Forrester Research Inc (FORR) 2002 Q3 法說會逐字稿

Good day, and welcome everyone to the Forrester Research third quarter 2002 earnings results conference call. Today's call is being recorded. There will be a rebroadcast available beginning today at 2:00 p.m. Eastern Time through midnight October 30. You may access this rebroadcast by dialing 719-457-0820. You will to use the confirmation code of 655414 to access this replay.

With us today is the Chairman of the Board and Chief Executive Officer, Mr. George Colony; and the Chief Financial Officer, Mr. Warren Hadley; as well as the director of investor relations, Ms. Kim Maxwell. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Colony. Please go ahead, sir.

Thank you very much. Good morning. And thank you for joining our third quarter 2002 conference call.

I will start off with a review of the third quarter. Warren will detail the financial results, I will then return to update you on Forrester plans for the rest of the year followed by questions. Before we begin Kim Maxwell will read from the Safe Harbor provisions. Kim?

This call will contain forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Words such as expects, intends, believes, anticipates, plans, estimates, or similar expressions are intended to identify the forward-looking statements. These statements are based on the Company's current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Some of the important factors that could cause actual future activities and results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The Company undertakes no obligation to update public -- update publicly any forward-looking statement whether as a result of new information, future events or otherwise.

Thanks, Kim. I would now like to summarize our financial results.

Forrester met its financial guidance for the quarter. Revenue for the third quarter was $21.9 million. Pro forma net income was $2.5 million, pro forma EPS was 11 cents per share and our cash position as of September 30 was $197.4 million.

In reviewing the third quarter, I will cover the following areas -- I'll review the business environment and its impact on Forrester, new product and services, Q3 events and how Forrester continues to build influence.

Turning first to the business environment, technology spending continued to remain tight in the third quarter and we expect this to persist for the remainder of 2002. Forrester surveyed 1,000 U.S. companies in June and July to gauge technology spending plans for the year. The companies reported that their tech expenditures in 2002 will increase by 2.3%. Spending will focus on infrastructure upgrades, demand for transformative systems such as enterprise applications will remain lower than average demand.

The economy continues to have an impact on Forrester. The Q3 selling environment remained challenging in North America, Asia, Europe and the rest of the world. The last year and a half has been, what I call a one good week/one bad week environment. Just as soon as business begins to unfreeze, new factors emerge that retighten technology spending. The approval and decision making process for research contracts continues to be rigorous. Finance and purchasing departments are increasingly involved as budgets are being closely scrutinized. Self-side financial services and software and tech services were the weakest verticals in the U.S. in the third quarter. Government was strong. We had some important wins in the state and federal levels in Q3.

There were other positive signs. Our global and North American operating groups, which together comprise approximately 75% of our revenue, shared improvement in dollar retention, renewing contracts, at or above the previous year's levels. In Q3, some of our largest global clients moved toward enterprise wide agreements. This drives usage and yields a larger base to renew from in the future. Planned retention reached the highest level in four quarters.

We had important wins during the quarter. Traditional clients renewed in Q3, including, Absenture [ph], Adobe Systems, Avia, Cisco, Metlife, Partners Health Care, Sun, the U.S. Postal Service, Verizon, Vinyette [ph], and Yahoo!. In addition, we added new clients including Costco, the Department of Treasury, Halifax Bank of Scotland, (which, by the way, now means we have the 10 major banks in the U.K.), Loreal, NBC Health, Starwood Hotels, Wal-Mart.com, and Western Southern Life. We also had significant win-backs during the quarter including Adulent [ph] Technologies, Bristol-Myers, CNP Assurance, Cody, and Saks Fifth Avenue.

On the new product front, we launched one Tech Rankings category during Q3: Business Process Management. BPM software is used to designed around [ph] cross function business process. Despite demand, no single vendor currently delivers a complete Business Process Management suite. IBM recently bought Holosofix [ph] -- I think I'm pronouncing that correctly. We believe the deal will establish IBM as a serious contender in the BPM market. Other vendors include Filenet, Waygo [ph], IDS, Aris, Netalio [ph], Metastorm, Sevignon [ph], Staffwear, and Ultimuss [ph].

