Forrester Research Inc (FORR) 2015 Q2 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 Michael Doyle, Forrester's Chief Financial Officer.

George will open the call. Michael Morhardt will follow George to discuss sales. Michael Doyle will then follow Michael Morhardt to discuss our financials. We'll then open the call to Q&A.

A replay of this call will be available until August 28th, 2015, and can be accessed by dialing 1-888-843-7419, or internationally 1-630-652-3042. Please reference the passcode 7320030-pound.

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 expects, believes, anticipates, intends, plans, estimates, or similar expressions are intended to identify these forward-looking statements.

These statements are also 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 George Colony.

Good afternoon, and thanks for joining the call. I will speak for a few minutes and then give an update on the quarter and on the first half of the year. Mike Morhardt, our Chief Sales Officer, will give a short briefing on sales at midyear. And Mike Doyle, Forrester's CFO, will then give a financial review of the second quarter. The three of us will then take questions.

Our plan for 2015 is to expand the Company's operating margin, bookings, revenue, and earnings per share. We are achieving those goals but at a pace that is not yet consistent or comprehensive. Significant parts of our business are growing at double digits, but we still have some products that are not yet performing to planned levels.

On a macro level, Forrester's strategy of helping our clients win, serve, and retain customers remains resonate in the marketplace, and the opportunity for Forrester remains large. I was with more than 100 clients over the course of Q2. And the lean in and interest in our strategy was palpable.

As we have spoken about on previous calls, Forrester believes that the marketplace is entering a 20-year period in which customers will become increasingly empowered, taking control away from corporations, governments, and other institutions.

In this age of the customer, Forrester helps clients in three areas: one, building an understanding of their customers; two, working with marketing and strategy executives to win those customers; and three, working with technology management executives to develop systems for winning, serving, and retaining those customers. And this is what we call business technology.

Now, this is a major opportunity for Forrester. And more importantly, it is an opportunity that will widen over time. We have released two reports that outline the global technology market outlook for 2016, and two conclusions stood out. First, spending on BT projects will comprise 31% of total global tech purchases in 2016. However, BT will comprise 54% of new project spending. And second, while BT spending is a third of the size of IT spending, it is growing at twice the rate of IT.

So, all of this poses the question, if the opportunity is so large and the relevancy is so high, why isn't it translating into -- why is it not translating into improved results for Forrester faster? And there are three answers to this question. Number one, our strategy is relatively new. We are 18 months into executing, and there are still parts of our client base and operations that are in transition.

Two, it's early days in the age of the customer. More advanced companies like USAA, L'Oreal, and Delta Airlines are actively embracing business technology and focusing on the customer experience, but they remain in the minority. The majority of companies are still examining and considering. And this has put Forrester at the forefront. And this is, by the way, a very good harbinger for our future business. But, it means that some clients are not yet ready.

And finally, three, as Forrester has shifted the research conversation from IT to BT, some IT-centered clients have lagged. And that is reflected in BT RoleView renewal rates. We have always believed that we would be out ahead of some of our clients. And we continue to work on those transitions.

So, given the opportunity I just described and the challenges we are overcoming, I want to outline what parts of our business are not on pace and those that are. Our leadership board business remains challenged. While six boards grew at double digits, the business overall is not growing at planned rates.

We have taken several actions to move FLBs forward, including transforming our sales enablement board into a B2B marketer board and moving our marketing leadership board to become a B2C marketer board. We are also launching a board for small to medium-sized technology vendors. And finally, we are preparing to launch two high-end executive programs focused on CIOs and CMOs in enterprises with more than $5 billion in revenue.

Turning to events, this business has not performed to our plan in the first half of the year. While attendee numbers are down only 2%, sponsorship revenue is off, driven by changes we made late in 2014 to the events sales team. This team is now rebuilt with a new sales head and an expanded staff.

Turning now to those products which are on track, the research organization led by Cliff Condon continues its strong pivot, producing a consistent and rich portfolio of research for customer-obsessed companies. Playbooks, reports, and briefs are now 100% focused on age of the customer.

Marketing and strategy RoleView and technology industry RoleView are growing double digits with historically high renewal rates. BT RoleView growth is flat, driven by the transition factors I outlined above. We are working primarily through new packaging options to move BT RoleView into growth in the second half of the year.

