Forrester Research Inc (FORR) 2013 Q3 法說會逐字稿

Good afternoon. Thank you for joining today's call. With me today are George Colony, Forrester's Chairman of the Board and CEO; Michael Morhardt, Forrester's Chief Sales Officer; and Mike Doyle, Forrester's Chief Financial Officer. George will open the call. Mike Morhardt will follow George to discuss sales. Mike Doyle will then follow Mike Morhardt to discuss our financials. We will then open the call to Q&A. A replay of this call will be available until November 22, 2013, and can be accessed by dialing 1-888-843-7419, or internationally, 1-630-652-3042. Please reference the passcode, 9233923, pound.

Before we begin, I would 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 expects, believes, 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 will now hand the call over to George Colony.

Good afternoon, and thanks for joining Forrester's Q3 conference call. I will spend a few moments reviewing the quarter. Following my remarks, Mike Morhardt, our Chief Sales Officer, will give a short update on sales. Mike Doyle, CFO, will then give a full financial review. Mike, Mike and I will then take questions.

As I have stated throughout the year, the streamlining and strengthening of our organization continues to be a work in progress. The rebuilding of our sales force is proceeding in gradual and steady increments, as you will hear from Mike Morhardt. The build out of our consulting organization, as I outlined in the Q2 call, continues at pace. Finally, we are enhancing our research and product engines, as I will outline below. Against this backdrop, I wanted to spend time today outlining the unique opportunity that is presenting itself to Forrester. Now, this is a somewhat complex story, but I believe it should be well understood by our investors.

We are in the age of the customer, and this is a 20-year period during which buyers are taking power from institutions. Using technology, customers are able to price, critique, and buy products from any company, at any time, with few geographical boundaries. Customers are dynamic, moving quickly between brands, morphing their behavior, and using technology to buy in hard-to-predict patterns. This is placing harsh demands on companies. They must be prepared for continuous changes and the onslaught of disruptive and unpredictable new market rules.

In the age of the customer, three interrelated opportunities are opening up for Forrester. Firstly, Forrester helps its clients understand their customers. If large companies are to thrive in these times, they must have precise and continually updated information and data on their buyers. They must understand demographic, social, and behavioral dynamics that are changing go-to-market rules. And as you know, Forrester's data business has been serving clients for over 15 years.

We survey over 80% of the world's GDP, with coverage including China, India and South America. Our data, coupled with our analysis, gives large companies, like Proctor & Gamble and L'Oreal, early warning of changes in the marketplace, enabling them to make better decisions about products, marketing strategies, partnerships, and channels. Companies must understand their buyers, customer intelligence is an area in which Forrester excels.

The second major opportunity for Forrester is helping marketing and strategy executives win customers. As you know, we serve the CMO and his reports, and these are the six most critical roles in marketing and strategy. Through M&S RoleView and our M&S leadership boards, we are inspiring and guiding those executives to win, retain and serve the newly empowered customer. Forrester is the market leader in this business.

Thirdly, we work with technology management executives, ensuring they deploy the right systems to win customers. Forrester believes that executives in technology management must now oversee two agendas in the age of the customer. The first agenda we can call IT. This is the work of automating the internal operations of the company, including supply chain, financial systems, productivity, technology for employees, just a few examples. But tech management must now also take on a second agenda, building technology, systems and process, to win, retain and serve customers, what we call business technology, or BT.

Because Forrester advises companies on their customers and we guide the marketing and strategy executives on how to reach those customers, we are uniquely positioned to guide CIOs as they look to build the best customer technologies. As an example of this, we will be hosting an exclusive forum in Napa next week for CIOs and CMOs, two executives that must unite and collaborate in the buyer-centric world. In the age of technology-enabled customers, all companies will be software companies, and fundamentally, that is what BT is about.

