Forrester Research Inc (FORR) 2015 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. Michael Morhardt will follow George to discuss sales. And Mike 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 through November 27, 2015 and can be accessed by dialing 1-800-843-7419 or, internationally, 1-630-652-3042. Please reference the passcode 6274710#.

Before we begin, I'd like to remind you 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 can 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 turn the call over to George Colony.

Good afternoon and welcome to the call. I would like to say a few words about the quarter, after which, Michael Morhardt will brief on sales and Mike Doyle will give a financial review. We will then take questions.

We are pleased to report healthy increases in EPS and margin for the quarter. We are being judicious in our expense management, ensuring that we are directing investments to those parts of our business that will yield long-term high returns. Products, the salesforce, and technology would be the most prominent examples.

While we remained disciplined and plan-full on the expense side of the business, the unevenness of bookings and revenue that were reported on the last call continued in Q3. The strategy change that the Company made at the beginning of 2014 is resonant in the marketplace. But, as with the initiation of any new strategy, the selling model is taking time to adapt to the market that we now play in. Our focus on working with large companies to help them win, serve, and retain customers is necessitating shifts in the way that we market and sell and we are still working through these factors. So, more on this in a few moments from Michael Morhardt.

I discussed specifics back in July on which of our products were on pace and which were lagging. 70% of our product portfolio is growing, in the aggregate, at 10%, but 30% of the portfolio is not growing. In August, I made a leadership change in the product organization, promoting Cliff Condon to oversee not only research, but the product group as well. Cliff is a long-time Forrester-ite, who has proven himself operating events, research, and our social platforms.

Over the last 18 months, Cliff has transformed the research team and its outputs to match the Company's age of the customer strategy and he did this through a deliberate, concentrated, and relentless approach. Cliff is bringing his speed, transparency, and creativity over to the product side. His early focus will be moving the slower, no-growth products back on track.

As I reported in the last call, we have three products that are not on pace. And they are Forrester Leadership Boards, BT RoleView, and Events. In FLBs, Cliff is sharpening the unique value proposition and is preparing to launch a new executive program for CMOs. He is also upgrading leadership for this product line. BT RoleView -- and this is the research that helps CIOs make decisions on customer technology -- is available in the fourth quarter in a new package. The AOC seat gives tech management executive access to marketing and strategy research to better equip the CIO and team to understand and collaborate with their business colleagues. Cliff is piloting several other new packaging approaches for our BT research and more on these in future calls.

We have hired a new head of Forrester events, a proven business executive who has run and grown large event organizations in the research and publishing space. Cliff's extensive experience in events has enabled him to move very quickly in this part of the portfolio.

The big picture of our products continues to reveal faster growth on the marketing and strategy side of our business and Cliff will be doubling down there. As an example, we believe that we have the largest customer experience practice in the world; research, data, consulting events, and boards all dedicated to helping companies improve their CX. So, while we are managing lagging products back into growth, we will be moving from strength to strength with our performing products.

Just to finish up, I led a very large group of Forrester analysts who participated in Salesforce.com's Dreamforce event in San Francisco in September. And our keynote was one of the highest-attended at the event. And why was this? Because Dreamforce is about winning, serving, and retaining customers; emerging market for what we call business technology. Forrester's keynote focused on how companies can operationalize their customer knowledge, acquisition, and retention.

I was with the CMO of one of the largest banks in the U.S. last week and she asked me a very important question, "Why does the bank's biggest competitor score better in customer experience even though we outspend them?" And that's the question that the new Forrester is being built to answer. And, as you might imagine, we had a long discussion.

As a company and as a team, we are dedicated to winning this amazing opportunity and establishing Forrester as the company that is challenging thinking and leading change in the age of the customer. I'm now going to turn the call over to Michael Morhardt, Forrester's Head of Sales. Mike?

Thanks, George. In Q3, we saw some excellent signals that the age of the customer message is resonating with our clients. But, as George mentioned, we also witnessed some challenges associated with this huge market opportunity.

