance sheet date.

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Note 7 — Derivatives and Hedging

During 2019, the Company entered into an interest rate swap contract to mitigate the cash flow risk associated with changes in interest rates on its variable rate debt (see Note 4 – Debt). The Company accounts for its outstanding interest rate swap contract in accordance with FASB ASC Topic 815 – Derivatives and Hedging (“Topic 815”), which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value.

At March 31, 2020, the Company had a single interest rate swap contract that matures in 2022, with an initial notional amount of $95.0 million. The notional amount at March 31, 2020 was $89.1 million. The Company pays a base fixed rate of 1.65275% and in return receives the greater of (1) 1-month LIBOR, rounded up to the nearest 1/16 of a percent, or (2) 0.00%. The fair value of the swap on March 31, 2020 was a liability of $1.8 million (see Note 8 – Fair Value Measurements for information on determining the fair value). The liability is included in other non-current liabilities in the Consolidated Balance Sheets.

The swap has been designated and accounted for as a cash flow hedge of the forecasted interest payments on the Company’s debt. As long as the swap continues to be a highly effective hedge of the designated interest rate risk, changes in the fair value of the swap are recorded in accumulated other comprehensive loss, a component of equity. Any ineffective portion of a change in the fair value of a hedge is recorded in earnings.

As required under Topic 815, the swap’s effectiveness is assessed on a quarterly basis. Since its inception, and through March 31, 2020, the interest rate swap was considered highly effective. Accordingly, the $1.3 million net accumulated loss as of March 31, 2020 continues to be deferred and recorded, net of taxes, in other comprehensive loss. The Company expects $0.7 million of this loss, net of taxes, to be reclassified into earnings within the next 12 months.

The Company’s derivative counterparty is an investment grade financial institution. The Company does not have any collateral arrangements with its derivative counterparty and the derivative contract does not contain credit risk related contingent features.

The Company did not have any derivatives as of, or during, the three months ended March 31, 2019.

Note 8 — Fair Value Measurements

The carrying amounts reflected in the Consolidated Balance Sheets for cash, accounts receivable, accounts payable, and accrued expenses (excluding the contingent consideration discussed below) approximate fair value due to their short-term maturities. The Company’s financial instruments also include its outstanding variable-rate borrowings (refer to Note 4 – Debt). The Company believes that the carrying amount of its variable-rate borrowings reasonably approximate their fair values because the rates of interest on those borrowings reflect current market rates of interest.

Additionally, the Company measures certain financial assets at fair value on a recurring basis including cash equivalents, contingent purchase price related to acquisitions, and its interest rate swap. The fair values of these financial assets have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements:

Level 1 — Fair value based on quoted prices in active markets for identical assets or liabilities.

Level 2 — Fair value based on inputs other than Level 1 inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Fair value based on unobservable inputs that are supported by little or no market activity and such inputs are significant to the fair value of the assets or liabilities.

The following table represents the Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):

|  | As of March 31, 2020 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds (1) |  | $ | 2,811 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,811 |
Total Assets: |  | $ | 2,811 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,811 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent purchase price (2) |  | $ | — |  |  | $ | — |  |  | $ | (2,524 | ) |  | $ | (2,524 | )
Interest rate swap (3) |  |  | — |  |  | $ | (1,787 | ) |  |  | — |  |  |  | (1,787 | )
Total Liabilities: |  | $ | — |  |  | $ | (1,787 | ) |  | $ | (2,524 | ) |  | $ | (4,311 | )

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|  | As of December 31, 2019 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds (1) |  | $ | 2,354 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,354 |
Total Assets: |  | $ | 2,354 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,354 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent purchase price (2) |  | $ | — |  |  | $ | — |  |  | $ | (2,511 | ) |  | $ | (2,511 | )
Interest rate swap (3) |  |  | — |  |  | $ | (144 | ) |  |  | — |  |  |  | (144 | )
Total Liabilities: |  | $ | — |  |  | $ | (144 | ) |  | $ | (2,511 | ) |  | $ | (2,655 | )

(1) | Included in cash and cash equivalents on the Consolidated Balance Sheets.

(2) | The acquisition of FeedbackNow on July 6, 2018 included a contingent consideration arrangement that required up to $4.2 million of consideration to be paid to the sellers based on the financial performance of FeedbackNow during the two-year period subsequent to the closing date. The fair value of the remaining contingent consideration to be paid to the sellers is $2.5 million at both March 31, 2020 and December 31, 2019, and is included in accrued expenses and other current liabilities in the Consolidated Balance Sheets.

(3) | The Company has an interest rate swap contract that hedges the risk of variability from interest payments on its borrowings (see Note 4 – Debt and Note 7 – Derivatives and Hedging). The fair value of the interest rate swap is based on mark-to-market valuations prepared by a third-party broker. Those valuations are based on observable interest rates and other observable market data, which the Company considers Level 2 inputs.

During the three months ended March 31, 2020 and 2019, the Company did not transfer assets or liabilities between levels of the fair value hierarchy. Additionally, there have been no changes to the valuation techniques for Level 2 or Level 3 liabilities.

Level 3 liabilities at March 31, 2020 consist entirely of the contingent purchase price related to the acquisition of FeedbackNow. Changes in the fair value of Level 3 contingent consideration for the three months ended March 31, 2020 were as follows (in thousands):

| Contingent |
| Consideration |
Balance at December 31, 2019 | $ | (2,511 | )
Fair value adjustment of contingent purchase price (1) |  | (11 | )
Payment of contingent purchase price |  | — |
Foreign exchange effect |  | (2 | )
Balance at March 31, 2020 | $ | (2,524 | )

(1) | This amount was recognized as acquisition and integration costs within the Consolidated Statements of Operations. As of March 31, 2020, the remaining range of undiscounted amounts that could be payable under this arrangement is zero to $2.5 million. The significant unobservable inputs used in the Monte Carlo simulation to fair value the contingent consideration included projected contract bookings, a discount rate of 17.3%, and revenue volatility of 26.6%. Increases or decreases in the inputs would result in a higher or lower fair value measurement.

Note 9 — Income Taxes

Forrester provides for income taxes on an interim basis according to management’s estimate of the effective tax rate expected to be applicable for the full fiscal year. Certain items such as changes in tax rates, tax benefits or expense related to settlements of share-based payment awards, and foreign currency gains or losses are treated as discrete items and are recorded in the period in which they arise.

Income tax expense for the three months ended March 31, 2020 was $19 thousand resulting in an effective tax rate of negative 3.8% for the period. Income tax benefit for the three months ended March 31, 2019 was $0.2 million resulting in an effective tax rate of 1.7% for the period.

The Company anticipates that its effective tax rate for the full year 2020 will be approximately 10% to 15%.

On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security ("CARES") Act to provide certain relief as a result of the COVID-19 outbreak. The Company is currently evaluating the potential impact that the provisions in the CARES may have on its financial position and results of operations.