Simply stated, the opportunity is to help our clients with number one, customers; two, commerce; and three, technology. Forrester is uniquely positioned in the marketplace to give an integrated solution that encompasses and interweaves all three of these challenges. We are able to answer difficult new questions for our clients, such as -- how can our company support the always-addressable customer? Or, how can marketing and technology work together to support empowered clients? Or, what technologies and platforms do we need to respond to customers as they move through time and space? Forrester is the only company that can help transform companies into customer-obsessed enterprises.

Now, to better position Forrester to take advantage of this opportunity, we have recently changed our organizational structure. The first move we made was to combine the formerly separate research teams that served marketing strategy and technology management executives into one research organization. We made this move so that research could collaborate on topics that are germane to marketing executives and technology management executives. As an example, building excellent customer experience must be addressed by the customer experience professionals in marketing, in concert with application and development executives in tech management. These challenges are much better understood and analyzed by a more flexible and wider-aperture research organization that works together rather than in separate worlds.

Cliff Condon, a 15-year veteran of Forrester will be leading our research organization. Cliff has touched nearly every part of the Company since joining in 1997. He has had many roles, including Director of Marketing and Strategy Research, Vice President of Research Operational Effectiveness, Director of Research Strategy and Innovation for both M&S and BT; and most recently, he served as the Global Director of Forrester Events. I have great competence in Cliff's ability to shape content strategy and improve operational effectiveness.

The second organizational change we have made is to build a product management group. Products were formerly diffused between corporate marketing and client groups, a structure that worked well when we operated with discreet sets of roles. But, serving customer-obsessed enterprises now requires a connected view of products. And, as the Company prepares to return to growth, we believe that we must have focused, professionally led product management with the capability to continually update and improve our current products, while aggressively launching new products. This group will also enable the Company to more quickly integrate acquisitions.

Our consolidated product organization will be led by Dennis van Lingen. Most recently, Dennis was a member of the executive team as the Managing Director of our Marketing and Strategy Research Organization. His 13-year tenure at Forrester has also seen him as the Marketing Director for Europe, Vice President of Marketing for the Americas, and President of Forrester EMEA. Dennis' strong product management background will help us bring a better aligned strategy to the many products that Forrester delivers, including RoleView, data, FLB, consulting and events.

As I mentioned on our Q2 conference call, we are reengineering our consulting organization, adding professionals who will perform project consulting for our clients. We are doing this for three reasons. Number one, to focus our clients on the creation of improved syndicated research. Two, to improve the quality of project consulting. And three, to make it easier to scale our project consulting business to match demand.

As we complete the first phase of this transition, I am happy to announce that we have already reached our hiring goal of 21 consultants for the year. As we move on to the second phase of our consulting transition, we expect our hiring speed to increase, enabling the Company to fill our roster of 70 dedicated project consultants by December 2014. I'll keep you updated as this effort progresses.

Finally, I want to end with an update on capital structure. Mike Doyle will give you details, but I'm happy to report that we have bought $109 million of shares in 2013. That's up from $30 million in 2012, and $18 million in 2011. Our share count has fallen from 22.3 million to 19.9 million shares in 2013. The Company continues to repurchase its shares, and we are planning more buybacks in 2014. We are working toward our goal of carrying $100 million of cash on our balance sheet.

In conclusion, the work of turning around Forrester continues at our planned pace. In my estimation, we have the most experienced and capable executive team in the Company's history, one that can return the Company to its historical revenue growth rates and operating margin. And as importantly, the age of the customer is unlatching a very big opportunity for Forrester, one that we are uniquely positioned to exploit. I want to thank you very much, and I would now like to turn the call over to Mike Morhardt, Forrester's Chief Sales Officer. Mike?

Thanks, George. As George mentioned, we continue to see improvements in the sales organization. Our goal is to methodically build a more mature, performance-driven culture marked by greater accountability, discipline, and results.

As I have said from the start, our strategy has centered around three key areas. First, geographic sales expansion, putting more sales people where our clients are located so we can develop stronger relationships. Secondly, operational discipline, bring more analytics and data into our decision making, driving consistent execution. And thirdly, improving overall sales force productivity. Q3 showed continued improvement across all three of these key strategies. Make no mistake, we are seeing progress.