Our data business remains on pace. Forrester's Customer Experience Index, our newest syndicated data product, is tracking to plan in its first year of availability. As I described during last quarter's call, the CX Index measures the brand experiences of 950 companies and governmental organizations across 18 industries in the US, Europe, and Asia. Companies are using the index to pinpoint what parts of their experience to improve and to benchmark themselves against competitors and high performers.

Forrester's consulting business includes four components: strategy, strategy consulting, contract negotiation, content marketing, and advisory. As a portfolio, the consulting business is tracking through the first half of the year. We certainly have more work to do perfecting our consulting operations, particularly in the strategy space, but it is becoming an integrated part of Forrester's overall business.

So, the full picture at midyear is mixed, with 40% of our product revenue lagging our plan and 60% growing at healthy double digits. Our work over the second half of the year is to drive the changes I outlined above to move all of our products back on pace, with special attention devoted to leadership boards, events, and BT RoleView.

In addition, we will continue to double down on our strategy to aggressively lay claim to the unique market position of helping large companies win, serve, and retain their customers.

As the largest shareholder of Forrester, I am as impatient as you are to see more consistent results. What encourages me is the Company's clear and resonant go-to-market strategy. The place where we have chosen to focus holds great potential. And Forrester's heritage and skills make us uniquely prepared to deliver high value to our clients. So, yes, it is taking time, but I remain confident that our strategy is the best path to sustained double-digit growth and operating margin in the 17% to 19% range.

I want to end my remarks with a story. At our Tech Management Forum Europe, which was held in Lisbon in June, I met with the CIO of the largest life insurance company in Portugal. And the end of the meeting, he said: George, great to see you, but we don't use Forrester anymore, and I'm not really sure why we're meeting.

And I said: Let me spend 15 minutes describing who we are now, and then let's talk. After I had outlined our pivot and our strategy, Eduardo said: I didn't know this change had happened. I can now see that we need Forrester on three fronts: one, to improve our customer experience; two, to help us build out our BT agenda; and three, to help me collaborate more broadly with our CMO.

Our job now is to translate those positive market signals into more consistently expanding business results.

I'm now going to turn the call over to Mike Morhardt, Forrester's Head of Sales. Mike?

Thanks, George. For Q2, the sales organization continued to demonstrate progress towards our goal of consistent double-digit bookings growth. As George mentioned, our clients tell us that the age of the customer market dynamic is real, and they need our help to capitalize on it.

For the quarter, we saw five of the seven sales teams achieve year-over-year growth. Our North American new business team had a solid quarter with improvements in year-over-year performance and local acquisitions. Our international partners also continued to perform above expectations. And we also saw a turnaround in our European business with improved year-over-year growth and retention rate.

We are still seeing unbalanced performance in Canada, parts of the Midwest, and in some countries in Europe. We are addressing these regions through leadership changes and additions and a renewed focus on client retention.

From a metrics perspective, we saw client retention up again for the sixth quarter in a row. Sales attrition was down again. We are now at a three-year low for sales attrition. We also continued our sales expansion efforts, ending up 6% over year-over-year quota-bearing headcount.

Our goal is to grow by 10% in 2015 and potentially accelerate that expansion if the opportunity presents itself. This sales expansion effort will allow us to drive better client retention and enrichment and increase new client acquisition. We do expect sales attrition to accelerate in Q3, like it did last year, but drop down in Q4.

The age of the customer market opportunity is also broadening our relationships with clients. Clients are looking for more comprehensive solutions from Forrester across many of our products. Consulting, data, and research, they want them combined all into one solution. This led to -- this has led to more and improved cross-selling percentages and an increase in average deal size.

We also saw a large percentage of our pipeline push from Q3 -- from Q2 into Q3 as these larger deals cross many of the functions within our client organizations and, in some cases, are more complex.

Finally, in an effort to improve productivity, we launched a new sales booking application along with a new simplified pricing model. The entire sales organization was trained on the new application and the pricing models at the end of Q1 and over the course of Q2.

So, at the midpoint of 2015, we're seeing good progress across the sales organization. We continue to drive for improved productivity, a focus on improved client retention rates, and expanding our sales organization.

With that, I'll turn it over to Mike Doyle for the financial update.

Thanks very much, Mike. I'll now begin my review of Forrester's financial performance for the second quarter of 2015, including a look at our financial results, the balance sheet at June 30th, 2015, our second quarter metrics, and the outlook for the third quarter and full-year 2015.