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Note 10 — Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows (in thousands):

|  |  |  |  |  |  |  |  |  | Total |
|  | Net Unrealized Gain |  |  | Cumulative |  |  | Accumulated |
|  | (Loss) on Interest |  |  | Translation |  |  | Other Comprehensive |
|  | Rate Swap |  |  | Adjustment |  |  | Loss |
Balance at December 31, 2019 |  | $ | (104 | ) |  | $ | (4,753 | ) |  | $ | (4,857 | )
Foreign currency translation |  |  | — |  |  |  | (1,920 | ) |  |  | (1,920 | )
Unrealized loss on interest rate swap, net of tax of $462 |  |  | (1,181 | ) |  |  | — |  |  |  | (1,181 | )
Balance at March 31, 2020 |  | $ | (1,285 | ) |  | $ | (6,673 | ) |  | $ | (7,958 | )

|  |  |  |  |  |  |  | Total |
|  |  |  | Cumulative |  |  | Accumulated |
|  |  |  | Translation |  |  | Other Comprehensive |
|  |  |  | Adjustment |  |  | Loss |
Balance at December 31, 2018 |  |  |  | $ | (5,154 | ) |  | $ | (5,154 | )
Foreign currency translation |  |  |  |  | (430 | ) |  |  | (430 | )
Balance at March 31, 2019 |  |  |  | $ | (5,584 | ) |  | $ | (5,584 | )

Note 11 — Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the basic weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the diluted weighted average number of common shares and common equivalent shares outstanding during the period. The weighted average number of common equivalent shares outstanding has been determined in accordance with the treasury-stock method. Common equivalent shares consist of common stock issuable on the exercise of outstanding stock options and the vesting of restricted stock units.

Basic and diluted weighted average common shares are as follows (in thousands):

|  | Three Months Ended |  |
|  | March 31, |  |
|  | 2020 |  |  | 2019 |  |
Basic weighted average common shares outstanding |  |  | 18,705 |  |  |  | 18,363 |  |
Weighted average common equivalent shares |  |  | — |  |  |  | — |  |
Diluted weighted average common shares outstanding |  |  | 18,705 |  |  |  | 18,363 |  |
Options and restricted stock units excluded from diluted weighted average share calculation as effect would have been anti-dilutive |  |  | 980 |  |  |  | 703 |  |

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Note 1 2 — Stockholders’ Equity

The components of stockholders’ equity are as follows (in thousands):

| Three Months Ended March 31, 2020 |
| Common Stock |  |  |  |  |  |  |  |  |  |  | Treasury Stock |  |  | Accumulated |  |  |  |  |
| Number of Shares |  |  | $0.01 Par Value |  |  | Additional Paid-in Capital |  |  | Retained Earnings |  |  | Number of Shares |  |  | Cost |  |  | Other Comprehensive Income (Loss) |  |  | Total Equity |
Balance at December 31, 2019 |  | 23,275 |  |  | $ | 233 |  |  | $ | 216,454 |  |  | $ | 118,147 |  |  |  | 4,631 |  |  | $ | (171,889 | ) |  | $ | (4,857 | ) |  | $ | 158,088 |
Issuance of common stock under stock plans, net |  | 114 |  |  |  | 1 |  |  |  | 1,052 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,053 |
Stock-based compensation expense |  | — |  |  |  | — |  |  |  | 2,802 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,802 |
Cumulative effect adjustment due to adoption of new accounting pronouncement, net of tax of $61 |  | — |  |  |  | — |  |  |  | — |  |  |  | (157 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (157 | )
Net loss |  | — |  |  |  | — |  |  |  | — |  |  |  | (513 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (513 | )
Net change in interest rate swap, net of tax of $462 |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,181 | ) |  |  | (1,181 | )
Foreign currency translation |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,920 | ) |  |  | (1,920 | )
Balance at March 31, 2020 |  | 23,389 |  |  | $ | 234 |  |  | $ | 220,308 |  |  | $ | 117,477 |  |  |  | 4,631 |  |  | $ | (171,889 | ) |  | $ | (7,958 | ) |  | $ | 158,172 |

| Three Months Ended March 31, 2019 |
| Common Stock |  |  |  |  |  |  |  |  |  |  | Treasury Stock |  |  | Accumulated |  |  |  |  |
| Number of Shares |  |  | $0.01 Par Value |  |  | Additional Paid-in Capital |  |  | Retained Earnings |  |  | Number of Shares |  |  | Cost |  |  | Other Comprehensive Income (Loss) |  |  | Total Equity |
Balance at December 31, 2018 |  | 22,951 |  |  | $ | 230 |  |  | $ | 200,696 |  |  | $ | 127,717 |  |  |  | 4,631 |  |  | $ | (171,889 | ) |  | $ | (5,154 | ) |  | $ | 151,600 |
Issuance of common stock under stock plans, net |  | 99 |  |  |  | 1 |  |  |  | 3,274 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,275 |
Stock-based compensation expense |  | — |  |  |  | — |  |  |  | 2,685 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,685 |
Net loss |  | — |  |  |  | — |  |  |  | — |  |  |  | (13,316 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (13,316 | )
Foreign currency translation |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (430 | ) |  |  | (430 | )
Balance at March 31, 2019 |  | 23,050 |  |  | $ | 231 |  |  | $ | 206,655 |  |  | $ | 114,401 |  |  |  | 4,631 |  |  | $ | (171,889 | ) |  | $ | (5,584 | ) |  | $ | 143,814 |

Equity Plans

Restricted stock unit activity for the three months ended March 31, 2020 is presented below (in thousands, except per share data):

|  |  |  |  |  | Weighted- |
|  |  |  |  |  | Average |
|  | Number of |  |  | Grant Date |
|  | Shares |  |  | Fair Value |
Unvested at December 31, 2019 |  |  | 656 |  |  | $ | 42.94 |
Granted |  |  | 15 |  |  |  | 37.15 |
Vested |  |  | (71 | ) |  |  | 44.34 |
Forfeited |  |  | (48 | ) |  |  | 43.71 |
Unvested at March 31, 2020 |  |  | 552 |  |  | $ | 42.53 |

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Stock option activity for the three months ended March 31, 2020 is presented below (in thousands, except per share data and contractual term):

|  |  |  |  |  | Weighted - |  |  | Weighted - |  |  |  |  |
|  |  |  |  |  | Average |  |  | Average |  |  |  |  |
|  |  |  |  |  | Exercise |  |  | Remaining |  |  | Aggregate |
|  | Number |  |  | Price Per |  |  | Contractual |  |  | Intrinsic |
|  | of Shares |  |  | Share |  |  | Term (in years) |  |  | Value |
Outstanding at December 31, 2019 |  |  | 436 |  |  | $ | 35.62 |  |  |  |  |  |  |  |  |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Exercised |  |  | (17 | ) |  |  | 33.53 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (33 | ) |  |  | 38.46 |  |  |  |  |  |  |  |  |
Outstanding at March 31, 2020 |  |  | 386 |  |  | $ | 35.47 |  |  |  | 3.54 |  |  | $ | 4 |
Exercisable at March 31, 2020 |  |  | 378 |  |  | $ | 35.42 |  |  |  | 3.56 |  |  | $ | 4 |
Vested and expected to vest at March 31, 2020 |  |  | 386 |  |  | $ | 35.47 |  |  |  | 3.54 |  |  | $ | 4 |

Stock-Based Compensation

Forrester recognizes the fair value of stock-based compensation over the requisite service period of the individual grantee, which generally equals the vesting period. Stock-based compensation was recorded in the following expense categories in the Consolidated Statements of Operations (in thousands):

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  |  | 2019 |
Cost of services and fulfillment |  | $ | 1,593 |  |  | $ | 1,463 |
Selling and marketing |  |  | 362 |  |  |  | 440 |
General and administrative |  |  | 847 |  |  |  | 782 |
Total |  | $ | 2,802 |  |  | $ | 2,685 |

Forrester utilizes the Black-Scholes valuation model for estimating the fair value of shares subject to purchase under the employee stock purchase plan, which were valued using the following assumptions:

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  |  | 2019 |
Average risk-free interest rate |  |  | 0.30 | % |  |  | 2.51 | %
Expected dividend yield |  |  | 0.0 | % |  |  | 0.0 | %
Expected life |  | 0.5 Years |  |  | 0.5 Years |
Expected volatility |  |  | 26 | % |  |  | 34 | %
Weighted average fair value |  | $ | 8.10 |  |  | $ | 12.50 |

Dividends

As a result of the acquisition of SiriusDecisions on January 3, 2019 (see Note 2 – Acquisitions), and the related debt incurred to fund the acquisition (see Note 4 – Debt), the Company suspended its dividends program in 2019. The Company did not declare or pay any dividends in the three months ended March 31, 2020 and March 31, 2019, respectively.