Our geographic sales expansion continued as we added 3 new cities to our coverage, totalling 10 for the year. Discounting has dropped 4.9%, year to date, and 7.4% for Q3, year over year. We are seeing improved productivity for those reps that attended our redesigned new-hire class this past spring. We saw bookings improvements across all regions and all teams, quarter over quarter. And finally, our net new client acquisition improved, quarter over quarter, by 31 net new logos.

While these signals are encouraging, we still have a lot of work to do. The velocity of our change is dependent upon the related changes across the Company. From recruiting of a sales person to the delivery of a project, our success is dependent on the alignment of sales of Forrester as a whole. The recent organizational changes George announced will have a significant impact on our ability to serve our clients more effectively. Alignment across research, consulting, product, and sales is instrumental to our success. In the short time that the new organization has been in place, we have seen better and faster responses to clients and prospect requests.

To wrap up, we are seeing positive signs from the changes we have made. We are not where we want to be, and we realize there are obstacles ahead, but we are very encouraged by the progress we made in Q3. With that, I am going turn it over to Mike Doyle to give the financial update.

Thanks, Mike. I will now begin my review of the financial performance for Forrester's third-quarter results, the balance sheet at September 30, our third-quarter metrics, and the outlook for the fourth quarter and full year 2013. 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, and net gains and losses from investments. Also, for 2013, we will utilize an effective tax rate of 39% for pro forma purposes. The actual effective tax rate for the third quarter of 2013 was approximately 39%.

For the third quarter, Forrester met its revenue and exceeded its pro forma operating margin and EPS guidance. Revenue gains in our marketing and strategy business continued to offset some softness in our business technology business, while both planned and unplanned expense savings from unfilled positions and tight expense management helped bolster operating profit. We did see modest bookings improvement in the third quarter, relative to the third quarter of last year, and we're making progress across all sales teams.

That said, to reinforce what Mike and George previously said, we still have work ahead of us to return to historical growth levels. The changes Mike has made to our sales organization and processes has had some immediate benefit to our results, but the full effect will come over the next 3 to 4 quarters. On the capital structure front, we continued to repurchase shares of Forrester stock during the quarter, with our year-to-date purchases totalling approximately $109 million. This exceeds Forrester's repurchase activity for the previous three years combined.

Now, let me turn to a more detailed review of our third-quarter results. Forrester's third-quarter revenue increased by 2% to $69.6 million, from $68.5 million in the third quarter of 2012. Third-quarter research services revenue decreased 1% to $49.8 million, from $50.3 million last year, and represented 72% of total revenue for the quarter. The decline was driven by our data business, which has seen a decrease in syndicated revenue, partially offset by an increase in one-time data revenue. Excluding data, research services revenue was up 1%, compared to the third quarter of last year.

Third-quarter advisory services and other revenue increased 8% to $19.8 million, from $18.2 million in the third quarter of 2012, and represented 28% of total revenue for the quarter. Growth in M&S and BT consulting, as well as the shift of syndicated to non-syndicated data revenue, are the primary drivers behind the increase. Our international revenue mix was 27% for the period ending September 30, 2013, which is down from 28% in 2012. US revenue increased by 3% for the period, while international revenue decreased by 3% for the period, driven by continued challenges in Europe, partially offset by strong performance in our Asia Pac region.

I would now like to take you through the activity behind our revenue, starting with research. We continue to make progress with developing playbooks, with 4 more rolled out in the third quarter, bringing the total to 62. We plan to continue expanding the number of playbooks available to our clients into 2014. In the third quarter, 275 new research documents were added to RoleView, and we hosted 47 webinars, with a total attendance of 1,330. At the end of the quarter, the top-three research roles were Application Development & Delivery with 5,792 members; Enterprise Architecture with 4,050 members; and Analyst Relations with 3,210 members.