Please note that the income statement numbers I'm reporting are pro forma, and they exclude the following items: stock-based compensation expense, amortization of intangibles, reorganization costs, and any net gains and losses from investments. Also for 2015, we continue to utilize an effective tax rate of 38% for pro forma purposes.

For the second quarter of 2015, Forrester's revenue fell short of guidance. However, pro forma operating margin and earnings per share exceeded the top end of guidance.

As George mentioned, we have made significant progress during the second quarter and first half of 2015, with 60% of our products growing at double-digit rates. Client retention remains at historically high levels, and disciplined pricing and expense management drove strong operating income and earnings per share for the quarter.

We did have a few challenges in the quarter as we continue to experience, like most global companies, strong foreign exchange headwind, which shaved 3.5% off of our revenue growth for the quarter. We expect this headwind to continue for the balance of 2015.

In addition, while we had double-digit growth with 60% of our products, we need to focus our energy in the second half of 2015 on the remaining 40%. As George mentioned, we are still transitioning the business, and some products need work. We need to drive meaningful increases in growth for these products, in particularly our FLB and events businesses, in order to achieve the growth rates we are targeting.

Now, let me turn to a more detailed review of our second quarter results. Forrester's second quarter revenue of $82.8 million was essentially flat compared to $82.9 million in the second quarter of 2014 and grew 3% on an FX neutral basis.

Second quarter research services revenue increased 1% to $52.6 million from $52.3 million last year and represented 64% of total revenue for the quarter. On an FX neutral basis, research services revenue grew by 4%, and excluding FLB, grew by 10% with healthy performance in our RoleView, reprints, and data products.

Second quarter advisory services and event revenue decreased by 1% to $30.2 million from $30.6 million in the second quarter of 2014 and represented 36% of total revenue for the quarter. On an FX neutral basis, advisory services and events revenue grew by 2%, with double-digit growth coming from our consulting group, offset by a planned reduction in delivery from our research group related to our previously announced content improvement strategy and underperformance in our event business.

The international revenue mix was 23% for the period ending June 30th, 2015, compared to 25% in the same quarter of last year. However, adjusted for foreign exchange, 26% of the revenue was generated outside of the US, indicating improvements we're beginning to see in our European business, which is encouraging.

I would now like to take you through the activity behind our revenue, starting with research. Research had 59 playbooks at the end of the second quarter, and we added 356 new documents to our RoleView library. In addition, we hosted 40 Webinars for our clients during the second quarter.

As of June 30th, 2015, the top three research roles were the CIO role with 8,427 members, application development and delivery with 5,309 members, and analyst relations professionals with 4,248 members.

Forrester leadership boards, or FLB, our peer offering for senior executives, remains a focus area following the reorganization effort that commenced earlier in the year. As of June 30th, 2015, Forrester leadership boards had a total of 1,522 members, down 12% compared to the same time last year, but flat to the prior quarter.

Declines to prior year partially reflect our efforts to right-size geographically and to align our councils to the opportunity we see in the marketplace. The balance of the decline is underperformance by some of our councils, which we are looking to correct over the next six months.

Our data business and products provide our B2B and B2C clients with actionable insights that complement our research and consulting services in a way that cannot be duplicated. On a year-over-year basis, revenue increased by 3% for the second quarter and 6% on an FX neutral basis, driven in part by our CX Index offering. We're very encouraged by the initial client response to this product, which continues to gain traction in the marketplace, as well as the performance of our other data products.

In our advisory and consulting business, total revenue for the second quarter increased by 6% compared to the prior year and 9% on an FX neutral basis. We continue to move towards the optimal delivery balance between our consulting and analyst organizations, with a goal of optimizing consulting productivity while increasing both the quantity and quality of our research production and analyst revenue delivery.

In our events business, we held five forums in the second quarter of 2015, our Marketing Leader and Tech Leader forums in the US and in Europe as well as our Customer Experience Forum in New York, which is the largest event in Forrester history.

Despite a strong customer experience event, overall events revenue declined significantly on a year-over-year basis in the second quarter due to an overall decline in sponsorship revenue, while paid attendance was up 3%.

The decline in sponsorship revenue is primarily a reflection of the turnover in the sponsorship sales organization late last year. We anticipate, now that we have a fully staffed sponsorship sales team, we will begin to regain growth momentum in this area.