Treasury Stock

As of March 31, 2020, Forrester’s Board of Directors had authorized an aggregate $535.0 million to purchase common stock under its stock repurchase program. The shares repurchased may be used, among other things, in connection with Forrester’s equity incentive and purchase plans. In the three months ended March 31, 2020 and March 31, 2019, the Company did not repurchase any shares of common stock. From the inception of the program through March 31, 2020, the Company repurchased 16.3 million shares of common stock at an aggregate cost of $474.9 million.

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N ote 13 — Non-Marketable Investments

At March 31, 2020 and December 31, 2019, the carrying value of the Company’s non-marketable investments, which were composed of interests in technology-related private equity funds, was $2.5 million, and is included in other assets in the Consolidated Balance Sheets.

The Company’s non-marketable investments are accounted for using the equity method as the investments are limited partnerships and the Company has an ownership interest in excess of 5% and, accordingly, the Company records its share of the investee’s operating results each period. Gains (losses) from non-marketable investments were immaterial during the three months ended March 31, 2020 and 2019 and are included in gain (loss) on investments, net in the Consolidated Statements of Operations. During the three months ended March 31, 2020 and 2019, no distributions were received from the funds.

Note 14 — Operating Segments

As of January 1, 2020, the Company realigned its internal management and reporting into Products and Research segments. The realignment eliminated the SiriusDecisions segment as it no longer operated under a separate management structure. The 2019 amounts have been revised to conform to the current presentation.

The Products segment includes the revenues of the Connect, Analytics, and Events products and the costs of the organizations responsible for developing and delivering these products. In addition, this segment includes Consulting revenues and the related cost of the Company’s project consulting organization. The project consulting organization delivers a majority of the Company’s project consulting revenue and certain advisory services primarily related to the Analytics product line. This segment also includes the costs of the product management organization that is responsible for product pricing and packaging and the launch of new products.

The Research segment includes the revenues of the Research products and the cost of the organizations responsible for developing and delivering the Company’s Research products. In addition, this segment includes Consulting revenues primarily from the delivery of advisory services (such as workshops, speeches and advisory days) delivered by the Company’s research analysts.

The Company evaluates reportable segment performance and allocates resources based on segment revenues and expenses. Segment expenses include the direct expenses of each segment organization and excludes selling and marketing expenses, general and administrative expenses, stock-based compensation expense, depreciation expense, adjustments to incentive bonus compensation from target amounts, amortization of intangible assets, interest and other expense, and losses on investments. The accounting policies used by the segments are the same as those used in the consolidated financial statements.

The Company provides disaggregated revenue by product in the segment tables below (in thousands):

|  | Products |  |  | Research |  |  | Consolidated |
Three Months Ended March 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |
Research services revenues |  |  |  |  |  |  |  |  |  |  |  |
Research |  | $ | — |  |  | $ | 53,606 |  |  | $ | 53,606 |
Connect |  |  | 13,889 |  |  |  | — |  |  |  | 13,889 |
Analytics |  |  | 5,301 |  |  |  | — |  |  |  | 5,301 |
Total research services revenues |  |  | 19,190 |  |  |  | 53,606 |  |  |  | 72,796 |
Advisory services and events revenues |  |  |  |  |  |  |  |  |  |  |  |
Consulting |  |  | 20,638 |  |  |  | 12,821 |  |  |  | 33,459 |
Events |  |  | 90 |  |  |  | — |  |  |  | 90 |
Total advisory services and events revenues |  |  | 20,728 |  |  |  | 12,821 |  |  |  | 33,549 |
Total segment revenues |  |  | 39,918 |  |  |  | 66,427 |  |  |  | 106,345 |
Segment expenses |  |  | (19,378 | ) |  |  | (18,784 | ) |  |  | (38,162 | )
Selling, marketing, administrative and other expenses |  |  |  |  |  |  |  |  |  |  | (59,875 | )
Amortization of intangible assets |  |  |  |  |  |  |  |  |  |  | (4,712 | )
Acquisition and integration costs |  |  |  |  |  |  |  |  |  |  | (2,875 | )
Interest expense, other income and gain on investments |  |  |  |  |  |  |  |  |  |  | (1,215 | )
Loss before income taxes |  |  |  |  |  |  |  |  |  | $ | (494 | )

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|  | Products |  |  | Research |  |  | Consolidated |
Three Months Ended March 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |
Research services revenues |  |  |  |  |  |  |  |  |  |  |  |
Research |  | $ | — |  |  | $ | 49,780 |  |  | $ | 49,780 |
Connect |  |  | 13,571 |  |  |  | — |  |  |  | 13,571 |
Analytics |  |  | 5,258 |  |  |  | — |  |  |  | 5,258 |
Total research services revenues |  |  | 18,829 |  |  |  | 49,780 |  |  |  | 68,609 |
Advisory services and events revenues |  |  |  |  |  |  |  |  |  |  |  |
Consulting |  |  | 18,885 |  |  |  | 12,902 |  |  |  | 31,787 |
Events |  |  | 253 |  |  |  | — |  |  |  | 253 |
Total advisory services and events revenues |  |  | 19,138 |  |  |  | 12,902 |  |  |  | 32,040 |
Total segment revenues |  |  | 37,967 |  |  |  | 62,682 |  |  |  | 100,649 |
Segment expenses |  |  | (19,948 | ) |  |  | (20,397 | ) |  |  | (40,345 | )
Selling, marketing, administrative and other expenses |  |  |  |  |  |  |  |  |  |  | (62,011 | )
Amortization of intangible assets |  |  |  |  |  |  |  |  |  |  | (6,210 | )
Acquisition and integration costs |  |  |  |  |  |  |  |  |  |  | (2,967 | )
Interest expense, other income and loss on investments |  |  |  |  |  |  |  |  |  |  | (2,658 | )
Loss before income taxes |  |  |  |  |  |  |  |  |  | $ | (13,542 | )