Forrester Leadership Boards, our peer offering for senior executives, achieved flat year-over-year revenue in the third quarter, with growth in our Marketing and Strategy leadership boards, offset by declines in the BT leadership boards. As of September 30, 2013, Forrester Leadership Boards had a total of 1,849 members, down 6% from September 30, 2012.

Our data business continues to be a critical part of our value proposition, as George described earlier. Our continually refreshed data now covers more than 80% of global GDP and technology spending. We survey over 400,000 consumers and 60,000 businesses, in over 20 countries, annually. This data provides our B2C and B2B clients with actionable insights on issues ranging from enhancing social media strategies, to developing and deepening brand equity, to aligning sales and marketing with customer demand. It also gives our analysts the most accurate and timely facts they need to drive their research forward.

On a year-over-year basis, revenue decreased by 4% for the third quarter, driven by the phasing out of our Tech Marketing Navigator product. Elements of this product will be incorporated into our Forrsights product in 2014. Excluding Tech Marketing Navigator, data revenue increased by 1% for the quarter. Our consulting business increased by 6%, versus prior year, in the third quarter, with both BT and M&S showing favorable results on a year-over-year basis.

Going on to events, in the third quarter, Forrester held the second annual Asia Pacific CIO Summit series, with events taking place in Sydney, Singapore, and Mumbai. Attendance grew by 6% for these events on a year-over-year basis. In addition, Forrester released the 2014 events calendar in the third quarter, which will feature one new event in Asia Pac with the launch of a summit in Sydney for marketing and strategy professionals, focused on customer experience. This brings the total forums scheduled in 2014 to 24, as compared to a total of 23 in 2013.

I will now highlight the expense and income portions of the income statement. Operating expenses for the third quarter were $63.1 million, up 6% from $59.3 million in the prior year, due mainly to increased compensation from higher headcount. Overall headcount increased 4% as of September 30, 2013, compared to the same period last year. At the end of the third quarter, we had a total staff of 1,263, including a research staff of 466, and a sales staff of 474. Research headcount was up 6%, versus prior year, and also as compared to June 30, 2013.

We continued to grow our sales force, with sales headcount increasing 6%, versus prior year, and up 1% compared to June 30, 2013. Sales attrition remains elevated, as we remain diligent about managing performance, but it has come down from peak levels in 2012. Headcount growth is slower than we expected for both sales and research, which has had a short-term impact on our ability to accelerate top-line growth. We are beginning to see progress on this front, as we improve our ability to accelerate time to hire and recruit on a regional basis.

Operating income was $6.5 million, or 9.3% of revenue, compared with $9.2 million, or 13.4% of revenue, in the third quarter of 2012. Other income for the quarter was a negative $100,000, down from approximately $400,000 in income in the third quarter of 2012. Net income for the third quarter was $3.9 million, and earnings per share was $0.19 on diluted weighted average shares outstanding of 20.7 million. That compares with net income of $5.8 million and earnings per share of $0.26, on 22.9 million diluted weighted average shares outstanding in the third quarter of last year.

Now, I will review Forrester's third-quarter metrics to provide more perspective on the operating results for the quarter. Agreement value, this represents the total value of all contracts for research and advisory services in place, without with regard to the amount of revenue that has already been recognized. As of September 30, 2013, agreement value was $210.7 million, a decrease of 5% from the third quarter of 2012. As of September 30, 2013, our total for client companies was 2,482, up 31 from the second quarter, or down 1% compared to the third quarter of 2012. Client count, unlike our retention and enrichment metrics, is a point-in-time metric at the end of each quarter.

Forrester's retention rate for client companies was 76% as of September 30, 2013, which is unchanged from June 30, 2013. Our dollar retention rate during the same time period was 89%, also unchanged from the prior quarter. Our enrichment rate was 95% for the period ended September 30, 2013, also unchanged from June 30, 2013. We calculate client and dollar retention rates and enrichment dates on a rolling 12-month basis, due to the fluctuations which can occur between quarters with deals that close early or slip into the next quarter. The rolling 12-month methodology captures the proper trend information. As of September 30, 2013, there were 2.4 rolls per client, an increase of 6% from June 30, 2013.