Forrester's click and buy capability was rolled out during the third quarter. All of Forrester's research is now available for online purchase. As you know, Forrester services are available on an annual basis. We primarily sell long-term, ongoing relationships. Click and Buy is able to tap into the project market. Companies that have a quick problem to solve or who need access to a limited analytical set. This is ultimate leverage for Forrester. We are using our existing electroproperty to open up an additional market. While revenues for Click and Buy remains limited, it is generating an excellent new stream of leads for ongoing services.

We introduced the Forrester Wave in Q3. The Forrester Wave is a branded research graphics supported by an interactive spreadsheet that quickly and simply shows how vendors rank in their markets. The Forrester Wave evaluates vendors on three dimensions: current offerings, strategy and market presence. The Forrester Wave clearly exposes the methodologies behind the rankings making it the most valuable decision support tool for users and vendors. The first two Forrester Waves covered the web services and adaptive logistic management markets.

We held two summits during the third quarter both covering new topics. The Tech Ranking seminar in Salt Lake City was geared toward IT executives and business managers who are involved in enterprise portal selection. The one-day event analyzed how portals can decrease costs and accelerate internal process. The summit provided portal rankings, analyzing BEA, broad vision, iPlanet, Oracle, Plumb Tree and Tiffco [ph]. [Inaudible] and integrity will be ranked by the end of Q4.

76% of attendees have never attended a Forrester event before, and 92% -- 92% of attendees said that they would attend another Forrester event. The facilitator received the highest content scores for the year.

Continuing on events, TV summit in New York City analyzed how networks, advertisers, cable and satellite operators and producers will adapt to on-demand TV. CNBC gave blanket coverage, donating much of their program squawk box to the summit. CNBC conducted interviews with outside speakers, Michael Ramsey, Chairman and CEO of Tevo; Robert Zinner, SVP of Technology Operations at HBO; and Martin Judkovitz [ph], President of NBC Digital Media. Forrester's differentiation in the research business was very visible at the TV summit. The attendees were drawn from business and marketing executives, a very whole-view audience.

I want to finish the Q3 review by talking about how Forrester continues to focus on building influence. We were quoted over 2,000 times in the media in Q3. Forrester analysts and research were included in stories on CNN, NPR, marketplace radio, and the BBC; in print publications such as "USA Today," "Wall Street Journal," "The New York Times," "Investors Business Daily," "Business Week," the "Economist," and "Newsweek;" and in key trade technology media such as "Information Week," "Computer World," and "CNET."

As I mentioned on the last call, video views, which are video summaries of our research, continue to gain traction. Since the launch earlier this year, 70 video views are currently on our site. These videos have -- these videos have been viewed approximately 32,000 times. In the quarter, Forrester entered into an agreement with CNET. Forrester analysts are providing regular commentaries on leading technology issues for the CNET site. With approximately 1 million page views, cnetnews.com is a primary source of information about technology. We expect these commentaries to bring excellent leads back to our site.

And finally, Forrester's website received a Standard of Excellence award from the Web Marketing Association earlier this month.

I would now hand the call over to Warren who will give a financial review of the third quarter.

Warren?

Thank, George. Over the next several minutes, I will review Forrester's third quarter result, year-to-date results, the balance sheet at September 30, our third quarter metrics and the outlook for our business model for the remainder of the year.

Please note that the income statement numbers I'm reviewing with you today are pro forma and reflect adjustments for the following three items. One, we have excluded a Q3 reorganization charge in the amount of $3.1 million related to the workforce reduction that Forrester completed in July. Two, we have excluded a Q3 charge of $859,000 for write-downs related to certain nonmarketable investments. And, three, we have assumed an effective tax rate of 30% for pro forma tax purposes. The actual anticipated effective tax rate for 2002 is 8%.