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

This Quarterly Report on Form 10-Q contains 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. Reference is made in particular to our statements about possible acquisitions, payments pursuant to existing acquisition agreements, acquisition and integration costs, future dividends, future share repurchases, future growth rates and operating income, future compliance with financial covenants under our credit facility, anticipated increases in, and productivity of, our sales force and headcount, and the adequacy of our cash and cash flows to satisfy our working capital and capital expenditures. These statements are based on our current plans and expectations and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual future activities and results to differ include, among others, our ability to retain and enrich subscriptions to, and licenses of, our Research, Connect, and Analytics products, our ability to fulfill existing or generate new advisory and consulting engagements, our ability to generate and increase demand for our Events we host, technology spending, our ability to mitigate the adverse impact from the widespread outbreak of COVID-19 which could disrupt or restrict our ability to sell or fulfill, or reduce demand for, our products, services, and events, the risks and challenges inherent in international business activities including any impact of Brexit, our ability to offer new products and services, our dependence on key personnel, our ability to attract and retain qualified professional staff, our ability to respond to business and economic conditions and market trends, our ability to integrate the operations of acquired companies, the impact of our outstanding debt, the possibility of network disruptions and security breaches, competition and industry consolidation, our ability to enforce and protect our intellectual property rights, compliance with privacy laws, possible variations in our quarterly operating results, taxation risks, concentration of our stock ownership and any weakness identified in our system of internal controls. These risks are described more completely in our Annual Report on Form 10-K for the year ended December 31, 2019 and in Item 1A of Part II of this Quarterly Report on Form 10-Q for the year ended March 31, 2020. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

The global spread of the novel coronavirus (COVID-19), which has been declared by the World Health Organization to be a “pandemic”, has spread to many countries and is impacting worldwide economic activity. Many governments have implemented policies intended to stop or slow the further spread of the disease, such as shelter-in-place orders, resulting in the temporary closure of non-essential businesses, and these measures may remain in place for a significant period of time. Due to COVID-19 materially impacting our business beginning only in the last month of the quarter, the impact on our business in the first quarter of 2020 is primarily limited to March customer contract bookings and the amount of consulting projects delivered. While the duration and severity of this pandemic is uncertain, we currently expect that our results of operations in the second quarter of 2020 will have the most significant impact of the effects of COVID-19, and that subsequent periods will also be negatively impacted. We typically generate a significant portion of our Events revenues in the second quarter of the year, including revenues from our two flagship events, the SiriusDecisions Summit and CX North America, both of which will be held as virtual events, resulting in a significant reduction in revenues and profits from these two events. In addition, we cancelled two smaller events originally scheduled for the second quarter of the year. We also expect a reduction in our subscription Research, Connect and Analytics revenues and a reduction in Consulting revenues during the second quarter due to reduced customer contract booking activity in March, which is expected to continue through at least the second quarter of 2020. The extent to which the COVID-19 pandemic ultimately impacts our business, financial condition, results of operations, cash flows, and liquidity may differ from our current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

We have implemented several cost-reduction measures that include reductions to travel, new hiring, and employee incentive compensation programs. We will continue to proactively respond to the situation and may take further actions that alter our business operations as may be required by governmental authorities, or that we determine are in the best interests of our employees and customers.

As previously noted, on January 3, 2019, we acquired 100% of the issued and outstanding shares of SiriusDecisions, Inc., a privately held company based in Wilton, Connecticut with approximately 350 employees globally. SiriusDecisions equips business-to-business (B2B) sales, marketing, and product leaders with the actionable research, frameworks, tools, operational benchmarks and expert advice to maximize performance and drive alignment. Pursuant to the terms of the merger agreement, the Company paid $246.8 million at closing. Net cash paid, which accounts for the cash acquired of $7.9 million and a subsequent working capital adjustment, was $237.7 million. We paid for the acquisition with $175.0 million of debt and cash on hand. See Note 2 - Acquisitions and Note 4 – Debt in the Notes to Consolidated Financial Statements for more information on the acquisition and related debt obligations.

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We derive revenues from subscriptions to our Research, Connect and Analytics products and se rvices, licensing electronic “reprints” of our Research, performing advisory services and consulting projects, and hosting Events. We offer contracts for our Research, Connect and Analytics products that are typically renewable annually and payable in adva nce. Subscription products are recognized as revenue ratably over the term of the contract. Accordingly, a substantial portion of our billings are initially recorded as deferred revenue. Reprints include an obligation to deliver a customer-selected researc h document and certain usage data provided through an on-line platform, which represents two performance obligations. We recognize revenue for the performance obligation for the data portion of the reprint ratably over the license term. We recognize revenu e for the performance obligation for the research document at the time of providing access to the document. Billings for licensing of reprints are initially recorded as deferred revenue. Clients purchase advisory and consulting services independently and/o r to supplement their access to our subscription-based products. Consulting project revenues, which generally are short-term in nature and based upon fixed-fee agreements, are recognized as the services are provided. Advisory service revenues, such as work shops, speeches and advisory days, are recognized when the service is complete or the customer receives the agreed upon deliverable. Billings attributable to advisory services and consulting projects are initially recorded as deferred revenue. Events reven ues consist of ticket or sponsorship sales for a Forrester-hosted event. Billings for Events are also initially recorded as deferred revenue and are recognized as revenue upon completion of each Event.

Our primary operating expenses consist of cost of services and fulfillment, selling and marketing expenses and general and administrative expenses. Cost of services and fulfillment represents the costs associated with the production and delivery of our products and services, including salaries, bonuses, employee benefits and stock-based compensation expense for all personnel that produce and deliver our products and services, including all associated editorial, travel, and support services. Selling and marketing expenses include salaries, sales commissions, bonuses, employee benefits, stock-based compensation expense, travel expenses, promotional costs and other costs incurred in marketing and selling our products and services. General and administrative expenses include the costs of the technology, operations, finance, and human resources groups and our other administrative functions, including salaries, bonuses, employee benefits, and stock-based compensation expense. Overhead costs such as facilities and annual fees for cloud-based information technology systems are allocated to these categories according to the number of employees in each group.

Client retention includes all client relationships except for clients that only purchase web-based products such as individual reports, workshops and Event tickets. Dollar retention and enrichment are calculated at a client account level which results in a broader view of dollar retention and enrichment as it includes virtually all products in the calculations (except for web-based products mentioned above) and captures all enrichment that occurs within the year for an account.

Deferred revenue, agreement value, client retention, dollar retention, enrichment, and number of clients are metrics that we believe are important to understanding our business. We believe that the amount of deferred revenue, along with the agreement value of contracts, provide a significant measure of our business activity. We define these metrics as follows:

| • | Deferred revenue — billings in advance of revenue recognition as of the measurement date.

| • | Agreement value — the total revenues recognizable from all contracts to purchase our services in force at a given time (excluding contracts that consist solely of Consulting services and the value of Event sponsorships included in all contracts), without regard to how much revenue has already been recognized.

| • | Client retention — the percentage of client companies (defined as all clients except those that only purchase web-based products such as individual reports, workshops and Event tickets) at the prior year measurement date that have active contracts at the current year measurement date.

| • | Dollar retention — the percentage of the total dollar value of client companies’ active contracts at the prior year measurement date that have active contracts at the current year measurement date.

| • | Enrichment — the dollar value of client companies’ active contracts at the current year measurement date compared to the dollar value of the corresponding client companies’ active contracts at the prior year measurement date.

| • | Clients — we aggregate the various divisions and subsidiaries of a corporate parent as a single client and we also aggregate separate instrumentalities of the federal, state, and provincial governments as a single client. We include only clients that purchased subscription-based products in our definition of clients.