I'll now highlight the expense and income portions of the income statement. Operating expenses for the second quarter were $70.9 million, down 3% from $73.1 million the prior year and essentially flat on an FX neutral basis. Cost of services and fulfillment decreased by 3% and remained essentially flat on a constant currency basis on lower compensation and benefit costs related to the reorganization in the first quarter of 2015 and partially offset by higher survey cost.

Selling and marketing expenses were essentially flat but increased on a -- 2% on a constant currency basis compared to the same period last year, driven by higher sales, rep headcount, and commissions, as well as annual merit increases, and partially offset by reduced marketing headcount related to the reorganization.

General and administrative costs decreased by 9% or by 6% on an FX neutral basis due to lower recruiting cost related to the buildout of the consulting organization last year and a lower professional services related to the implementation of Cloud-based software services. Both of these were completed in 2014.

Compensation and benefit costs were essentially flat as compared to the prior year.

Overall headcount was essentially flat compared to the second quarter of 2014 and unchanged compared to the first quarter of 2015. At the end of the second quarter, we had a total staff of 1,305, including a research and consulting staff of 487 and a sales staff of 519.

Research and consulting headcount was essentially flat year over year as compared to the prior quarter. Sales headcount increased 4% versus prior year and by 2% as compared to prior quarter. Sales rep headcount increased by 6% compared to the second quarter of 2014 and remained essentially flat compared to the prior quarter.

Operating income was $11.9 million, or 14.3% of revenue, compared with $9.9 million, or 11.9% of revenue in the second quarter of 2014. This is an increase of 20% year over year.

Net income for the second quarter was $7.3 million, and earnings per share was $0.40 on diluted weighted average shares outstanding of 18.3 million, compared with net income of $6.2 million and earnings per share of $0.32 on 19 million diluted weighted average shares outstanding in the second quarter of 2014.

And now, I'll review Forrester's second 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 regard to the amount of revenue that has already been recognized.

As of June 30th, 2015, agreement value was $233.4 million, up 4% from the second quarter of 2014, and negatively impacted by approximately 1 percentage point due to FX.

As of June 30th, 2015, our total for client companies was 2,482, up 18 from March 31, 2015, and up 43 compared to the second quarter of 2014. 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 80% as of June 30th, 2015, up 1 point from the prior quarter and up 5 points compared to last year. Our dollar retention rate remained unchanged compared to the prior quarter and increased by 3 points compared to last year.

Our enrichment rate was 97% for the period ending June 30th, 2015, unchanged compared to the prior quarter and compared to last year.

We calculate client and dollar retention rates and enrichment rates 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 appropriate trend information.

Now, I'd like to review the balance sheet. Our total cash and marketable securities at June 30th was $110.8 million, which is an increase of $6.3 million from $104.5 million at the end of the year 2014.

Cash from operations was $8.5 million for the quarter as compared to $2.3 million in the second quarter of last year. We've received approximately $600,000 in cash from options exercised for the quarter, as compared to $2.6 million in the second quarter of last year. We also paid a dividend in the second quarter which amounted to $3.1 million, or $0.17 per share.

Accounts receivable at June 30th, 2015, was $42.7 million compared to $41.2 million as of June 30th, 2014. Our days' sales outstanding at June 30th was 47 days compared to 45 days at June 30th of 2014. And accounts receivable over 90 days was 3% at June 30th, 2015, compared to 6% at June 30th, 2014.

Deferred revenue at June 30th, 2015, was $136.2 million, down 5 points compared to June 30th, 2014, and on a constant currency basis was down 2%. The 2% reduction in deferred revenue reflects revenue growing at a slightly faster rate than bookings on a trailing 12-month constant currency basis.

In closing, as we look at our second quarter and first half of 2015, we've made good progress, but we still have work to do. Our events and FLB businesses are not yet performing at levels acceptable to us.

As Mike described, we had a mixed quarter from the sales organization, with teams that typically perform well falling slightly short of the mark. In addition, we expect the foreign exchange markets will continue to be a headwind for us for the balance of the year. These factors are reflected in our revised guidance for 2015.

In addition, our third quarter guidance reflects some caution with our project consulting revenue, as we are lapping a strong third quarter in 2014.

That said, there are a number of things that are moving in the right direction. As I mentioned earlier, 60% of our products are growing in double digits. Client retention remains at historical highs. Our client count is growing. Our European and new business sales teams had a strong quarter. And we had strong margin and earnings per share performance.