As George reported to you, Forrester's third quarter revenue decreased 36% to $21.9 million, from $34.4 million in the third quarter of last year. Net income decreased 47% to $2.5 million, from $4.8 million last year. Earnings per share were 11 cents on diluted rated average shares outstanding of 23.6 million, compared with 20 cents and 23.6 million shares outstanding last year. Third quarter core research revenue was on plan at $16 million, representing a 46% decrease from $29.5 million last year. Core revenue comprised 73% of total revenue for the quarter, compared with 86% for the third quarter of 2001. Third quarter advisory services and other revenue increased 23% to $6 million, from $4.9 million in Q3 of 2001. Advisory services and other revenues comprised 27% of total revenue for the quarter.

As George mentioned, we held two summits in the third quarter compared with no summits or forum events in the third quarter of last year. In Q4, we plan to hold three forums, including our executive strategy forum in Boston. We also plan to hold two summits. We expect that advisory and other revenue will comprise 30% to 35% of total Q4 revenue and core research revenue will be in the range of 65% to 70% of total revenue.

On a geographic basis, 27% of Forrester's third quarter revenues was derived from international sales, compared with 30% in Q3 last year. This is in line with our expectation that international revenue will comprise approximately 26% to 30% of Forrester's total 2002 revenue.

Operating expenses for the quarter were $19.6 million, down from $29.2 million last year. We have continued to align our expenses with our revenue base through strict cost controls and workforce reductions. We are on plan with regard to expenses savings estimated from our workforce reductions earlier this year.

Operating income was $2.4 million, or 11% of revenue, compared with $5.2 million, or 15% of revenue last year. We recorded a charge in the third quarter of $3.1 million for costs related to the July 2002 workforce reduction. Of the $3.1 million total, approximately 27% relates to compensation for severance, and 73% to office space reductions, professional fees, and leasehold and equipment write-offs. This charge is larger than we projected due to additional lease termination costs and related write-offs of leasehold improvements. Approximately $850,000, or 28% of the charge is noncash.

Now I'd like to turn to Forrester's year-to-date results. Total revenue through September 30 decreased 41% to $73.4 million from $124.5 million over the same period last year. Operating income for the nine months ended September 30 was $8.4 million, or 11.4% of revenue, compared with operating income of $17.9 million or 14.4% of revenue for the same last year. Net income decreased 42% to $8.8 million from $15.3 million last year. Earnings per share for the nine months ended September 30 were 37 cents on diluted weighted average shares outstanding of $28.8 million, compared with 64 cents and 24 million shares outstanding last year.

Now I'd like to review the balance sheet. We continue to maintain a strong cash position. Our cash and investments at the end of the third quarter were $197.4 million. Despite the tough economic environment, we continue to generate positive cash flows from operations. Cash flows from operations were approximately $1.6 million in Q3 and $3.9 million year to date.

During the third quarter, we used $6.9 million of cash to purchase 437,000 shares on the open market pursuant to our stock buy-back program. To date, we have purchased 850,000 shares for a total of $14.8 million. Our stock buy-back program, which we announced in October 2001, allows for the use of up to $50 million to purchase shares. We plan to continue to buy back shares in the fourth quarter.

Accounts receivable at September 30 was $10.9 million, down from $24.5 million at the end of 2001. We had another strong collections quarter with cash receipts totalling $17.2 million in the quarter. Our days sales outstanding at September 30 was 77 days, a decrease from 91 days last September 30. In accounts receivable, over 90 days, was 5%, down from 14% a year ago, and down from 8% in the second quarter of this year.

Net property and equipment decreased to $12.7 million as of September 30 from $21.3 at the end of 2001. Our capital spending in the third quarter was less than $100,000, which brings us to just over $1 million in capital spending year to date. Our capital spending plan for 2002 was $2 million, but we don't expect to reach that number this year. Deferred revenue at September 30 was $39.6 million, compared with $59.9 million at the end of September 2001, representing a year-over-year decrease of 37%.

