Forrester Research Inc (FORR) 2010 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2010 Forrester Research earnings conference call. My name is Michelle, and I will be your Operator for today. (Operator instructions.) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call. Ms. Carol Levinson, Vice President, Corporate Communications. Please proceed.

Thanks very much, and good morning. Thank you for joining our first quarter call. with me today are George Colony, Forrester's Chairman of the Board and CEO, Charles Rutstein, Forrester's Chief Operating Officer, and Mike Doyle, Forrester's Chief Financial Officer.

Mike will open the call and provide detail on our financial results for the quarter. George will follow Mike and provide a strategic update on the business and our role based strategy. After George completes his review we'll open the call to Q&A.

A replay of this call will be available until May 6th, 2010, and can be accessed by dialing 888-286-8010. Please reference the pass code 70546377. This call is also available via webcast and will be archived in the Investor Section at forrester.com.

Before we begin, I'd like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expect, believe, anticipates, intends, plans, estimates, or similar expressions are intended to identify these forward-looking statements. These statements are based on the Company's current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements.

Some of the important factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

I'll now hand the call over to Mike Doyle.

Thanks, Carol. I will now begin my review of Forrester's first quarter financial performance, the balance sheet at March 31st, our first quarter metrics, and the outlook for the second quarter and full year 2010.

Please note that the income statement numbers I'm reporting are pro forma and exclude the following items -- amortization of intangibles, stock based compensation expense, reorganization costs in 2009, acquisition related costs and credits, and net realized gains from investments.

Also, we continue to utilize an effective tax rate at 40% for pro forma purposes. The actual effective tax rate for the first quarter of 2010 is approximately 38%.

For the first quarter Forrester exceeded its quarterly guidance for pro forma operating margin and EPS and met guidance for revenue. We are pleased with the continued improvement in our operating performance which reflects healthy renewal activity and excellent operating discipline resulting in strong bottom line performance. We continue to see signs of an improving economy, both with improved customer retention and enrichment metrics and broad based success across all segments and geographies. In addition, the integration of Strategic Oxygen, acquired on December 1st, is progressing as planned and had a small but positive affect on our operating results.

Now, let me turn to a more detailed review of our first quarter results. Forrester's first quarter revenue increased 5% to $59.2 million from $56.4 million in the first quarter of last year. Given our deferred revenue recognition model we are just now starting to see the revenue effects of our improving bookings performance over the last few quarters. In addition, we experienced strong consulting delivery and a positive impact of foreign exchange rates.

First quarter Research Services revenue increased 1% to $39.4 million from $39 million last year. Research Services revenue was 67% of total revenue for the quarter versus 69% in the first quarter of 2009.

First quarter Advisory Services and other revenue increased 14% to $19.8 million from $17.4 million in the first quarter of 2009, and represented 33% of total revenue for the quarter.

International revenues were 30% for the first quarter, up from 29% in the first quarter last year, primarily due to the impact of foreign exchange rates.

I'd now like to take you through the activity behind our revenue and review the results for each of our products, starting with research. In the first quarter 383 new research documents were added to RoleView. The top three research roles are the enterprise architecture professionals, 4,311 clients, our application development and program management professionals with 3,931 clients, and our technology product management, with 3,842 clients. We hosted 62 teleconferences in the first quarter with a total attendance of 3,103.

Forrester Leadership Boards, our peer offering for senior executives, continues to improve, achieving year-over-year revenue growth of 4% in the first quarter of 2010. The seven Boards focused on IT roles now have a total of 929 members. Technology Industry Boards now have a total membership of 267. And, finally, the Marketing and Strategy Boards have a total membership of 374. At the end of the first quarter the Forrester Leadership Boards had 1,570 members, an increase of 1% from December 31st, 2009.

In our data business we continue to add and renew an impressive list of clients, including the addition of 11 new [1B+] companies in the first quarter, including Google, AmEx, State Farm, Telefonica, and Deutsche Telecom.

In our consulting business demand for our consulting services increased 9% from the first quarter of 2009, which we believe reflects an improving economy and a continued focus on the needs of our clients in their roles. Consulting improvement was broad based across each of our operating segments.