For the quarter, we saw five of seven sales regions achieve year-over-year bookings growth. Our North American new business team had a very solid year-over-year performance and our Asia-Pac and international partner organizations also continue to perform above expectations. We saw unbalanced performance across our larger North American businesses, with some regions performing over expectations and others below. Europe continued to make good progress, but is still performing below expectations in certain geographies.

While the age of the customer strategy is opening up new opportunities across our clients and prospect base, we also need to respond to this demand in new ways to engage our clients and prospects. Here are three examples.

First, as I mentioned in the last call, the age of the customer market opportunity is broadening our relationships with clients, with cross-sold clients growing and the average deal size up. However, selling more complex, solution-oriented deals has led to longer sales cycles and purchasing cycles with a broader set of decision-makers involved. We are working closely with the sales teams to train on these new sales motions and buying processes. We are also working with our internal business units to drive a more seamless selling model with these clients and prospects.

Secondly, we have also seen clients gravitate towards the age of the customer message through increased engagement from our business buyers and our IT professionals with business technology agendas. However, we are also still seeing migration of those clients with traditional IT agendas to our age of the customer research taking time. As George mentioned, in September, we launched our new age of the customer seat, which incorporates both business technology and marketing strategy content. The response from our clients has been immediate, which has led to faster IT to BT migrations and overall increased pipelines.

Finally, we continued our sales expansion efforts in Q3, ending up 6% year over year in quota-bearing headcount. Sales attrition remains well below last year's level and better than expected. The age of the customer market potential is large, but we need to build a more sophisticated and targeted market segmentation to focus on our key buyers. We will be refining our sales expansion plans over the next several quarters as we look at new additional selling models to reach key age of the customer clients and prospects.

In summary, we continue to see solid progress across the sales organization in Q3. Clients are looking to engage with Forrester at levels we have not experienced before. This presents a huge opportunity and a requirement to react to our changing customers' demand. With that, I'll turn it over to Mike Doyle for the financial update.

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

Please note that the income statement numbers I'm reporting are pro forma and exclude the following items; stock-based compensation expense, amortization of intangibles, reorganization costs, and 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 third quarter of 2015, Forrester's revenue achieved top end of guidance and pro forma operating margin and EPS exceeded guidance. Our revenue performance was at the upper end of our expectations, despite declining year over year. Strong foreign exchange headwinds shaved about 3.5 points off of our growth and consulting declines year over year reflect significant one-time project activity in the third quarter of 2014.

George spoke about our focus on improving three products; BT RoleView, FLB, and Events. To give you some perspective, on a year-to-date basis, they make up approximately 28% of our bookings on an FX-adjusted basis and they have declined 7% year over year. The remainder of our products have grown 10% on an FX-neutral basis. We're confident in the plans to improve performance in those products which are declining and it will help enable us to achieve double-digit growth performance in the future.

Our pro forma operating margin and earnings per share exceeded our expectations and grew at double-digit rates, as we continue to stay focused on streamlining our operations while investing for growth.

Now, let me turn to a more detailed review of our third quarter results. Forrester's third quarter revenue of $74.8 million decreased by 1% compared to $75.4 million in the third quarter of 2014 and grew 3% on a constant-currency basis.

Third quarter research services revenue increased 3% to $52.2 million from $50.6 million last year and represented 70% of total revenue for the quarter. On a constant-currency basis, research services revenue grew by 7%.

Third quarter advisory services and event revenue decreased by 9% to $22.5 million from $24.7 million in the third quarter of 2014 and represented 30% of total revenue for the quarter. On an FX-neutral basis, advisory services and event revenue decreased by 6%, reflecting an ongoing effort to fine-tune our consulting and event businesses and significant consulting growth in the comparable period last year.

International revenue mix was 23% for the period ending September 30, 2015 compared to 26% in the same quarter of last year. On a constant-currency basis, 26% of revenue was generated from outside the U.S., reflecting continued improvement in results from Europe and Asia-Pacific.