Now, I would like to review the balance sheet. Our total cash and marketable securities at September 30, were $166.8 million, down $75.9 million, or 31%, from our year-end 2012 balances, which reflects a significant repurchase of our shares, totalling $109.2 million, for the first nine months of 2013. Cash from operations was a negative $4.9 million for the quarter, as compared to a positive $3.8 million in the third quarter of last year. The decline is due to lower earnings, year over year, as well as timing of tax payments. We received $4 million in cash from options exercised and our employee stock purchase plan for the third quarter of 2013. We also paid a dividend in the third quarter, which amounted to $3 million, or $0.15 per share.

Accounts receivable at September 30, 2013 was $37 million, compared to $44.1 million as of September 30, 2012. Our days sales outstanding, as of September 30, 2013, was 49 days, down from 59 days at September 30, 2012. Accounts receivable over 90 days was 4% at September 30, 2013, down from 12% at September 30, 2012. Our capital spending for the third quarter of 2013 was approximately $800,000, compared to $1.6 million during the third quarter of 2012. Deferred revenue at September 30, 2013 was $126.7 million, up 1% over September 30, 2012. Deferred revenue plus future AR, a key indicator of future performance, declined 4% year over year. Our future AR balances are amounts to be invoiced in the future for clients with multi-year deals or scheduled payment terms.

I want to close my discussion with some comments on capital structure and guidance, both for this year and next year. As I mentioned earlier, we have spent $109 million purchasing approximately 3 million shares during the first nine months of this year. We will continue to be opportunistic with share repurchases going forward, as we look to drive our cash towards our targeted $100 million level. In addition, we have said before, we will consider short-term borrowing, when necessary, to support ongoing investment in our business and allow for acquisition opportunities. We remain committed to enhancing our shareholder value.

As I mentioned in my opening remarks, we met our guidance for revenue for the quarter and exceeded our guidance for operating margin and earnings per share. We are beginning to see results from our sales changes, with bookings growth growing during the quarter and improvement across all sales teams. To reinforce George's message, this continues to be a work in progress, as we put changes in place to ensure we deliver double-digit top-line and bottom-line growth for the long term.

In addition to the sales changes, George discussed some changes to our research, product, and consulting organizations. I expect we will realize the full benefit of all these changes by the second half of 2014. When I combine the impact of the changes with our bookings performance, year to date, as evidenced by our deferred revenue plus future AR, I want to provide some context for 2014. I'm projecting 2014 revenue will grow in the mid single-digit range, with earnings per share growing in the low double-digit range, with both metrics accelerating in the second half of 2014. This is a very preliminary estimate, as we have a very important quarter ahead of us, and we'll provide more detailed guidance for 2014 on our February 2014 call.

Now, I would like to review our guidance for 2013. As a reminder, our guidance excludes the following -- amortization of intangible assets, which we expect to be approximately $600,000 for the fourth quarter, and approximately $2.3 million for the full year 2013; stock-based compensation expense of $1.8 million to $2 million for the fourth quarter, and approximately $6.4 million to $6.6 million for full year 2013; reorganization costs of $1.9 million for the full year 2013; and investment gains and losses.

For the fourth quarter 2013, we are aiming to achieve total revenues of approximately $75.5 million to $78.5 million; pro forma operating margins, we expect to be in the range of 6% to 8%; a pro forma income tax rate of 39%; and pro forma diluted earnings per share of approximately $0.14 to $0.18. For the full year, we have tightened our revenue range by increasing the low end of our guidance and have increased our EPS guidance. We are now targeting total revenues of approximately $295 million to $298 million; pro forma operating margins of 9.5% to 10.5%; other income of approximately $600,000; a pro forma income tax rate of 39%; and pro forma diluted earnings per share of $0.85 to $0.89.

