Forrester Research (FORR) 8-K Forrester Research Reports Third-Quarter 2005 Financial Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Forrester Research Reports Third-Quarter 2005 Financial Results

CAMBRIDGE, Mass., October 26, 2005 . . . Forrester Research, Inc. (Nasdaq: FORR) today announced its third-quarter ended September 30, 2005 financial results.

Third-Quarter Financial Performance

• Total revenues were $39.0 million, compared with $33.9 million for the third quarter of last year.

• On a GAAP-reported basis, which reflects an effective tax rate of 44 percent, Forrester reported net income of $3.2 million or $0.15 per diluted share, compared with net income of $3.2 million, or $0.14 per diluted share, for the same period last year.

• On a pro forma basis, net income was $4.1 million or $0.19 per diluted share, for the third quarter of 2005, which excludes amortization of $786,000 of acquisition-related intangible assets, and non-marketable investment gains of $241,000 and which reflects a pro forma effective tax rate of 35 percent. This compares with pro forma net income of $3.4 million, or $0.15 per diluted share, for the same period in 2004, which excludes amortization of $1.4 million of acquisition-related intangible assets, and marketable and non-marketable investment gains of $1.0 million, and reflects a pro forma effective tax rate of 35 percent.

Nine-Month Period Ended September 30, 2005 Financial Performance

• Total revenues were $112.1 million, compared with $100.5 million for the same period last year.

• On a GAAP-reported basis, which reflects an effective tax rate of 41 percent, Forrester reported net income of $8.7 million, or $0.40 per diluted share for the nine months ended September 30, 2005, compared to a net income of $606,000 or $0.03 per diluted share for the same period last year.

• On a pro forma basis, net income was $10.0 million or $0.46 per diluted share, for the nine months ended September 30, 2005, which excludes amortization of $2.7 million of acquisition-related intangible assets, marketable and non-marketable investment gains of $2.0 million and which reflects a pro forma effective tax rate of 35 percent. This compares with pro forma net income of $8.9 million, or $0.40 per diluted share for the same period last year, which excludes amortization of $5.1 million of acquisition-related intangible assets, reorganization costs of $8.8 million primarily due to office space consolidations, and marketable and non-marketable investment gains of $1.0 million, and reflects a pro forma effective tax rate of 35 percent.

A reconciliation of GAAP results to pro forma results may be found in the attached financial tables.

“Forrester reported another strong quarter, with revenue growth of 15 percent and pro forma earnings per share growth of 27 percent,” said George F. Colony, chairman of the board and chief executive officer. “After the first three quarters, Forrester is on track to meet its 2005 financial objectives. The fourth quarter will be very busy as 40 percent of our contracts come up for renewal. We will stay focused on driving sales of our syndicated research services products, while maintaining a high level of client service.”

Forrester is providing fourth-quarter 2005 financial guidance as follows:

Fourth-Quarter 2005 (GAAP):

• Total revenues of approximately $41.0 million to $43.0 million.

• Operating margin of approximately 13 percent to 15 percent.

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Forrester Third-Quarter Fiscal 2005 Results / Page 2

• Other income of approximately $700,000.

• An effective tax rate of 41 percent.

• Diluted earnings per share of approximately $0.18 to $0.20.

Fourth-Quarter 2005 (Pro Forma):
Pro forma financial guidance for the fourth quarter of 2005 excludes amortization of acquisition-related intangible assets of approximately $800,000 and any gains or impairment charges related to non-marketable investments.

• Pro forma operating margin of approximately 15 percent to 17 percent.

• Pro forma effective tax rate of 35 percent.

• Pro forma diluted earnings per share of approximately $0.20 to $0.22.

Forrester is providing full-year 2005 guidance as follows:

Full-Year 2005 (GAAP):

• Total revenues of approximately $152.0 million to $156.0 million.

• Operating margin of approximately 10 percent to 12 percent.

• Other income of approximately $3.0 million.

• An effective tax rate of 41 percent.