And now, I'll review Forrester's third quarter metrics. Agreement value is the total value of all contracts for core research and advisory services in place without regard to how much revenue has been recognized. Agreement value was $78.4 million as of September 30, representing a year-over-year decrease of 41%. Forrester's average contract size for core research in the third quarter was $46,100, a decrease of 10% from $51,300 last year. The average level-one partners program contract was $167,100, an increase of 4% from $160,500 last year, and the average level-two partners program contract was $85,800, an increase of 8% from $79,700 last year.

Forrester's retention rate for client companies at September 30 was 55%, up from 52% in Q2, but still below our target range of 74% to 76%. Our dollar retention rate was 70%, also up from 66% in Q2, but also below our target range of 75% to 80%. These retention rates are calculated on a 12-month rolling basis. Both rates have stabilized and are now moving in a positive direction. At the end of the third quarter, our total for client companies was 1,165, a 3% sequential decrease. This is the lowest quarterly decrease we have experienced in the past seven quarters.

For head count at the end of the third quarter, Forrester had a total staff of 367, down from 581 at the end of last year. Current head count included the research staff, 127, down from 191 at the end of 2001, and a sales staff of 117 down from 184 at the end of 2001.

The last topic I'd like to cover today is our business outlook for Q4 and the full year 2002. We are reaffirming our previous guidance for the fourth quarter and full year 2002, which excludes reorganization charges and investment write-downs and assumes a pro forma effective tax rate of 30%. For Q4, we're aiming to achieve total revenues of approximately 22 to $25 million, an operating margin of 10% to 12%, and diluted earnings per share of approximately 10 to 12 cents. For the full year 2002, we're aiming to achieve revenues of approximately 95 to $100 million, an operating margin of 9% to 11%, and diluted earnings per share of 45 cents to 50 cents. We are currently working through our 2003 planning process and given the uncertainty with the current economy, we are holding off on issuing guidance for 2003 until our year-end conference call in January.

Thanks, and now I'd like to turn the call back over to you, George.

Thank, Warren.

I'd like conclude the call by talking about plans for the fourth quarter. I will cover two areas, new products and events. We'll be introducing new TechRankings category during the fourth quarter. The business intelligence TechRankings category, which we discussed on the last call, will launch later this month. ERP, CRM and Commerce Systems all produce prodigious amounts of data. EI technology is an important technology that [inaudible] B Plus companies will use to field and analyze this data. Vendors to be analyzed in this category include Cognos, Crystal Decisions, Brio Software, Microstrategy, Microsoft, Oracle and SAP.

In early October, Forrester introduced a new service called Tech Spending Profiles. Drawing on our scientifically significant business technographics data, the profiles enable CIOs to benchmark their IT spending and implementation priorities against peer groups. Ten industry groups are profiled: high tech, insurance, distribution, financial services, retail, business services, chemicals and petroleum, consumer services, finished goods manufacturing, and utilities. The profiles leverage work we've already done, building on an archive of seven quarters worth of business, technographics data.

Turning to fourth quarter forums and summits, we will host three forums and two summits in the quarter. Earlier this month, we hosted the European finance forum in London. The event was a sellout. Earlier this week, we had a CPG and health care summit. The CPG summit, which is actually called "Winning in a Wal-Mart World," explored how manufacturers or retailers can effectively use technology to accomplish key business goals and differentiate their products and customer experiences. Featured speakers included Colin Dyer, CEO, Worldwide Retail; Kevin Smith SVP Supply Channel Logistics for CVS; Mark Van Gelder, President and CEO of Peapod; and Vivian Lee Bechtold [ph], Marketing Director of Proctor & Gamble. The health care summit outlined new insights and best practices and using consumer data to gain customer intimacy, bolster product sales, and target better and new treatments. Outside speakers included Roger Holstein [ph], CEO of webMD; John Hallic, President and CEO of CPM.