We have provided guidance on a GAAP basis for the fourth quarter and full year 2013 in our press release and 8-K filed today. Thanks very much, and I'm now going to turn the call back over to the Operator for the Q&A portion of the call.

(Operator Instructions)

Our first question comes from Tim McHugh from William Blair. Please go ahead.

This is Matt Hill in for Tim McHugh this afternoon. One of the questions, I guess, could you walk through a little bit more about the organizational change, some of the benefits you see occurring to your customers, and then also on your side? And then, also, any of the changes -- is this going to be a change to the subscriptions, are we going to have to consolidate some of those, that sort of thing?

Yes, this is George here. Very simply stated, the new organization is -- was really designed and built to enable us to be to take advantage of the opportunity around age of the customer. What's happening in age of the customer, if you look at a large company like L'Oreal, they are working intently every day to combine the efforts of the marketing executives at L'Oreal and the tech management executives at L'Oreal to build -- there is a whole bunch of new technologies like mobile engagement, which I won't bore you talking about, but giving L'Oreal the ability to connect to the technologies that their customers are using.

And, this is a very cross-disciplinary effort, which is going on in the clients that we serve. We could not serve that cross-disciplinary effort unless we also had a combined research organization, which enables us, as an example, to take the work of our customers -- in our customer experience base and marketing with application development space on the tech management side.

So it really, our organization was really a response -- there are really two goals for the organization. One was to enable us to more, to structure, to be able to take advantage of that opportunity. That's one. And two, it simplifies how we operate internally. We had two research organizations. We had no designated product organization. And now, with the new structure, it's very clear who is in charge, who is in charge of products, who is running research, and exactly who, how the decisions are going to be made. So, it really is, number one, to take advantage of the opportunity. And number two, to simplify how we operate.

Okay, great. And then, also, in the press release, I think one of the last comments was seeing some positive signs in some areas of the business. Could you expand on that a little bit more, maybe what those areas are? And then, conversely, what are the areas that maybe aren't looking so good?

I'll start off, and then we can kind of ramble around the three of us here. On the areas where we see improvement, events would be an example, where we have rebuilt the experience for events. We are seeing better attendance this year. So, I think events, generally, that would be one. Two would be our business in Asia, which is very stable and is growing pretty much at our planned rate at this point, so that's looking pretty good.

On the downside, I'll probably let Mike address this, but I think Europe is still a work in progress for everyone, not just us, but other companies operating there.

Yes, I would echo George's comments on Asia Pac and events. I would say the other thing that I'm encouraged by is our new business acquisition. That engine has kicked in after some changes in leadership and alignment. It's great to see, when you make some of these changes, the impact it can have over a couple of months.

How we're aligning to our clients, George mentioned the organizational alignments. I'll echo what he is saying. In the short term, and this has really only been in place since the beginning of October, we can see the responsiveness to our clients around some of the initiatives George outlined with the age of the customer, our ability to bring in the right research analysts, right consultants to a particular client problem has been remarkably improved. We still have work to do there, and we know there's a great market for it, so that's good.

On the downside, again, we're trying to put processes in place that, in some cases, are different than, say, what has been in place in the past. And so, those cultural changes, which is aligning to our clients from an engagement model perspective, where we follow a very disciplined approach in how we engage our clients over the life of their contract. There's a lot of work that needs to be done there to train everyone up, across the organization, to make sure that we continue to focus on retaining our clients. We're seeing the new business engine working, but we have other things in place that we need to push.

And then, Mike mentioned one other piece from a sales perspective, while attrition is down, it's not down where I would like it to be. Part of that has to do with things that we have put in place around performance management. We want to make sure that we're building out the right team, with the right expectations about how to grow the business. But from a hiring perspective, we've been able to increase the number of cities that we're covering. Again, this is some new muscle memory that we're trying to develop here, as far as how we recruit in particular geographic areas, the types of candidates that we're bringing in is a little different than what we've done in the past, and the discipline around how we do that hasn't been in place. So, everybody's learning a little bit around that as well.