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Client retention, dollar retention, and enrichment are not necessarily indicative of the rate of future retention of our revenue base. A summary of our key metrics is as follows (dollars in mi llions):

|  | As of |  |  | Absolute |  |  | Percentage |
|  | March 31, |  |  | Increase |  |  | Increase |
|  | 2020 |  |  | 2019 |  |  | (Decrease) |  |  | (Decrease) |
Deferred revenue |  | $ | 195.4 |  |  | $ | 191.6 |  |  | $ | 3.8 |  |  |  | 2 | %
Agreement value |  | $ | 354.9 |  |  | $ | 345.3 |  |  | $ | 9.6 |  |  |  | 3 | %
Client retention |  |  | 69 | % |  |  | 72 | % |  |  | (3 | ) |  |  | (4 | %)
Dollar retention |  |  | 89 | % |  |  | 90 | % |  |  | (1 | ) |  |  | (1 | %)
Enrichment |  |  | 102 | % |  |  | 106 | % |  |  | (4 | ) |  |  | (4 | %)
Number of clients |  |  | 2,805 |  |  |  | 2,850 |  |  |  | (45 | ) |  |  | (2 | %)

Deferred revenue at March 31, 2020 increased 2% compared to the prior year, with 4% of the increase due to the fair value adjustment of pre-acquisition deferred revenue that reduced deferred revenue in the prior year, and a 2% decrease primarily due to a reduction in contract billings during the three months ended March 31, 2020. Agreement value increased 3% at March 31, 2020 compared to the prior year due primarily to increased bundling of Consulting services with our Research and Connect products in our contracts. Client retention rate decreased 3 percentage points compared to the prior year period. Dollar retention rate decreased 1 percentage point compared to the prior year period. Enrichment rate decreased 4 percentage points compared to the prior year period. Retention and enrichment rates were negatively affected by a decrease in contract bookings experienced in March of 2020 as the economic effects of COVID-19 became widespread in Europe and North America.

Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our policies and estimates, including but not limited to, those related to our revenue recognition, leases, goodwill, intangible and other long-lived assets, and income taxes. Management bases its estimates on historical experience, data available at the time the estimates are made and various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies and estimates are described in our Annual Report on Form 10-K for the year ended December 31, 2019.

Results of Operations

The following table sets forth our statement of operations as a percentage of total revenues for the periods indicated:

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |
Research services |  |  | 68.5 | % |  |  | 68.2 | %
Advisory services and events |  |  | 31.5 |  |  |  | 31.8 |
Total revenues |  |  | 100.0 |  |  |  | 100.0 |
Operating expenses: |  |  |  |  |  |  |  |
Cost of services and fulfillment |  |  | 40.8 |  |  |  | 44.8 |
Selling and marketing |  |  | 37.9 |  |  |  | 41.8 |
General and administrative |  |  | 11.3 |  |  |  | 13.1 |
Depreciation |  |  | 2.2 |  |  |  | 2.0 |
Amortization of intangible assets |  |  | 4.4 |  |  |  | 6.2 |
Acquisition and integration costs |  |  | 2.7 |  |  |  | 2.9 |
Income (loss) from operations |  |  | 0.7 |  |  |  | (10.8 | )
Interest expense |  |  | (1.4 | ) |  |  | (2.3 | )
Other income (expense), net |  |  | 0.2 |  |  |  | (0.3 | )
Gain (loss) on investments, net |  |  | — |  |  |  | — |
Loss before income taxes |  |  | (0.5 | ) |  |  | (13.5 | )
Income tax expense (benefit) |  |  | — |  |  |  | (0.3 | )
Net loss |  |  | (0.5 | %) |  |  | (13.2 | %)

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Three Months Ended March 31, 20 20 and 201 9

Revenues

|  | Three Months Ended |  |  | Absolute |  |  | Percentage |
|  | March 31, |  |  | Increase |  |  | Increase |
|  | 2020 |  |  | 2019 |  |  | (Decrease) |  |  | (Decrease) |
|  | (dollars in millions) |  |  |  |  |  |  |  |  |
Revenues |  | $ | 106.3 |  |  | $ | 100.6 |  |  | $ | 5.7 |  |  |  | 6 | %
Revenues from research services |  | $ | 72.8 |  |  | $ | 68.6 |  |  | $ | 4.2 |  |  |  | 6 | %
Revenues from advisory services and events |  | $ | 33.5 |  |  | $ | 32.0 |  |  | $ | 1.5 |  |  |  | 5 | %
Revenues attributable to customers outside of the U.S. |  | $ | 21.4 |  |  | $ | 22.4 |  |  | $ | (1.0 | ) |  |  | (4 | %)
Percentage of revenue attributable to customers outside of the U.S. |  |  | 20 | % |  |  | 21 | % |  |  | (1 | ) |  |  | (5 | %)
Number of events |  |  | — |  |  | 2 |  |  |  | (2 | ) |  |  | (100 | %)

Total revenues increased 6% during the three months ended March 31, 2020 compared to the prior year period. Approximately 4% of the growth was due to the fair value adjustment of pre-acquisition deferred revenue that reduced revenues during the three months ended March 31, 2019. Revenues from customers outside the U.S. decreased 4% during the three months ended March 31, 2020 which was primarily due to a decrease in revenues in Canada and the United Kingdom.

Research services revenues are recognized as revenue primarily on a ratable basis over the term of the contracts, which are generally twelve-month periods. Research services revenues increased 6% during the three months ended March 31, 2020 compared to the prior year period, which was primarily driven by growth in Research and Connect products. Approximately 5% of the growth was due to the fair value adjustment of pre-acquisition deferred revenue that reduced revenues during the three months ended March 31, 2019.

Revenues from advisory services and events increased 5% during the three months ended March 31, 2020 compared to the prior year period, which was due to growth of Consulting revenues. Approximately 1% of the growth was due to the fair value adjustment of pre-acquisition deferred revenue that reduced revenues during the three months ended March 31, 2019.

Refer to the “Segments Results” section below for a discussion of revenues and expenses by segment.

Cost of Services and Fulfillment

|  | Three Months Ended |  |  | Absolute |  |  | Percentage |
|  | March 31, |  |  | Increase |  |  | Increase |
|  | 2020 |  |  | 2019 |  |  | (Decrease) |  |  | (Decrease) |
Cost of services and fulfillment (dollars in millions) |  | $ | 43.4 |  |  | $ | 45.1 |  |  | $ | (1.7 | ) |  |  | (4 | %)
Cost of services and fulfillment as a percentage of total revenues |  |  | 40.8 | % |  |  | 44.8 | % |  |  | (4.0 | ) |  |  | (9 | %)
Service and fulfillment employees (at end of period) |  |  | 786 |  |  |  | 754 |  |  |  | 32 |  |  |  | 4 | %

Cost of services and fulfillment expenses decreased 4% during the three months ended March 31, 2020 compared to the prior year period. The decrease was primarily due to a $2.6 million decrease in compensation and benefit costs, resulting principally from a decrease in incentive bonuses due to the cost-reduction measures implemented as a result of the impact of the COVID-19 pandemic, partially offset by an increase in headcount and merit increases, and a $0.6 million decrease in travel and entertainment expenses. These decreases were partially offset by a $1.6 million increase in professional services costs.