Continuing on the forums and summits, the executive strategy forum will be held next month in Boston. The focus is on how companies can use technology to recover from the recession. The form will analyze the potential of web services, internet, adaptive supply networks, and right channeling to help companies win market share, lower costs and increase sales in a recessionary time. Outside speakers include Ken Chenault [ph], the President and CEO of American Express; David Jones, Chairman of the Board of Humana; Kevin Rollins, the President and COO of Dell; Doug Elicks [ph], SVP and Group Executive of IBM; and Larry Summers, the former Secretary of the U.S. treasury, and now President of Harvard University.

Our final forum of the year will be the consumer forum Europe, which we will host in London. This forum will address how companies can boost their brand and sales by engaging online customers through the web, mobile telephony and IDTV.

So to conclude the call, the technology market remains in a one-good-week/one-bad-week condition. I do not expect the macroeconomic environment to substantially change in calendar year 2002. In spite of this market, Forrester is focused on continued innovation, staying close to our clients and carefully managing productivity and profitability. We believe this approach is yielding results. Client loss is slowing, new products are reaching new customers and opening new markets, home view remains highly differentiated, its flexibility and value stands out in the marketplace, so in short, we are not standing by waiting for the haze to clear. We're in full motion, innovating, changing and adapting to market conditions. We look forward to seeing many of you while we're on the road this quarter.

I want to thank you for listen in on the conference call, and now Warren and I will take questions. Thank you.

Thank you. The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit 1 on your touch tone telephone. If you're using the speaker phone, please make sure the mute button is turned off to allow your signal to reach our equipment. We'll will proceed in the order in which you signal us and will take as many questions as time permits. Once again, that's star 1. We'll pause for a moment to assemble our roster.

And our first question will come from Sandra Notardenado with Adams Harkness.

George, you talked about win-backs in the quarter which is nice to hear. Could you give a little clarity on why you lost them in the first place, when that occurred, and maybe what the impetus for them to come back was?

You know, probably the most frustrating part of this whole recession is clients saying, we love you guys, we can use your research, fantastic, but the budget got cut.

Right.

So most of the companies I named, probably the second, third, fourth quarter of last year got their budgets slashed and now budget money's returning and that's why they're coming on back on board with us. That's probably reason one. Reason two is WholeView. They're saying much greater value, better pricing, much easier to use, we like that a lot. They like the packaging. Those are the two reasons.

So are you -- for clients like this, these are pretty high-profile clients, your sales people, I'm sure, are staying in front of them even though perhaps last year they had to cancel their subscriptions and going back to them with the WholeView approach?

Yes, we have a whole list of the win-backs and active -- the sales force is very active pointed at the win-backs. So very, very high on the list. Is this the first quarter where we've seen win-backs? I'd say that, no, we've had win-backs every quarter. This is probably a higher number this quarter than the previous quarters, so this is the best quarter for win-backs.

Okay. That's a good sign. I'm not sure if you mentioned this, just a quick question on the Forrester form, how does attendance look so far, and if you could compare it to -- well, what you think it will be compared to 2001.

Well, I would say we'll be ahead of last year.

Okay.

Attendance is actually running very well for us. We'll be in the 600 range.

600 range.

Yeah.

And the peak back in '99, 2000 was what for the Forrester forum?

700 to 800 attendees.

Okay, great.

Last year it was, like, 550.

Okay. I'd like to talk a little bit about advisory services. I know you don't typically break out what that represents as a percentage of revenue, but I'd really like to know if that's becoming a larger percentage of the mix, and if so, what are your plans to capture more of these dollars while still maintaining the very attractive business model that you have?

Yeah, there's really two points to that question, one is, it is -- we have two summits in Q3, so advisory certainly is picking up and it actually grew by 23% advisory and other services over Q3 of last year.

To be more specific, Sandy, we're doing more advisory these days, so the mix is changing slightly.

Right. Okay.