I think I would add, just so we can close on an up note with the finance guy, we will -- I think consulting had a strong quarter. And, I think that's benefiting both from our existing analysts, but also some of the new consulting blood that we are bringing into the business. That had a nice growth year over year, so that's certainly encouraging. I think we're seeing a little more broadly, M&S beginning to resurge, which is great news for us.

I think, on the challenge front, we clearly would like to hire more people, more quickly, and I think we're working hard at that. We've got opportunities for business out there that we can't fulfill in some instances, so that's a challenge. But, I think we'll work our way through that. Overall, I think expense management has to remain tight, so profitability, from a company standpoint, has been pretty strong.

Okay. And then, on the capital allocation plans, is it still the $100 million -- getting down to $100 million, is that still the goal for the end of the year, or is that maybe slid out a little bit?

Matt, it's Mike. Yes, our target -- look, our target has been the end of the year. We're just going to have to see -- as I say, we would be opportunistic, and that, to some degree, is a supply-and-demand situation. We've got to find sellers, frankly, for us to buy and buy at the right price. It remains the target, but I'm not necessarily going to lock ourselves into a 12/31 date. But, as both George and I said, our target is to get to the $100 million. We've been aggressive this year, I think, as we highlighted. We've, clearly, stepped up our purchase activity, and our game plan is to continue.

Yes, Matt, also dependent on M&A activity, which as you know can be -- is always unpredictable, exactly when and if the deal might go down.

Yes, certainly. And then, one numbers question. I might have missed this, but did you give the events revenue, or number of events, during the quarter?

We did not give events revenue. The number of events was three. And the events revenue for the quarter was -- it's all done -- we've got about $350,000. So these were -- the [three] were relatively small events.

Okay. All right. Well, thank you.

Thank you.

Thanks, Matt.

Our next question comes from Vincent Colicchio with Noble Financial. Please go ahead.

Good afternoon, guys. Mike, could you give us more color on the data weakness within research services?

Real quickly, Vince, essentially, what's going on -- we've got two things going on. We've got a -- we had, what we call, a Tech Marketing Navigator product that was a syndicated data product that we've been phasing down. We think that our clients can be better served by taking elements of that model and baking into our Forrsights data package, and we're planning to do that in 2014. So that's had -- Tech Marketing Navigator has been the downward pull on our data business.

It's also -- what it's done, is we've also seen a shift out of syndicated data and more into one time, so that offset some of the syndicated data weakness with one time. I think that's just a phenomenon we're seeing. That's something that we're looking at as we go into '14 to see, I think, first of all, the transition out of TMN and into Forrsights is going to help, that's going to be a plus.

Then, the question is, can we push more back into a more syndicated-oriented data model, and that's just a work in progress with our data team right now. I feel comfortable where we're headed, and I like what we're doing. It's just this transition year with Tech Marketing Navigator that's proven to be a little bit of a drag on the data business.

You're in the completion of that though --

And Mike Morhardt, I would be curious, at this point, in the sales reorganization process to hear from your perspective, any positive or negative surprises you've encountered on your journey there?

Sure. I would say from a positive perspective, now I've been here, coming up on my one-year anniversary in November, and I'm impressed by the talent that we have. I'm impressed by the talent that we're bringing on board. So, that gives me a lot of encouragement. Over the last six months or so, some of the new folks that have joined us, their ability to hit the ground running and produce results quickly, locally, is great encouragement.

The other parts of the business, as I think George outlined, the alignment with the rest of the business, I can't underestimate how happy I was, personally, of having this alignment with the research and consulting and product organizations; because as a sales leader, dealing with a bunch of different leaders, it makes it more difficult when it comes to servicing our clients and working with our prospects. So, that move has already started to pay dividends, and I'm excited about what that's going to mean in 2014, as we can become further aligned.