Selling and Marketing

|  | Three Months Ended |  |  | Absolute |  |  | Percentage |
|  | March 31, |  |  | Increase |  |  | Increase |
|  | 2020 |  |  | 2019 |  |  | (Decrease) |  |  | (Decrease) |
Selling and marketing expenses (dollars in millions) |  | $ | 40.3 |  |  | $ | 42.0 |  |  | $ | (1.7 | ) |  |  | (4 | %)
Selling and marketing expenses as a percentage of total revenues |  |  | 37.9 | % |  |  | 41.8 | % |  |  | (3.9 | ) |  |  | (9 | %)
Selling and marketing employees (at end of period) |  |  | 771 |  |  |  | 739 |  |  |  | 32 |  |  |  | 4 | %

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Selling and marketing expenses decreased 4% during the three months ended March 31, 2020 comp ared to the prior year period. The decrease was primarily due to (1) a $1.1 million decrease in travel and entertainment expenses, and (2) a $0.7 million decrease in compensation and benefit costs, resulting principally from a decrease in incentive bonuses due to the cost-reduction measures implemented as a result of the impact of the COVID-19 pandemic, partially offset by an increase in headcount and merit increase s.

General and Administrative

|  | Three Months Ended |  |  | Absolute |  |  | Percentage |
|  | March 31, |  |  | Increase |  |  | Increase |
|  | 2020 |  |  | 2019 |  |  | (Decrease) |  |  | (Decrease) |
General and administrative expenses (dollars in millions) |  | $ | 12.0 |  |  | $ | 13.2 |  |  | $ | (1.2 | ) |  |  | (9 | %)
General and administrative expenses as a percentage of total revenues |  |  | 11.3 | % |  |  | 13.1 | % |  |  | (1.8 | ) |  |  | (14 | %)
General and administrative employees (at end of period) |  |  | 237 |  |  |  | 247 |  |  |  | (10 | ) |  |  | (4 | %)

General and administrative expenses decreased 9% during the three months ended March 31, 2020 compared to the prior year period. The decrease was primarily due to a $1.1 million decrease in compensation and benefit costs, resulting principally from a decrease in incentive bonuses due to the cost-reduction measures implemented as a result of the impact of the COVID-19 pandemic.

Depreciation

Depreciation expense increased by $0.4 million during the three months ended March 31, 2020 compared to the prior year period due to additional leasehold improvements being put into service.

Amortization of Intangible Assets

Amortization expense decreased by $1.5 million during the three months ended March 31, 2020 compared to the prior year period due to certain technology intangible assets becoming fully amortized.

Acquisition and Integration Costs

Acquisition and integration costs remained consistent during the three months ended March 31, 2020 compared to the prior year period. We expect to incur integration costs in a range of $3.5 million to $4.0 million for the year ending December 31, 2020.

Interest Expense

Interest expense consists of interest on our borrowings used to finance the previous acquisition of SiriusDecisions. Interest expense decreased by $0.8 million during the three months ended March 31, 2020 compared to the prior year period. This decrease was primarily due to lower average outstanding borrowings and lower effective interest rates.

Other Income (Expense), Net

Other income (expense), net primarily consists of gains (losses) on foreign currency and interest income. The increase in other income (expense), net of $0.6 million during the three months ended March 31, 2020 compared to the prior year period was primarily due to a decrease in foreign currency losses.

Gain (Loss) on Investments, Net

Gain (loss) on investments, net primarily represents our share of equity method investment gains and losses from our technology-related investment funds. Gain (loss) on investments, net remained essentially consistent during the three months ended March 31, 2020 compared to the prior year period.

Income Tax Expense (Benefit)

|  | Three Months Ended |  |  | Absolute |  |  | Percentage |
|  | March 31, |  |  | Increase |  |  | Increase |
|  | 2020 |  |  | 2019 |  |  | (Decrease) |  |  | (Decrease) |
Provision (benefit) for income taxes (dollars in millions) |  | $ | — |  |  | $ | (0.2 | ) |  | $ | 0.2 |  |  |  | 100 | %
Effective tax rate |  |  | (3.8 | %) |  |  | 1.7 | % |  |  | (5.5 | ) |  |  | (324 | %)

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Income tax expense for the three months ended March 31, 2020 was $19 thousand resulting in an effective tax rate of negative 3.8% for the period due to discrete items for the period, primarily tax expense related to th e exercise of stock options and the vesting of restricted stock units. For the full year 20 20, we anticipate that our effective tax rate will be approximately 10% to 15%.

Segment Results

As of January 1, 2020, we realigned our internal management and reporting into Products and Research segments. The realignment eliminated the SiriusDecisions segment as it no longer operated under a separate management structure. The 2019 amounts have been revised to conform to the current presentation.

The Products segment includes the revenues of the Connect, Analytics, and Events products and the costs of the organizations responsible for developing and delivering these products. In addition, this segment includes Consulting revenues and the related cost of our project consulting organization. The project consulting organization delivers a majority of our project consulting revenue and certain advisory services primarily related to the Analytics product line. This segment also includes the costs of the product management organization that is responsible for product pricing and packaging and the launch of new products.

The Research segment includes the revenues of the Research products and the cost of the organizations responsible for developing and delivering our Research products. In addition, this segment includes Consulting revenues primarily from the delivery of advisory services (such as workshops, speeches and advisory days) delivered by our research analysts.

We evaluate reportable segment performance and allocate resources based on segment revenues and expenses. Segment expenses include the direct expenses of each segment organization and exclude selling and marketing expenses, general and administrative expenses, stock-based compensation expense, depreciation expense, adjustments to incentive bonus compensation from target amounts, amortization of intangible assets, interest and other expense, and gains (losses) on investments. The accounting policies used by the segments are the same as those used in the consolidated financial statements.

|  | Products |  |  | Research |  |  | Consolidated |
Three Months Ended March 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |
Research services revenues |  |  |  |  |  |  |  |  |  |  |  |
Research |  | $ | — |  |  | $ | 53,606 |  |  | $ | 53,606 |
Connect |  |  | 13,889 |  |  |  | — |  |  |  | 13,889 |
Analytics |  |  | 5,301 |  |  |  | — |  |  |  | 5,301 |
Total research services revenues |  |  | 19,190 |  |  |  | 53,606 |  |  |  | 72,796 |
Advisory services and events revenues |  |  |  |  |  |  |  |  |  |  |  |
Consulting |  |  | 20,638 |  |  |  | 12,821 |  |  |  | 33,459 |
Events |  |  | 90 |  |  |  | — |  |  |  | 90 |
Total advisory services and events revenues |  |  | 20,728 |  |  |  | 12,821 |  |  |  | 33,549 |
Total segment revenues |  |  | 39,918 |  |  |  | 66,427 |  |  |  | 106,345 |
Segment expenses |  |  | (19,378 | ) |  |  | (18,784 | ) |  |  | (38,162 | )
Year over year revenue change |  |  | 5 | % |  |  | 6 | % |  |  | 6 | %
Year over year expense change |  |  | (3 | %) |  |  | (8 | %) |  |  | (5 | %)

|  | Products |  |  | Research |  |  | Consolidated |
Three Months Ended March 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |
Research services revenues |  |  |  |  |  |  |  |  |  |  |  |
Research |  | $ | — |  |  | $ | 49,780 |  |  | $ | 49,780 |
Connect |  |  | 13,571 |  |  |  | — |  |  |  | 13,571 |
Analytics |  |  | 5,258 |  |  |  | — |  |  |  | 5,258 |
Total research services revenues |  |  | 18,829 |  |  |  | 49,780 |  |  |  | 68,609 |
Advisory services and events revenues |  |  |  |  |  |  |  |  |  |  |  |
Consulting |  |  | 18,885 |  |  |  | 12,902 |  |  |  | 31,787 |
Events |  |  | 253 |  |  |  | — |  |  |  | 253 |
Total advisory services and events revenues |  |  | 19,138 |  |  |  | 12,902 |  |  |  | 32,040 |
Total segment revenues |  |  | 37,967 |  |  |  | 62,682 |  |  |  | 100,649 |
Segment expenses |  |  | (19,948 | ) |  |  | (20,397 | ) |  |  | (40,345 | )

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Product se gment revenues increased 5% during the three months ended March 31, 2020 compared to the prior year period. Connect revenues increased 2% driven by the exec utive program product while Analytics revenues increased 1%. Consulting revenues increased 9% driven by strong consultant delivery. Approximately 1% of the Product segment growth was due to the fair value adjustment of pre-acquisition deferred revenue that reduced revenues during the three months ended March 31, 2019.