In the first quarter our events business continued to strengthen in both sponsorship and attendee sales. We hosted four IT role based events in the first quarter -- the Enterprise Architecture Forum for North America, Infrastructure and Operations Forum for EMEA, the Security Forum for EMEA, and Infrastructure and Operations Forum for North America.

In the second quarter of 2010 we are hosting two IT role based events -- IT Forum in North America and in EMEA, and two M&S events -- Marketing Forum North America and Customer Experience Forum North America.

Let me turn now to our expenses and operating income. Operating expenses for the first quarter were $49.8 million, up 5% from $47.2 million in the first quarter of 2009, due to significantly higher commissions and bonus payouts, higher benefit costs, and increased travel and entertainment expenses as business activity continues to improve.

Operating income was $9.4 million or 15.9% of revenue compared with $9.2 million or 16.3% of revenue in the first quarter of 2009. The strong first quarter was offset by increased operating expenses as we ramp-up our sales organization to reflect the improved economy.

Other income for the first quarter was $1.1 million, down 15%. The decrease is due primarily to lower interest income reflecting lower global interest rates.

Net income for the first quarter was $6.3 million, and earnings per share was $0.28 on diluted weighted average shares outstanding of 22.9 million compared with net income of $6.3 million and earnings per share of $0.27 on 23.1 million weighted average shares outstanding in the first quarter of last year.

Now, I'd like to review our balance sheet. Our balance sheet continues to remain strong. Our total cash and marketable securities at March 31st were $283.1 million, up $23.3 million from our yearend 2009 balances. We generated $23.1 million in cash from operations for the first quarter, which is up $2.5 million or 12% from prior year due to healthy fourth quarter bookings activity, which is reflected in first quarter cash collections, and improved advisory revenues.

During the first quarter of 2010 we did not buy back any shares as the time between filing our 2009 10-K and entering the first quarter 2010 quiet period was limited. However, we plan to be opportunistic with our share buybacks and currently have 58.8 million remaining on our repurchase authorization.

Accounts receivable March 31st, 2010 was $46.9 million compared to $40.6 million as of March 31, 2009. Our days sales outstanding at March 31 was 71 days, up from 65 days at March 31, 2009. And accounts receivable over 90 days was 11% at March 31, 2010, down slightly from prior year.

Our capital spending for the first quarter 2010 was $1.4 million in line with our targets, compared to $2.6 million in the first quarter of 2009 as last year's amounts included leasehold improvement expenses.

Deferred revenue at March 31 was $117.6 million, up 8% over March 31, 2009, our future AR balances or amounts to be invoiced in the future for clients with multiyear deals or scheduled payment terms. Deferred revenue plus future AR grew 9.5% year-over-year. The strong year-over-year increase reflects improved business activity as our business recovers from the 2009 recession.

And now I'll review Forrester's first quarter metrics. Agreement value, this represents the total value of all contracts for research and advisory services in place without regard to the amount of revenue that has already been recognized or is yet to be recognized, and was $185.3 million at March 31, 2010, a decrease of 8% from the first quarter of 2009. The decline reflects a change in the method by which we calculate agreement value, as outlined in our 2009 10-K. We now exclude the value in excess of the first year for multiple year deals in calculating agreement value. Absent the change agreement value would have increased year-over-year.

At March 31, 2010 Forrester's retention rate for client companies was 77%, an increase of 3 points from December 31, 2009, and our dollar retention rate during the same time period was 88%, an increase of 2 points quarter-over-quarter. Our enrichment rate was 98% for the rolling 12-month period ended March 31, 2010, which is up 2 points from December 31st, 2009.

We calculate client and dollar retention rates and enrichment rates on a rolling 12-month basis due to the fluctuations between quarters with deals that close early or slip into the next quarter. The rolling 12-month methodology captures the proper trend information.