So, generally, very encouraged with the talent that we have, that the talent we're bringing on. Frustrated that I can't hire faster, but that's part of the reason is we don't want to hire the wrong people. So, we're going to be thoughtful about doing this and creating the right territories and putting them in the right locations that are going to drive the right productivity. Overall, I'm satisfied, but looking forward to the next couple of quarters and seeing some of these changes that we're making produce the results like we have with discounting and net new logos and some of the other things that we're seeing now.

Okay. Thanks, guys.

Thanks, Vince.

Our next question comes from Bill Sutherland. Please go ahead.

Mike, curious what your hiring plans look like as you head into the year end? Obviously, it's a challenging time to be ramping, I would think, a lot of new hires?

I think, Bill, you're speaking about sales?

Yes.

Yes, it is a challenging time, but this is an and situation -- we need to deliver a number and build for 2014. Right now, I think you'll see, as we go into Q4, we've been preparing for this. We realize that we have some additional folks that we need to bring on board. The pipelines are good.

We're learning, every day, on how to do this more effectively, whether it's our recruiting organization, our sales managers. There's a mind shift that needs to take place within the organization, specifically the sales organization and the sales leaders, that you are part of a growing organization. And so, that's been, been a good benefit of some of the work we did in Q3, and we saw some improvement there.

We've done a lot of our performance management, so we are not outrunning attrition like we were in the first, or second -- Q2 and Q3. The net news, I think, will have a bigger impact. We'll see more net news in Q3, based on what we're forecasting, from a net new salesperson perspective.

Do you happen to have the number of quota-bearing reps that you had at quarter end? Maybe Mike has that -- I mean, Mike Doyle.

Yes, the quota carrying at the end of September was 281, Bill. This excludes event sales reps, there's another 13 of event sales reps. All in, you've got 294, what I call, bag-carrying reps, and that's up --

What -- I was just curious what that compares to?

Actually, it's only up one, relative to the end of June, and it's up seven, year to date.

Okay --

And, that's [on] the events side, so you're up nine, year to date.

Okay. And Mike Morhardt, I was curious -- keep hearing about better tone of the economies in Europe, even Spain. What are you seeing most recently over there? Anything that gives you a little more confidence?

Yes. As I mentioned in the last call, we have brought on Alex Harpe, who is now our European sales leader. We're in the process of -- Alex just got over there, probably 2 or 3 weeks ago, so he's meeting with all the teams. The good news there is we have seen some good improvements in new business. We have seen pockets in specific countries starting to pop, which is good. We have seen stability within the sales ranks, so we don't -- we haven't seen the attrition that we have in the past. Those are all good signals that allows us to sort of build off of. I know there's still going to be macroeconomic trends, relative to Europe, but in the markets that we're serving right now, I'm starting to see some better signals.

Good. What was -- in the US, your plans for the geographic sales expansion, where would you like -- what would be, more or less, complete coverage from numbers of cities?

That's a great question. I don't know the exact number. We're starting from a low base, right, where we had the vast majority of our sales organization located in a couple of specific hubs -- Cambridge and San Francisco and Dallas. And, as you break out of that, looking at LA and Denver and Chicago and the other locations, what we're finding as we're building out these territories, there's definitely enough prospects.

What we're trying to do is making sure they are productive territories so that there's a mix of existing contract value -- existing contracts that they can maintain and also build off of that. They are all the logical locations, and we have a scoring model that we leverage to look at those particular territories that we want to prioritize first. I don't know what the total number of cities would be, but we're scheduled to probably be at around 12 by the end of the year. And then, in some cases, it's not so much adding another city, it's adding another person to an existing city.

Okay. I think that does it for me. Thanks.

Thanks, Bill.

Thanks, Bill.

(Operator Instructions)

Great, I think if there's no further questions, thanks very much for everyone attending the call. We'll look forward to seeing most of you on the road over the course of the upcoming quarter.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.