Product segment expenses decreased 3% during the three months ended March 31, 2020 compared to the prior year period. The decrease in expenses was primarily due to a (1) $1.5 million decrease in compensation and benefit costs due to a decrease in incentive bonuses due to the cost-reduction measures implemented as a result of the impact of the COVID-19 pandemic, partially offset by an increase in headcount and merit increases, (2) a $1.4 million increase in professional services primarily due to an increase in survey costs and an increase in outsourced services related to revenue delivery, and (3) a $0.4 million decrease in travel and entertainment expenses.

Research segment revenues increased 6% for the three months ended March 31, 2020 compared to the prior year period. The Research product line increased 8% driven by our reprint product, which was offset by a 1% decrease in Consulting revenues due to lower delivery of advisory revenues. Approximately 5% of the Research segment growth was due to the fair value adjustment of pre-acquisition deferred revenue that reduced revenues during the three months ended March 31, 2019.

Research segment expenses decreased 8% during the three months ended March 31, 2020 compared to the prior year period. The decrease in expenses was primarily due to a $1.5 million decrease in compensation and benefit costs due to a decrease in incentive bonuses due to the cost-reduction measures implemented as a result of the impact of the COVID-19 pandemic, partially offset by an increase in headcount and merit increases.

Liquidity and Capital Resources

We have historically financed our operations primarily through funds generated from operations. Research services revenues, which constituted approximately 69% of our revenues during the three months ended March 31, 2020, are generally renewable annually and are typically payable in advance. We generated cash from operating activities of $21.8 million and $26.0 million during the three months ended March 31, 2020 and 2019, respectively. The $4.2 million decrease in cash provided from operations for the three months ended March 31, 2020 was primarily attributable to a $5.3 million reduction in cash generated from accounts receivable and deferred revenue due to a reduction in contract bookings for the period.

During the three months ended March 31, 2020, we used cash in investing activities of $2.4 million for purchases of property and equipment, primarily consisting of software and leasehold improvements. During the three months ended March 31, 2019, we used cash in investing activities of $241.7 million, consisting primarily of $238.9 million for the acquisition of SiriusDecisions, net of cash acquired, and $2.8 million in purchases of property and equipment, consisting primarily of software and leasehold improvements.

We used $15.3 million of cash from financing activities during the three months ended March 31, 2020 primarily due to $16.3 million of repayments of debt that consisted of $14.0 million of discretionary payments on our revolving credit facility and $2.3 million of required repayments of our term loan. We generated $151.4 million of cash in financing activities during the three months ended March 31, 2019 primarily due to $171.3 million of borrowings, which reflects the face value of debt of $175.0 million less $3.7 million that was netted against the proceeds to pay debt issuance costs. This was partially offset by $21.6 million of repayments of debt during the quarter that consisted of $20.0 million of discretionary payments on our revolving credit facility and $1.6 million of required repayments of our term loan. During 2020, we anticipate paying approximately $3.5 million of deferred acquisition purchase price (which consists of up to $2.5 million for a contingent consideration agreement (refer to Note 8 – Fair Value Measurements in the Notes to Consolidated Financial Statements) and $1.0 million of an indemnity holdback) for the FeedbackNow acquisition that occurred in 2018.

In connection with the acquisition of SiriusDecisions, we entered into a $200.0 million credit agreement on January 3, 2019 (the “Credit Agreement”). The Credit Agreement provides for: (1) senior secured term loans in an aggregate principal amount of $125.0 million (the “Term Loans”) and (2) a senior secured revolving credit facility in an aggregate principal amount of $75.0 million (the “Revolving Credit Facility”). We utilized the full $125.0 million of the Term Loans and $50.0 million of the Revolving Credit Facility to finance a portion of the acquisition of SiriusDecisions and to pay certain fees, costs and expenses incurred in connection with the Term Loans and Revolving Credit Facility. Additional information is provided in Note 4 – Debt in the Notes to Consolidated Financial Statements.

Borrowings under the Credit Agreement can be repaid early, in part or in whole, at any time and from time to time, without premium or penalty, other than customary breakage reimbursement requirements for the London Interbank Offering Rate (“LIBOR”) based loans. The Term Loans must be prepaid with net cash proceeds of (i) certain debt incurred or issued by us and our restricted subsidiaries and (ii) certain asset sales and condemnation or casualty events, subject to certain reinvestment rights.

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Amounts borrowed under the C redit A greement bear interest, at our option, at a rate per annum equal to either (i) LIBOR for the applicable interest period plus a margin that is between 1.75% and 2.50% based on our consolidated total l everage ratio or (ii) the alternate base rate plus a margin that is between 0.75% and 1.50% based on our consolidated total leverage ratio. In addition, we will pay a commitment fee that is between 0.25% and 0.35% per annum, based on our consolidated total leverage ratio, on the average daily unused portion of the Revolving Credit Facility, payable quarterly, in arrears. During 2019, we entered into an interest rate swap contract to effectively convert the floating base interest rate to a fixed rate on appr oximately 80% of the outstanding Term Loan principal balance. Additional information is provided in Note 7 – Derivatives and Hedging in the Notes to the Consolidated Financial Statements.

The Credit Agreement contains certain customary restrictive loan covenants, including among others, financial covenants that apply a maximum leverage ratio and minimum fixed charge coverage ratio. The negative covenants limit, subject to various exceptions, our ability to incur additional indebtedness, create liens on assets, merge, consolidate, liquidate or dissolve any part of Forrester, sell assets, pay dividends or other payments in respect to capital stock, change fiscal year, or enter into certain transactions with affiliates and subsidiaries. The Credit Agreement also contains customary events of default, representations, and warranties.

As of March 31, 2020, we were in compliance with our financial covenants under the Credit Agreement. We currently forecast that we will be in compliance with our financial covenants for at least one year from the issuance of these interim financial statements, after taking into consideration the cost cutting measures implemented during the first quarter of the year. If the impact of COVID-19 is more severe than currently forecasted this may impact our ability to comply with our financial covenants which could have a material adverse effect on our business.

As of March 31, 2020, we had cash and cash equivalents of $69.8 million. This balance includes $51.8 million held outside of the U.S. If the cash outside of the U.S. are needed for operations in the U.S., we would be required to accrue and pay U.S. state taxes and may be required to pay withholding taxes to foreign jurisdictions to repatriate these funds. However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate these funds for our U.S. operations. We believe that our current cash balance and cash flows from operations will satisfy working capital, financing activities, and capital expenditure requirements for the next twelve months.