At the end of the first quarter our total for client companies was 2,487, down 32 from December 31, 2009. Client count, unlike our retention and enrichment metrics, is a point in time metric at the end of each quarter and can fluctuate with deal movement between quarters. As of March 31st there are 3.2 roles per client, which is flat with our fourth quarter 2009 levels. Overall, our client and dollar retention and enrichment metrics coupled with our deferred revenue performance highlight the improvement we're seeing in the business.

For headcount, at the end of the first quarter Forrester had a total staff of 986, up from 947 at December 31, 2009, as we continue to invest in growing our sales staff. Current headcount includes a research staff of 357 and sales staff of 353, a 12% increase in our sales staff from December 31, 2009.

The last topic I'd like to cover today is our business outlook for the second quarter and the full year 2010. At our last call we reviewed our 2009 performance and highlighted what was a very good year in very difficult times. At that point we were very encouraged by our fourth quarter performance, which had positive trends on most key performance metrics.

Our first quarter 2010 has built on the fourth quarter of 2009 with performance accelerating on key customer retention and enrichment metrics. In addition, cash flow was up 12% year-over-year, continuing to add to an already strong balance sheet. Deferred revenue, a key indicator of future performance, was up 8%. And in an important strategic area, our sales platform, we added an additional 12% to our staff. Equally important, sales attrition is well below year-ago levels. We are beginning to lay the foundation for a very good 2010.

Our pro forma guidance for the second quarter and full year 2010 reflects our view that the economic conditions are improving and, therefore, continued investment in our business in the form of sales and research talent is appropriate. As a reminder, our guidance excludes the following. Amortization of intangible assets, which we expect to be approximately $900,000 for the second quarter and approximately $3.6 million for the full year 2010, and stock based compensation expense of $1 million to $1.2 million for the second quarter and $5 million to $6 million for 2010, and gains on investments are excluded, as well.

For the second quarter of 2010 we're aiming to achieve total revenues of approximately $63.5 million to $66.5 million. This range reflects a 3% to 8% improvement versus prior year. We're looking for operating margins to be in the range of 18.5% to 20.5%. Other income of approximately $250,000. A pro forma income tax rate of 40%, and pro forma diluted earnings per share of approximately $0.32 to $0.36.

At this time we are reiterating our pro forma full-year guidance, which is as follows. Total revenues of approximately $240 million to $248 million. This reflects an increase of between 3% and 6% versus prior year. Pro forma operating margins of approximately 14.5% to 15.5%. other income of approximately $1 million. A pro forma income tax rate of 40%, and a pro forma diluted earnings per share of between $0.97 and $1.03.

We have provided guidance on a GAAP basis for the second quarter and full-year 2010 in our press release and 8-K filed this morning.

Thank you, and now I'll turn the floor over to George.

Thanks, Mike. And I'd like to welcome everyone to the call. I will cover three topics this morning. Number one, the economy and tech spending. Two, Forrester's three business imperatives. And, finally, three, progress with acquisitions and the integration of Strategic Oxygen.

Turning first to the economy and tech spending, as the global economy recovers I'm glad to report that Forrester's clients are moving out of their conservative spending positions into more aggressive growth. Budgets for marketing and strategy roles, IT roles, and roles within tech vendors are all beginning to expand. Fortune projects that 2010 tech spending will increase 8.4% in the U.S. with the global IT market up 7.7% in U.S. dollars. Computer equipment and software will lead the increase in spending. IT services will lag as this sector waits for new package software projects to begin. In addition, IT outsourcing, a maturing market segment, will show modest growth of 4%.

Manufacturers, financial services firms, utilities and healthcare will lead the recovery in the U.S. The North American and Asia-Pacific Regions will show the highest growth, with Western and Central Europe lagging due to currency and debt problems. Tech spending, as you know, is closely correlated with GDP growth and Forrester expects U.S. GDP to increase 2.5% to 4% in 2010.

In addition to these short-term dynamics, Forrester projects a long-term cycle of technology innovation, driven by smart computing, the app internet, services oriented architectures, social marketing, and new forms of mobile computing. We believe this fourth technology wave will last between seven to 10 years.