• Diluted earnings per share of approximately $0.55 to $0.63.

Full-Year 2005 (Pro Forma):
Pro forma financial guidance for full-year 2005 excludes amortization of acquisition-related intangible assets of approximately $3.5 million, as well as all gains and impairment charges related to marketable and non-marketable securities.

• Pro forma operating margin of approximately 13 percent.

• Pro forma diluted earnings per share of approximately $0.65 to $0.69.

• An effective tax rate of 35 percent.

Forrester Research (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice about technology’s impact on business and consumers. For 22 years, Forrester has been a thought leader and trusted advisor, helping global clients lead in their markets through its research, consulting, events, and peer-to-peer executive programs. For more information, visit www.forrester.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, Forrester’s financial and operating targets for the fourth quarter of and full-year 2005. These statements are based on Forrester’s 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, Forrester’s ability to anticipate business and economic conditions, technology spending, market trends, competition, industry consolidation, the ability to attract and retain professional staff, possible variations in Forrester’s quarterly operating results, risks associated with Forrester’s ability to offer new products and services, and Forrester’s dependence on renewals of its membership-based research services and on key personnel. Forrester undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information, please refer to Forrester’s reports and filings with the Securities and Exchange Commission.

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Forrester Third-Quarter Fiscal 2005 Results / Page 3

The consolidated statements of income, consolidated balance sheets, and consolidated statements of cash flows are attached.

Kimberly Maxwell	Karyl Levinson
Director, Investor Relations	Director, Corporate Communications
Forrester Research, Inc.	Forrester Research, Inc.
+1 617/613-6234	+1 617/613-6262
kmaxwell@forrester.com	press@forrester.com

© 2005, Forrester Research, Inc. All rights reserved. Forrester and Forrester Oval Program are trademarks of Forrester Research, Inc.

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Forrester Third-Quarter Fiscal 2005 Results/Page 4

Forrester Research, Inc.
Consolidated Statements of Income

(In thousands, except per share data)

	Three months ended September 30,				Nine months ended September 30,
	2005		2004		2005		2004
	(Unaudited)				(Unaudited)
Revenues
Research services	$	24,987	$	23,544	$	72,203	$	69,579
Advisory services and other		14,038		10,335		39,850		30,950
Total revenues		39,025		33,879		112,053		100,529
Operating expenses
Cost of services and fulfillment		15,358		13,266		45,648		40,782
Selling and marketing		12,559		11,036		37,464		33,701
General and administrative		4,672		4,291		13,122		11,687
Depreciation		859		744		2,615		2,801
Amortization of intangible assets		786		1,384		2,742		5,112
Reorganization costs		—		—		—		8,751
Total operating expenses		34,234		30,721		101,591		102,834
Income (loss) from operations		4,791		3,158		10,462		(2,305	)
Other income, net		722		680		2,226		2,168
Realized gains on sales of securities and on non-marketable investments		241		991		2,021		1,048
Income before income taxes		5,754		4,829		14,709		911
Income tax provision		2,527		1,618		6,019		305
Net income	$	3,227	$	3,211	$	8,690	$	606
Diluted income per share	$	0.15	$	0.14	$	0.40	$	0.03
Diluted weighted average shares outstanding		21,931		22,345		21,872		22,577
Basic income per share	$	0.15	$	0.15	$	0.40	$	0.03
Basic weighted average shares outstanding		21,287		21,952		21,470		22,094
Pro forma data (1):
Income (loss) from operations	$	4,791	$	3,158	$	10,462	$	(2,305	)
Amortization of intangible assets		786		1,384		2,742		5,112
Reorganization costs		—		—		—		8,751
Pro forma income from operations		5,577		4,542		13,204		11,558
Other income, net		722		680		2,226		2,168
Pro forma income before income taxes		6,299		5,222		15,430		13,726
Pro forma income tax provision		2,205		1,828		5,401		4,804
Pro forma net income	$	4,094	$	3,394	$	10,029	$	8,922
Pro forma diluted earnings per share	$	0.19	$	0.15	$	0.46	$	0.40
Diluted weighted average shares outstanding		21,931		22,345		21,872		22,577