I'd now like to take you through the activity behind our revenue, starting with research. Forrester had 59 playbooks at the end of the third quarter and we added 396 new documents to our RoleView library. In addition, we hosted 31 webinars for our clients during the third quarter. As of September 30, 2015, the top-three research roles were the CIO with 9,782 members, application development and delivery professionals with 6,232 members, and analysts' relations professionals with 4,873 members.

Forrester leadership boards, our peer offering for senior executives, remains a focus area following the reorganization effort that commenced earlier in the year. As of September 30, 2015, Forrester leadership boards had a total of 1,536 members, down 11% compared to the same time last year, and up 1% 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, as George mentioned, is the primary focus of our new Chief Product Officer, Cliff Condon.

Our data products provided 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 11% for the third quarter and 14% on an FX-neutral basis driven, in part, by continued acceleration of our CX Index offering.

In our advisory and consulting business, total revenue for the third quarter decreased by 11% compared to the prior year or by a negative 8% on an FX-neutral basis. Segments of our advisory and consulting businesses continue to grow at healthy rates and we're working to refine our go-to-market strategy as it relates to the practices that are underperforming.

Our events business was active in Asia-Pacific in the third quarter. We held two summits for CIOs and CMOs in Singapore and in Sydney where we also held our summit for marketing leaders. We also held our summit for CIOs in Mumbai. Events revenue was down 20% compared to the third quarter of 2014 driven mainly by a decline in sponsorship revenue.

I will now highlight the expense and income portions of the income statement. Operating expenses for the third quarter were $66 million, down 3% from $68 million in the prior year and essentially flat on an FX-neutral basis.

Cost of services and fulfillment decreased by 3% or by a negative 1% on a constant-currency basis on lower compensation and benefits, costs related to the reorganization in the first quarter of 2015, and, also, due to the lower outsource fees related to our consulting business.

Selling and marketing expenses decreased by 1%, but increased 2% on a constant-currency basis compared to the same period last year. The decrease was driven primarily by lower commissions, partially offset by higher sales headcount.

General and administrative costs decreased by 7% or by negative 4% on an FX-neutral basis due to lower recruiting costs for consultants and a lower professional services related to the implantation of cloud-based software services.

Overall, headcount was essentially flat compared to the third quarter of 2014 and up 1% compared to the second quarter of 2015. At the end of the third quarter, we had a total staff of 1,321 including a research and consulting staff of 497 and a sales staff of 513. Research and consulting decreased by 4% to prior year and increased by 1% as compared to the prior quarter. Sales headcount decreased by 4% versus prior year and declined by 1% compared to the prior quarter. Sales rep headcount increased by 6% compared to the third quarter of 2014 and decreased by 1% compared to the prior quarter.

Operating income was $8.7 million or 11.7% of revenue compared with $7.4 million or 9.8% of revenue in the third quarter of 2014. Other income for the quarter was $159,000 compared to $232,000 in the third quarter of 2014. Net income for the third quarter was $5.5 million and earnings per share was $0.30 on diluted weighted-average shares outstanding of 18.1 million compared with net income of $4.7 million and earnings per share of $0.25 on 18.5 million diluted weighted-average shares outstanding in the third quarter of 2014.

And now I'll 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 regard to the amount of revenue that has already been recognized. As of September 30, 2015, agreement value was $233.3 million, up 3% from the third quarter of 2014 and negatively impacted approximately 1 point due to foreign exchange.

As of September 30, 2015, our total for client companies was 2,482; unchanged from June 30 of 2015 and up 30 compared to the third quarter of 2014. Client count, unlike a 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 September 30, 2015, unchanged from the prior quarter and up 4 points compared to last year. Our dollar retention rate improved to 91% from 90% in the prior quarter and increased by 2 points compared to last year. Our enrichment rate was 97% for the period ending September 30, 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 September 30th was $104.2 million, which is essentially flat with $104.5 million that we had at year-end 2014. We generated $3.5 million of cash from operations for the quarter as compared to a use of cash of $7.4 million in the third quarter of last year. We received $1 million in cash from options exercised for the quarter as compared to $2.6 million in the third quarter of last year. We also paid a dividend in the third quarter, which amounted to $3 million or $0.17 per share.