Now, all of this bodes very well for Forrester's long-term business. When technology spending increases clients in their roles use research to lower the risk of tech expenditures. They use Boards to get advice from peers. They use data to benchmark themselves against competitors. And they contract for consulting projects to guide implementation.

I'd like to turn now to Forrester's three business imperatives, and they are, one, becoming more role based, two, increasing the size of the sales force, and, three, increasing the percentage of Forrester's business that is syndicated.

Looking first at the role based transition I have several topics to update. Over the last two quarters the Company has added several new roles, and both are off to a good start. In marketing and strategy the customer intelligence professional has quickly gained traction. At our Marketing Forum, which was held in Los Angeles last week, Nickelodeon, Intercontinental Hotels, and Prudential all talked about the emerging importance of real-time customer data for their new marketing efforts. The customer intelligence professional has direct responsibility to manage this critical new resource.

The second new role, sales enablement professionals, is taking on high importance for technology vendors. With the economy recovering tech companies are looking to expand their sales forces and increase their productivity. And the sales enablement professionals are chartered to oversee this project.

I'm not going to name names, but several very large tech vendors are just beginning complex revamping of their sales forces. These companies will be using our SE data and research to guide their efforts.

We are using technology to enhance roles. In the first quarter we rolled out a standard platform for individual analyst blogs and for aggregated role blogs. All Forrester blogs can now be fully linked, indexed, and cross-referenced, increasing their value to clients and more closely integrating them with the Company's research data and other products.

This platform enables our analysts to give quick, personal views of the roles and the topics they cover, and it has measurably increased the lead flow for our sales force. Since the new platform has become active, traffic on Forrester blogs has increased 22%.

In addition to blogs, we continue to roll-out online communities led by the Forrester Leadership Boards. Traffic within the communities has increased 39% since the fourth quarter of 2009, 93% of all FLB members have now visited their respective Board's community at least once. We will continue to use social technologies as a means of expanding the value we deliver to our clients.

And, a final word on roles, as Forrester continues to sharpen its role-based focus we believe that our relevancy is increasing. Our better than expected performance through this recession is more evidence that changing Forrester's DNA to be focused on roles has paid-off.

I'd like to now turn to Forrester's second business imperative, and that's the expansion of our sales force. As I have noted on previous calls, our long-term goal is to increase the headcount in sales by 15% to 20% per year. In 2009 we held the sales force flat in response to the economic slowdown.

I'm glad to report that in 2010 sales force attrition has reached a five-year low, down appreciably from year-ago levels. Our sales force headcount, as Mike mentioned, is now up 12% through the first quarter, giving us a head start to attain our targeted growth rate for the year.

Greg Nelson, our Worldwide Head of Sales, has engaged his Leadership Team to stay focused on developing and retaining the sales forces' best and brightest. And I'm happy to report that his efforts are showing results.

The Company's third business imperative is to increase the percentage of our business that is syndicated, and we call this metric [Q]. We are managing Q upward year-to-year through three means. Number one, adjusting sales commissions to encourage sales of syndicated products. Two, compensating the Executive Team, and by the way that includes myself, on achieving key results, thus incenting the Company's leadership to manage to Q targets. And, three, sharpening packaging and pricing to feature syndicated products. In the long term the Company is looking to attain a balance of 70% Q sales and 30% non-Q sales.

I'd like to finish up with a short discussion of acquisition plans and results. As always, Forrester's Acquisition Team remains busy and our pipeline remains well-stocked. Roles keeps us laser focused on certain targets and dismissive of a number of potential acquisitions that might have made sense for us 10 years ago but no longer fit our strategy.

I'd love to give all of you a timetable for acquisitions, but as you know many variables enter into the deal and many of those variables are beyond our control. I'll bet that if I predicted a quiet acquisition season the floodgates would open. And if I announced that we were almost there on a deal it would almost, it would instantly collapse. So let me just say that we are being [plentifully] aggressive with a goal that we will do the right thing at the right time.