In addition, we like what we see in the market. The global technology spending on business technology, which is tech spending focused on winning, serving, and retaining customers, is over $700 billion and growing at double the rate of traditional IT spending.

We remain confident in our age of the customer strategy and believe we are uniquely positioned to be successful in this large and fast-growing market.

We also remain committed to returning value to our shareholders. Yesterday, Forrester's Board of Directors announced our quarterly dividend of $0.17 per share and added $25 million to our share repurchase authorization, bringing the total available to approximately $45 million. We will use these funds opportunistically to buy shares in the market as we believe, at current pricing, it is an effective use of our cash.

Now, let me take you through the specifics of our guidance for the third quarter and full-year 2015. As a reminder, our guidance excludes the following: amortization of intangible assets, which we expect to be approximately $200,000 for the third quarter and approximately $900,000 for the full year of 2015; stock-based compensation expense of between $2 million and $2.5 million for the third quarter and $8.3 million to $8.8 million for the full-year 2015; reorganization costs of zero for the third quarter and $3.5 million for the full-year 2015; and any investment gains and losses.

Forrester's providing third quarter 2015 financial guidance as follows: total revenues of approximately $72 million to $75 million; pro forma operating margins of approximately 6.5% to 8.5%; pro forma effective tax rate of 38%; pro forma diluted earnings per share of approximately $0.17 to $0.21.

Our full-year 2015 guidance is as follows: total revenues of approximately $310 million to #318 million; pro forma operating margins of approximately 9.5% to 10.5%; pro forma effective tax rate of 38%; and pro forma diluted earnings per share of approximately $1 to $1.08.

We've provided guidance on a GAAP basis for the third quarter and full-year 2015 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). Tim McHugh, William Blair & Company.

Hi. It's Tim McHugh. I guess, first, on the -- just the 40% of the business I guess that's not growing like you would like, I guess, one, what's the math on -- I guess, what pace is that growing or declining? And can we walk through -- I know you gave pieces of this throughout, but just to summarize it I guess, what makes up that 40%? I know leadership boards, events. I guess, can you break out the relative size of each of those, the pieces?

Yes, Tim. It's Mike. Yes, and this is 60% and 40% on bookings for the first half, just to give you some color, not revenue. Essentially, the 40% is declining. And obviously, that's offset by what's growing here. The largest single component is our board business, FLB. That's the biggest piece of it, Tim. That's -- of that 40% bucket -- I won't necessarily give specifics, but that represents slightly under 40% of the 40% bucket. So, it's the biggest piece.

The next largest piece is advisory. Now, some of that advisory is by design. We expected it to be slower growth as we ramped up project consulting. But, there's still opportunities to grow bookings on the advisory side. That's the next biggest bucket. That's probably more in the 30% range of that bucket.

Then you have what we call BT RoleView. And George sort of hinted at the challenge there, which is clients transitioning as we take the research agenda from an IT one to a BT one, our clients transitioning. And that's probably more sort of in the line of the 25%.

And then you've got -- then you have events, which smaller numbers, but sort of bigger variances. In terms of percentage declines, it's the biggest decline. So, that's the remainder of the bucket. So, those are the components, Tim.

Okay. And did you say what events -- what was events down for this quarter?

For the quarter, let me just -- on the revenue side, Tim, percentage wise, we were down about -- I want to say about 20%.

Okay. And in terms of leadership boards, I guess the RoleView, your comment is kind of it's just a function of the shift in focus. And -- .

-- Yes -- .

-- Advisory, there's a little bit of -- that's just a function of the shift in focus. I guess, but leadership boards, is there an answer to how you turn that around?

Well, Tim, George here. The -- I don't want to get too tech -- too detailed here. The marketing leadership board was a board that was diminishing. And that's the one that we've now transitioned over to be the B2C marketer board.

And I think, looking at Mike here, we're getting good early feedback on that. And then the sales enablement board, which also was dropping in size, has now been transitioned over to be the B2B marketer board. So, we feel like that's going to turn around two boards that were really in trouble. And this is going to turn them around.

You combine that, too, Tim, as George mentioned, we're launching two executive leadership boards to target CMOs and CIOs, which is something the sales organization's been looking for. That will help as well.

And I think, over the course of the past year, we have pushed on the value proposition of peer networking. And we've worked through our client base to make sure that they understand the value proposition within the Forrester leadership board is focused on kind of the peer networking aspect.