Contractual Obligations

There has been a material change to the operating lease payments and purchase commitment lines of the contractual obligations table as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019. As of March 31, 2020, we have the following updated contractual obligations (in thousands):

Contractual Obligations |  |  |  | Total |  |  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  | Thereafter |
Operating lease payments (1) |  |  |  | $ | 106,026 |  |  | $ | 12,046 |  |  | $ | 15,777 |  |  | $ | 15,387 |  |  | $ | 14,872 |  |  | $ | 14,534 |  |  | $ | 33,410 |
Purchase commitments (2) |  |  |  |  | 8,372 |  |  |  | 6,632 |  |  |  | 870 |  |  |  | 870 |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  |  | $ | 114,398 |  |  | $ | 18,678 |  |  | $ | 16,647 |  |  | $ | 16,257 |  |  | $ | 14,872 |  |  | $ | 14,534 |  |  | $ | 33,410 |

(1) | We primarily lease office space under non-cancellable operating lease agreements. During the three months ended March 31, 2020, we entered into several operating leases that commence later in 2020. These leases require us to make $17.2 million of lease payments over the terms of the leases, which are up to ten years. This additional amount is reflected in the table above. Refer to Note 5 - Leases in the Notes to the Consolidated Financial Statements.

(2) | Purchase commitments principally consist of contractual commitments for software, outsourced research services and Event venues. As noted earlier, due to the impact of COVID-19, we moved our two flagship events during the second quarter, the SiriusDecisions Summit and CX North America, to a virtual format, and we cancelled two smaller everts originally scheduled to take place during the same period. As a result of these changes, during the three months ended March 31, 2020 we were able to cancel contracts for event venues, reducing our previously disclosed purchase commitments amounts by a total of $2.1 million.

Other than as noted above, the Contractual Obligations section in our Annual Report on Form 10-K for the year ended December 31, 2019 remains current in all material respects.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet financing arrangements.

Recent Accounting Pronouncements

See Note 1 – Interim Consolidated Financial Statements in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the expected dates of adoption and effects on results of operations and financial condition.

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ITEM 3. QUANTITATIVE AND QUALITAT IVE DISCLOSU RES ABOUT MARKET RISK

There have been no material changes in our assessment of our sensitivity to market risk since our presentation set forth in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the year ended December 31, 2019.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined under Securities Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2020. Based upon their evaluation and subject to the foregoing, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance as of that date.

Changes in Internal Control Over Financial Reporting

Except as noted below, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) of the Exchange Act) that occurred during the quarter ended March 31, 2020, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. In response to COVID-19, we have undertaken measures to protect our employees, partners, and clients, including encouraging employees to work remotely. These changes have compelled us to modify some of our control procedures. However these changes have so far not been material.

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PART II. OTHE R INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not currently a party to any material legal proceedings.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Form 10-K remain applicable to our business. In addition, we are updating the risk factor included in our Annual Report on Form 10-K titled “We Face Risks Related to Health Epidemics That Could Adversely Impact Our Business” as follows.

We Face Risks Related to Health Epidemics That Could Adversely Impact Our Business. Our business has been and could continue to be adversely affected by the effects of a widespread outbreak of contagious disease, including the outbreak of respiratory illness caused by a novel coronavirus first identified in Wuhan, Hubei Province, China, or COVID-19. Any outbreak of contagious diseases, and other adverse public health developments, could have a material and adverse effect on our business operations. This could include disruptions or restrictions on the ability of our employees or our customers to travel and a slowdown in the global economy, which could adversely affect our ability to sell or fulfill, and a reduction in demand for, our products, services or events. Any disruption or delay of our customers or third-party service providers would likely impact our operating results. Due to COVID-19 materially impacting our business beginning only in the last month of the quarter, the impact on our business in the first quarter of 2020 is primarily limited to March customer contract bookings and the amount of consulting projects delivered. While the duration and severity of this pandemic is uncertain, we currently expect that its results of operations in the second quarter of 2020 will have the most significant impact of the effects of COVID-19, and that subsequent periods will also be negatively impacted. We typically generate a significant portion of our Events revenues in the second quarter of the year, including revenues from our two flagship events, the SiriusDecisions Summit and CX North America, both of which will be held as virtual events, resulting in significant reduction in revenues and profits from these two events. In addition, we cancelled two small events originally scheduled for the second quarter of the year. We also expect a reduction in our subscription Research, Connect and Analytics revenues and a reduction in Consulting revenues during the second quarter due to reduced customer contract booking activity in March, which is expected to continue through at least the second quarter of 2020. The extent to which the COVID-19 pandemic ultimately impacts our business, financial condition, results of operations, cash flows, and liquidity may differ from our current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

We have implemented several cost-reduction measures that include reductions to travel, new hiring, and employee incentive compensation programs. We will continue to proactively respond to the situation and may take further actions that alter our business operations as may be required by governmental authorities, or that we determine are in the best interests of our employees and customers.

As of March 31, 2020, we were in compliance with our financial covenants under our Credit Agreement (see Note 4 – Debt in the Notes to Consolidated Financial Statements). We currently forecast that we will be in compliance with our financial covenants for at least one year from the issuance of these interim financial statements, after taking into consideration the measures noted above. If the impact of COVID-19 is more severe than currently forecasted this may impact our ability to comply with our financial covenants which could have a material adverse effect us.

The risks described in our Annual Report on Form 10-K and the updated risks within this Form 10-Q are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Through March 31, 2020, our Board of Directors authorized an aggregate $535.0 million to purchase common stock under our stock repurchase program. During the quarter ended March 31, 2020, we did not purchase any shares of our common stock under the stock repurchase program. As previously disclosed, subsequent to our acquisition of SiriusDecisions we anticipate continuing to substantially reduce or eliminate repurchases of our common stock during 2020.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6. EXHIBITS

3.1 |  | Restated Certificate of Incorporation of Forrester Research, Inc. (see Exhibit 3.1 to Registration Statement on Form S-1A filed on November 5, 1996)
3.2 |  | Certificate of Amendment of the Certificate of Incorporation of Forrester Research, Inc. (see Exhibit 3.1 to Annual Report on Form 10-K for the year ended December 31, 1999)
3.3 |  | Certificate of Amendment to Restated Certificate of Incorporation of Forrester Research, Inc.
3.4 |  | Amended and Restated By-Laws of Forrester Research, Inc.
4.1 |  | Specimen Certificate for shares of Common Stock, $.01 par value, of Forrester Research, Inc. (see Exhibit 4 to Registration Statement on Form S-1A filed on November 5, 1996)
31.1 |  | Certification of the Principal Executive Officer. (filed herewith)
31.2 |  | Certification of the Principal Financial Officer. (filed herewith)
32.1 |  | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith)
32.2 |  | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith)
101.INS |  | XBRL Instance Document. (filed herewith)
101.SCH |  | XBRL Taxonomy Extension Schema. (filed herewith)
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase. (filed herewith)
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase. (filed herewith)
101.LAB |  | XBRL Taxonomy Extension Label Linkbase. (filed herewith)
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase. (filed herewith)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FORRESTER RESEARCH, INC.
By: |  | /s/ Michael A. Doyle
|  | Michael A. Doyle
|  | Chief Financial Officer (Principal financial officer)

Date: May 11, 2020

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