I'm happy to report that the first quarter results from Strategic Oxygen, the data company we bought in the fourth quarter, have been above expectations. The Company has integrated quickly and seamlessly into the technology and product management professional role. The Forrester sales force is learning how to sell this very unique and complex product, and a plan of using the Forrester sales platform to reach new clients for SO is on track. While one quarter does not a successful integration make, early indicators look very positive.

So, to conclude, we're off to a good start for 2010. Changes we made in our sales force are yielding lower attrition and positive bookings results. Forrester's client facing technology is improving. Relevancy continues to gradually arise through a relentless role focus. The Company has fewer competitors, and our acquisition pipelines remain healthy.

All of this is happening against a backdrop of an improving economy and a new cycle of technology innovation. While we are forever paranoid there are many indicators that 2010 will be a good year.

Please visit us here in Cambridge, and we look forward to seeing many of you on the road during the quarter. Please call us if you have any questions. Thank you for listening to the call.

I would now like to welcome Charles Rutstein, Forrester's COO, to join Mike and me for questions. We will now take questions.

(Operator instructions.)

Your first question comes from the line of Laura Lederman. Please proceed.

Hi, guys. Congratulations on the improvement of business. Can you talk a little bit about why given the (inaudible) in EPS you didn't raise the guidance for the year? Is it conservatism or just the expectation to step-up spending? Thanks.

Hey, Laura. It's Mike Doyle. The -- I think at this point it's more conservatism than not. It's early in the year, and I think that if the second quarter plays out as we hope then we'll look to adjust guidance at that point in time. But we've tried to and historically have not anything in the first quarter just because, well, you know, we're three months in. So, and we do expect spending to ramp-up but that is factored into our guidance for the second quarter. So at this point I'd say it's just a little bit of conservatism.

All right, that's helpful. You mentioned that currency was a positive, and I didn't see it in the information in the release, so can you give us how much of a benefit --

It's about 1 point on revenue, Laura, on the top line. The affect on bottom line performance is negligible, because we have a natural hedge, so to speak, a little bit, so went a little bit the other way on the expense side. But we picked up about 1%, 1 point on the revenue side.

All right. And just sort of a mathematical question, which is the deferred went up yet CD isolating for the change in how you define CD was flat, so can you talk a little bit about the difference in the timing of those things?

Yes, actually, you know, I think agreement value for us was up. I mean we didn't give a specific, but I would say it was just up. If you back-out the affect of eliminating the multiyear deal aspect of it, it was up just a shade under what deferred revenue was up. So it tended to move in tandem, so we're pretty comfortable that the metric is still good. It's just we made a change midyear last year, which we think is a good change, because it just focuses on the one year, the first year of multiyear deals.

And just one final clarification, when you talked about the renewal rate of 77% and the [ACH dollar] was that a rolling four quarter or was it --

It is, yes, both the client and dollar retention rates are rolling four quarter, so as you would expect sort of the, you know, it's got some affects of last year still in there. So we were really encouraged by the way that's moving, and we're very happy with those trends.

I know historically that you provided rolling 12-months, but the language sounded like it no longer was, so I got a little confused. So thank you.

Yes, yes, I apologize if I didn't create -- I'm sorry, Laura, go ahead?

No, it's reporting season. I'm tired, so it's not your explanation, it's my ability to listen. Thanks. I'll go ahead and pass the questions on.

Thanks, Laura.

Thanks, Laura.

(Operator instructions.)

Your next question comes from the line of Bill Sutherland of Boenning & Scattergood.

Good morning, guys. This is actually [Kevin Chabatony] on for Bill.

Hey, Kevin.

Given the increase in the sales headcount, did you guys see any change in your productivity metrics in the quarter or did they pretty much hold-up as expected?

No, we had actually, you know, we didn't, we don't release them but we did have a nice bump on productivity, so it's -- we're pretty happy with where it's headed, Kevin. And I would say the last couple of quarters since Greg came onboard and made changes to his team we've been quite pleased with the progress so far. So we're anxious to see how 2010 plays out, but right now I'm optimistic.

Okay, and then I know you touched on this a little bit, but give maybe some more color on the customer facing technology development in terms of your level of investment and any customer feedback you've gotten?