Forrester believes that pro forma financial results provide investors with consistent and comparable information to aid in the understanding of Forrester’s ongoing business. Our pro forma presentation excludes amortization of intangibles, reorganization costs and impairments of non-marketable securities and gains from sales of marketable securities as well as their related tax effects. This does not purport to be prepared in accordance with Generally Accepted Accounting Principles

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Forrester Third-Quarter Fiscal 2005 Results/Page 5

Forrester Research, Inc.
Consolidated Balance Sheets

(In thousands)

	September 30,			December 31,
	2005			2004
	(Unaudited)
Assets:
Cash and cash equivalents	$	52,468		$	37,328
Marketable securities		82,090			90,112
Accounts receivable, net		28,653			39,210
Deferred commissions		6,314			6,834
Prepaid expenses and other current assets		5,626			5,509
Total current assets		175,151			178,993
Property and equipment, net		6,080			6,410
Goodwill, net		52,915			52,875
Intangible assets, net		4,320			6,992
Deferred income taxes		43,283			42,860
Non-marketable investments and other assets		14,273			14,742
Total assets	$	296,022		$	302,872
Liabilities and stockholders’ equity:
Accounts payable	$	1,956		$	3,741
Accrued expenses		26,462			26,928
Deferred revenue		67,671			72,357
Total liabilities		96,089			103,026
Preferred stock		—			—
Common stock		253			247
Additional paid-in capital		188,758			180,310
Retained earnings		79,767			71,077
Treasury stock, at cost		(66,314	)		(50,056	)
Accumulated other comprehensive loss		(2,531	)		(1,732	)
Total stockholders’ equity		199,933			199,846
Total liabilities and stockholders’ equity	$	296,022		$	302,872

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Forrester Third-Quarter Fiscal 2005 Results/Page 6

Forrester Research, Inc.
Consolidated Statements Cash Flows

(In thousands)

	Nine months ended September 30,
	2005			2004
	(Unaudited)
Cash flows from operations:
Net income	$	8,690		$	606
Adjustments to reconcile net income to net cash provided by operating activities – Depreciation		2,615			2,801
Amortization of intangible assets		2,742			5,112
Non-marketable investments gains		(532	)		(370	)
Realized gain on sale of securities		(1,489	)		(678	)
Tax benefit from stock options		1,243			256
Deferred income taxes		(739	)		(2	)
Non-cash reorganization costs		—			1,541
Increase in provision for doubtful accounts		100			224
Accretion of premiums on marketable securities		829			635
Changes in assets and liabilities, net of acquisition –
Accounts receivable		9,282			15,541
Deferred commissions		520			849
Prepaid expenses and other current assets		(294	)		(296	)
Accounts payable		(1,785	)		(116	)
Accrued expenses		1,317			(3,722	)
Deferred revenue		(2,572	)		(8,770	)
Net cash provided by operating activities		19,927			13,611
Cash flows from investing activities:
Purchases of property and equipment		(2,376	)		(2,423	)
Purchase of non-marketable investments		(300	)		(2,263	)
Proceeds from non-marketable investments		516			—
Decrease in other assets		788			842
Purchase of marketable securities		(179,612	)		(107,478	)
Proceeds from sales and maturities of marketable securities		185,776			121,623
Net cash provided by investing activities		4,792			10,301
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock option plans and employee stock purchase plan		7,201			2,959
Acquisition of treasury shares		(16,258	)		(12,623	)
Structured stock repurchase		—			54
Net cash used in financing activities		(9,057	)		(9,610	)
Effect of exchange rate changes on cash and cash equivalents		(522	)		(66	)
Net increase in cash and cash equivalents		15,140			14,236
Cash and cash equivalents, beginning of period		37,328			22,385
Cash and cash equivalents, end of period	$	52,468		$	36,621

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