More demand from our clients --

Yeah.

For that high-touch more consultive type service?

Yes.

So, I guess my question then is,how are you balancing maybe capturing more of those dollars without turning into a consulting model?

Well, there are virtually no clients for advisory who does not also receive large contracts in consulting. In core research. I'm sorry. So it's still high linkage there. We're not going out and doing projects for companies who do not buy research from us. We're also finding if we do more advisory for them, they tend to buy more research and we have better relationships there, so it's very complementary, and we're not going to become a consulting firm, believe me.

Okay. Just two more questions. The Click and Buy research you talked about this quarter, the price point on that, is that the same as it was before you went to WholeView or have you taken prices down a little bit?

Oh, no, the price plan on the Click and Buy is for individuals who go onto the website and just buy an individual report or brief, so the price points there are $200 to $800, I believe.

Three years ago, we had a product which sold -- called Baseline, which sold packages of research, Sandy.

Right.

But they were, you know, three or four months out of date and they special packages. This is, like, all our research, the minute it's live on our site, it goes live on Click and Buy.

Okay.

But there's real variability in pricing. If it's a really hot report, we price it at $5,000. But if it's an aged report, it will go at $800.

Okay. Last question, just somewhat of a housekeeping question. Can you give the deferred revenue number on customers who are not on the one-year subscription program?

Yes. That was -- our future AR is $7.7 million. Those are clients to be billed. Out of that, about $2 million is out of two-year payment terms.

Okay, great. Thank you guys very much.

Thanks.

Our next question will come from Laura Letterman with William Blair Brokerage.

Yes, good morning. Just a few quick questions. One is in your modeling for '03, can you give us a sense of what your underlying view is for the economy? Are you modeling assuming the economy will remain weak? Also IT budgets, are you assuming flat IT budgets? If we could get a sense of what you're thinking in terms of the budget environment next year. I realize you're not giving formal guidance but that guidance will give us a sense in terms of what you're thinking of.

I'll give us our analysis, Laura, our Forrester analysts are saying we're up 2.3% this year in IT spending, that's after a down year of 10%. The Forrester number is now at around 9% increase in tech spending for next year. But given all that, we are planning very conservatively for next year. We're not planning any up tick in the economy and it will be nice if it happens next year but we're not going to plan on it.

Sooner or later we'll move to a more normalized environment. What do you think Forrester's underlying growth will be in a normal GDP, let's say assume, 3%, or whatever normalized GDP you want to talk about. Thanks.

Well, we're still in the 25% to 35% range in normal time. It's kind of crazy to say that when we're at this point contracting. But give normal times when tech spending is in the, you know, 9% to 12% range where it traditionally is, our growth will be in the 30% range. I think you also look -- after the haze clears here, Laura, a lot of players who were in our business who are now gone. Jupiter is gone, Herwitz [ph] Group went out of business two weeks ago, there's going to be a lot less competition around in the business. That's going to help us.

Wow. Let's say IT spending does -- final question, let's say IT spending doesn't go up 9% to 12% in a normalized environment like it used to, let's say it's more like five to seven. What would you grow if IT budgets were only grow 5% to 7% in the future?

I would say we'd probably be in 25 to 35% range -- in the 20% range, may lower by five percentage points. Somewhere in that range Remember, because of WholeView, only one-third of WholeView is dedicated to the tech spending. Two-thirds is dedicated to the marketing spend and business spend. And that's somewhat disattached from the IT spend.

Great. Thank you so much.

Thank you.

Fred McCray with Thomas Weisel Partners has the next question.

Good morning, everybody.

Hey, Fred.

How are you doing?

Good.

Actually, just to go back to the Click and Buy very quickly. George, tell us the thought process behind introducing that. I know some of your competitors have, you know, offered one-off research reports bought over the web for quite sometime. What kind of brought you to the conclusion that now is the time as opposed to sometime in the future or even a couple years ago?