And so, I think Mike had mentioned this, and George had mentioned that. That means different things to different geographies. And so, we're being much more focused in how we sell this in, say, Asia-Pac or in Europe versus in North America.

And just some financial color on it, Tim, we planned -- our internal plan had the board business declining in the first half of the year. But, it was a low single-digit number because we knew there was a transition. We made -- because we did a reorganization in the first quarter, we eliminated some European councils, we expected noise.

I think that it -- we've had a little bit more noise. To George's point, we didn't transition into those other areas as quickly as we would've liked. So, I think the solution is we continue to move forward and execute well on the transition and get momentum back in that business.

But, we did expect a modest decline in that business in the first half. And in reality, it's a low double-digit decline. And that's I think, to George's point, more a function of transition and execution. And we've just got to -- we've got to get after that.

One more detail here, Tim, and Mike alluded to it, but in Europe, we were serving eight to nine boards in Europe. And it was just too many. And what we -- the actions we took in the early part of the year was to move to four boards in Europe so that we're focused at four.

Yes, six, four to six.

Four to six. Yes, okay. Yes, so, we're covering fewer boards in Europe. So, that's why the transition to a lower growth number in the first part of the year, if that helps.

Okay. Thanks.

Thanks, Tim.

Bill Sutherland, Emerging Growth Equities.

Thanks. Hi, everybody. The FX impact, Mike, was it meaningfully greater than what you were penciling in with the guidance?

Not in the quarter, Bill. I would attribute the second quarter -- it's a headwind. But, we had captured most of that in our second quarter guidance. I think it's -- we're seeing it more for the full year. We're -- we've now sort of brought down our thinking about FX for the back half of the year. But, it had a -- I would say a very modest impact on our second quarter. Our second quarter miss was really more driven by some event slippage and a couple of those things. It was more what I would call performance oriented than FX driven.

The full year, though, we look at events as -- or sorry, FX as being about 20% of the reason for us bringing guidance on revenue. So, that's a piece of the story for the back part of the year. The remainder is really around sort of a recast look at events and FLB based on first-half performance. So, that's how we're thinking about the back half of the year guidance.

So, at the midpoint, you're sort of guiding now to revenue for the year of a little under 1 point. What would that be FX neutral?

FX neutral, the 1 point -- well, FX neutral, it's probably -- you want to tack on a little more than 3 points on top of that.

Okay.

So, I would say, for the year, we're about 4%.

Right.

Clearly, our intent is to try and drive more out of that. But, right now, where we are, that's how we're rolling it out.

Well, you do look like it bumps up in the fourth quarter. I don't know if part of that is some leaving -- I'm sorry, some of the FX impact getting alleviated or whether you're thinking that's more of a turn in the business by then.

I think it's a little bit of a turn. And then typically, we should get a bump up in -- as we roll into the fourth quarter, you should get some bump up in advisory and project consulting. So, that's how we're looking at it. So, we're looking to get an uplift and then just some normal trend movement there, too, Bill.

And the turnover in the sponsorship sales organization, can you just give us a little color on what happened?

Hi, Bill. It's Mike. So, the sponsorship sales organization was closely partnered with the field research and consulting sales organization a couple of years ago. And over the course of the last couple of years, we've migrated the sponsorship sales organization into -- they were kind of in an order taking kind of role. And we wanted truly to have hunters and somebody who was an account manager with these types of sponsorship opportunities.

And so, over the course of the last six to seven months, we've moved out these more junior individuals and brought in a more senior team. We had lost our sponsorship sales leader the second part of last year. We've replaced that individual with a more seasoned individual. And she's rebuilt this team.

So, essentially, Bill, we were depending on the field sales force to do a lot of the sponsorship sales. And we've transitioned away from the field sales force to a dedicated sales force, but that was in inelegant transition.

Yes.

Okay. I think that's it from me. I think you guys gave us the -- yes, you gave us the quota-bearing reps for the quarter.

We did, yes.

Up 6%. Okay. Thanks, again.

Thanks, Bill.

Thanks, Bill.

We have no further questions at this time. I will now turn the call over to Michael Doyle for closing remarks.

Okay. Thanks very much, everyone, for joining the call. George and I are going to be on the road actually doing a little bit of Midwest tour, but also trying to get out and see as many investors as possible. So, we look forward to seeing you over the next months in our travels. Thanks very much.

Thank you.

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