The feedback on the blogs has been excellent. As I pointed out, the advantage of being on one platform is that the blogs are all highly interconnected and highly referenced and referential, so that's been a big improvement in the blog platform. Clients have loved that.

On the community side, you know, we started with FLB because I was at an FLB meeting a couple of years ago, I think it was down in Miami, and an FLB client said to me, "You know, I love the boards, they're fantastic, but I want to be able to connect to my peers much more seamlessly when we're not meeting." And so that really sparked, almost two years ago, the development of the communities.

And the communities rolled out, I think it was in September of 2009 we began to roll the communities for FLBs. And that's been very well received. As I said, the numbers are increasing there, and satisfaction has been very high there. I would expect us to spend more money in communities for other sets of clients in the Company. So I think you're looking at probably a year, two years of more spending from Forrester on client facing technology because there's so much dynamism in that business right now.

Okay, that's very helpful. And then, lastly, can you give some color on the consulting growth and the events in terms -- I know you talked about this current quarter, 2Q, but any plans you have for the number of events for the full year or attendance trends there?

Hey, Kevin. It's Charles. So the -- with respect to the number of events in the year I believe it's flat versus last year. If you want to see the specific events and the timing of them they are up on our website at forrester.com/events.

With respect to, I think the other question was consulting?

Yes.

So what's the specific question there, Kevin?

Just some color on the growth in the quarter, what was driving that?

Right. I think in part what you're seeing is the economic recovery happening, one. Two, some improvements in productivity on the delivery side of consulting. And part of it I guess is driven by some of the stuff that George was talking about, the uncertainty that's in the market right now around some of the newer technologies and how they fit into the corporate landscape.

Okay, that's helpful. That's all I had. Thanks.

Yes, thanks, Kevin.

Your next question comes from the line of [Dan Levin] of Robert W. Baird. Please proceed.

Good morning. This is actually [Nick Dolbray] sitting in for Dan. And I'm going to follow-up on that consulting issue, on that consulting question, rather. As we're looking at performance in advisory services in general is the type of performance that we've seen this quarter pretty much factored into your guidance or is this -- has performance here been a bit stronger than what you expected initially?

I think, you know, it was -- we were up slightly above what we had expected for the quarter, but for the most part we've got that factored into our guidance. And I think I'll dial back to the point Laura Lederman made in her first question, though. You know, Q2 certainly reflects what we believe to be the activity from an advisory standpoint that we expect, and then for the full year we'll be updating that in the second quarter call. But right now we're leaving that unchanged, probably a little bit of conservatism there.

I see. And switching to the research portion, I know that you have an indicated goal of 70%. Can you give us an update as to when you think reaching that target would be achievable? Is there something likely to happen maybe this year or 2011? How are you thinking about that?

I think it's two years, Nick. I think this year because of the nature of coming out of the recession, right? So, you know, the research sort of builds back based on our bookings activities. That's going to build on a very measured and positive pace.

And to Charles' point I mean I think we've got a lot of activity with the customers on the advisory side, and that's going to continue. I mean I think what you're going to see is dollars grow in both areas, which is a good thing, and the percentages will come together I think in probably a couple of years where we'll see a 70% number.

One other thought, Nick. It's Charles. If you look at the year-on-year comparisons in some of the non-syndicated line items, so for example in the events business, you're comparing against a relatively soft '09. And as those lines start coming back more strongly obviously that's going to push the percentage down (inaudible) good for the business.

You've -- we've talked about this on previous calls, but events is when GDP begins to recover, events is one of the first businesses that really begins to grow at fast rates. In fact, we're observing that this year.

Great. And there's, unfortunately, a bit of confusion in my mind with regards to how agreement value is calculated around this change. How -- can you provide some sort of color around sequential progression here from Q4 to Q1 in agreement value and deferred revenue? And kind of what you're seeing as strength there?