Well, there was a lot of worry about Click and Buy internally, Fred, because our sale guys said, "Don't do this, you're going to cannibalize the sales force," and that actually would have been true back in the old services model that we had a year ago. Because in the old services model, someone could have said, "Well, instead of buying financial services for 15K, I'll go Click and Buy all of the reports that I want for financial services and then I can basically build it cheaper," but in the world of WholeView where all of our research is available to all clients at one price, it now makes it possible to sell one-off reports and not really -- and not cannibalize our services at all.

It's a different market. You have to realize that we're selling primarily relationships which are a year or longer with our clients, which involve research but also advisory and many points of contact with us. That's one client. And we were not reaching with that product the project base client. The client who has, you know, doing a project for the CEO needs one report, fast. They didn't want a relationship with Forrester for a whole year but they need some of our research. So for us, it really opens up a whole new market of that project-based client.

Understood.

By the way, to date, there's been no cannibalization. No sales guys ran into my office saying, hey, you're cannibalizing my potential service here. Hasn't happened.

Good to hear.

Yep.

And then, also, back to the advisory services. At what level is a percentage of revenue, you know, do you get -- advisory services -- totally one specific number but maybe a range that you say too much, too much of the mix, you know, we need to start getting things aligned back toward the core research model, you know, continued emphasis there. At what level do you feel you've tipped the scales a little too much on the advisory services?

I would say maybe, perhaps in the 60% range, 60% to 65% range.

More research to advisory services? --

Yeah. In the 30% to 40% range, probably 40% we'd say, hey, this is a big number. Changing the business model. You know, Fred, we're never going to do advisory ever, ever, unless it is leverage advisory, which means we're not going to do consulting projects where you pay the guy 100K internally and the the contract's worth 300K. Right. The old three to one math. We're always looking for math that's higher than that on the four to one, or even six to one leverage on advisory. You following me on this?

Yes, absolutely. You have some thoughts?

The only other point I would make is from time to time in a quarter that we might have three or four events in the fourth quarter, we have three forums and two summits, that will obviously spike the advisory and other services up as a percentage of our total revenues.

Yeah, clearly. And then in terms of the CIO piece that you were describing in terms of the benchmarking work, the tech spending profiles.

Mm-hmm.

What type of attraction has that had and, you know, this clearly as other larger -- or other broad-based business best practice research shops that kind of follow the same type of model, is this something you think has some legs and can you take to the next step here?

Yeah, I think so. If you look at -- talk to CIOs these days, there's a lot of risk aversion out there, and they -- I won't say they're sheep, but certainly -- they want to stay within a band of spending and also the technology they're buying.

Mm-hmm.

So best practice has become a very hot space for obviously the market and also for us. Early results, it's really too early to tell. It just went active, like two weeks ago. On the Q4 call, we'll give you an update here, but I think it will be a great product for us.

Understood.

Yeah. And also what we like about it is it leverages work we've already done. It's not a whole new program or data set we have to build, it's coming right out of business technographics, so it's data we have on hand.

Packaging, positioning and selling as opposed to --

Exactly.

Perfect. Great. Thanks so much.

Thank you. Our next question comes from Steve Lidberg with Pacific Press.

Good morning, guys. Was wondering first of all, what percentage of your customer base was up in Q3 and what is that number for Q4?

In Q3 it's about 23, 24%; and in Q4, more than a third, 34%, 35%.

And as you look at the customer base specifically the change in the customer base in the third quarter, any additional color that you can provide as far as activity on new account adds versus lost accounts, please?

Well, for total client company, the number was 1,155 we're down 35. We added 87 and lost 122 in the quarter. If that's what you're asking.

Yep, that is. Thanks, Warren.

You're welcome.

And as a reminder, it is star one to ask a question or make a comment. At this time, there appears to be no further questions. Mr. Colony, please go ahead.

Thanks very much for being on the call, guys. See you on the road this quarter, and hope to see you all very soon. Thanks very much.

That concludes today's conference call. Thank you for your participation.