Yes, I think that -- I think Q4 and Q1 are from a methodology standpoint for agreement value are consistent, so we changed midyear last year, so I think they're consistent. And we typically, by the way, see declines from Q4 to Q1, okay? That's just sort of a natural piece. You get this spike up with our heavy activity in the fourth quarter. And that's historical. Our [AB] declines from Q4 to Q1, and go back, so that's just a typical pattern. And the same on deferred revenue. So you're going to have that movement as a natural part of what we do. That's why we prefer to look at it year-over-year by quarter. That, to me, is a cleaner metric, and a better measure of how we're doing.

Okay, and one last question for me is you're looking at 12% extra headcount in the sales force. What sort of goal do you guys have the new people added this year as far as, how should I say, new customer additions or new engagements generated? How should we think about that?

Nick, it's Charles. So the ramp time for reps depends quite a bit on their positions in the Company and where they are, and the kinds of customers that they're going after. It's not so much about customer count as it is about dollars. You can figure that from the time of hire until the time of full productivity is going to be probably somewhere around nine months. Sometimes as low as six, sometimes as long as 12.

And so the impact on the current year is totally dependent on when they land in the year. As you saw, we've got this target of 15% to 20% for the year. We landed 12% in Q1. That means that you'll see a slowing pace of additions later in the year, but we still expect to wind-up in that 15% to 20% range.

Okay. Thank you.

(Operator instructions.)

Your next question comes from the line of Vincent Colicchio of Noble Financial. Please proceed.

Nice quarter, guys. Mike, I think you said that new clients declined 32% sequentially?

Vince, not 32% (inaudible).

Excuse me, I'm tired, as well, from the (inaudible).

I know it's earnings season.

Yes, 32 number sequentially. Should we expect new clients to start increasing going forward throughout the year?

I think the trend over the year is going to be positive. I think clearly we have, as we've always had in our business, a lot of noise with smaller clients, right? So we have a lot of ins and outs, and that coupled with what I like to call the timing pieces that can happen, where you have deals that slip into another quarter, it can affect it.

But I think what you're going to see is the trend over the course of the year is going to be absolutely moving up. I mean I don't, you know, so can I predict each of the quarters? No, it's difficult. I mean that's why we've adopted the rolling 12-month metrics for client retention and dollar retention and enrichment because those tend to capture the -- some of the fluctuations that can occur and gives you better trend numbers, but client count has always been a point in time metric.

And one other thought there, is if you look at the difference in some of those metrics that Mike talked about, the difference between the client and dollar retention rate is at about 11 points, you start to understand some of the underlying dynamics. We're renewing our biggest clients at a significantly higher rate than the smaller clients. We're increasing our influence with the biggest, most important companies in the world, and the noise that you're seeing is typically the smaller companies, typically small technology vendors.

And one other point here, Vince, this is George, is that the power of role based is that, and the power of the repackaging that we did last year means that we're able now to reach more roles in those large companies, and that is tending to drive the size of those contracts.

Okay, and what are -- another question on the agreement value issue, Mike?

Sure.

On the same basis, you said it increased year-over-year. What kind of magnitude, was that moderate, or low?

Yes, I mean it was a shade, you know, we didn't give specifics, but a shade below our deferred revenue growth, which was 8%. So when we back out the affects of the multiyear we're about 6% up on AB.

Okay, and one last question, do you plan on implementing a price increase this year? Any early thoughts on that?

Hey, Vince. It's Charles. So we typically undertake price changes in the summertime, and this year would be no exception. As always, same factors that we look at, product demand one, value we deliver two, and competitive environment three.

I think all I'd want to say at this point is that you may recall that we made material changes to the packaging model last year, splitting RoleView into three separate pieces, which has implications for pricing here in 2010. What it means is that we now have the flexibility to differentially price by client segment and extract the appropriate value by segment. And so you're unlikely to see an across-the-board change but rather some changes specific to the customer segments, but we would talk about those later in the year.

Okay, that's it for me. Thanks, guys.

Thank you.

Thanks, Vincent.

(Operator instructions.)

If there are no further questions, I'd like to turn the call back over to Carol Levinson for closing remarks.

Thank you very much, and enjoy the rest of the day. Good-bye.

this concludes the presentation. Thank you for your participation. You may now disconnect. Have a great day.