Accounts receivable at September 30, 2015 was $37.4 million compared to $39 million as of September 30, 2014. Our days sales outstanding at September 30, 2015 was 46 days compared to 48 days at September 30, 2014. And accounts receivable over 90 days was 8% at September 30, 2015 compared to 7% at September 30, 2014.

Deferred revenue at September 30, 2015 was $124.2 million, down 4% compared to September 30, 2014, and, on a constant-currency basis, was down 1%. The 1% reduction in deferred revenue reflects revenue growing at a slightly faster rate than bookings on a trailing-12-month constant-currency basis.

So, in closing, we had a solid quarter with revenue at the upper end of expectations and significantly exceeding our expectations for pro forma operating margin and earnings per share. We are seeing strong performance from a majority of our products and client retention remains high, which reinforces our view that our age of the customer strategy is resonating with clients.

While breakout bookings performance has been held back by some underperforming products, we're making progress on those products and have implemented some changes during the quarter with more to come. As we continue to invest for growth, we remain committed to improving operating margin and earnings per share and our guidance for 2015 reflects that commitment.

Now, let me take you through the specifics of our guidance for the fourth 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 fourth quarter and approximately $900,000 for full-year 2015; stock-based compensation expense of $2.3 million to $2.6 million for the fourth quarter and $8.2 million to $8.5 million for full-year 2015; reorganization costs of zero for the fourth quarter and $4.4 million for the full-year 2015; and any investment gains and losses.

Forrester is providing fourth quarter 2015 financial guidance as follows; total revenues of approximately $78 million to $82 million; pro forma operating margin of approximately 6% to 8%; pro forma effective tax rate of 38%; pro forma diluted earnings per share of approximately $0.15 to $0.19.

Our full-year 2015 guidance is as follows; total revenues of approximately $311 million to $315 million; pro forma operating margin of approximately 9.5% to 10.5%; pro forma effective tax rate of 38%; and pro forma diluted earnings per share of approximately $1.04 to $1.08. We've provided guidance on a GAAP basis for the fourth 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 over to the operator for the Q&A portion of our call.

Thank you. We'll now begin the question and answer session. (Operator Instructions). Vincent Colicchio, Barrington Research.

Yes. Thanks, operator. George, the board business continues to be challenging. What changes -- it's tough to follow what changes you're making versus what you said last quarter. I know you were going to add a CIO board and a CMO board.

Yes.

I heard the CIO board. And then, there was some consolidation going on. Could you give us some more complete picture?

Yes. I mean actually what you heard was CMO board.

Okay.

Just to help you with this, Vince; there is a CIO and CMO council, FLB, which is a peer-oriented body. We're now launching what we call executive programs. We actually don't know the exact name yet, but we're talking about calling them executive programs, for the CMO, which would be more of a -- it's more expensive, which we like. But this an aide who's going to be with you in your staff meetings, channeling the right research from Forrester to you at the right time.

And a coach.

And coach, yes. Mike's chiming in on this. That's number one. Number two on this is that I think the EVP on this product strayed over the last couple of years, Vince. And so, Cliff, in his inimitable way, has come in and, in a very short time, he is going to sharpen exactly why a client would be a member of the FLB, what they're going to get from being in the FLB, what the real value is. And I think that got kind of fogged up in the last two years. So, he's sharpening that one.

Mike, I would also say it's not across all FLB councils. What we're seeing is certain councils both on the BT side and the M&S side are doing really well, where other councils are not.

CX and CMO being examples, yes.

Being examples of where they're taking it off -- taking off. So, I think where we see the growth; it's councils being run well. The value proposition is well-understood. And we've got a great opportunity for clients to network and get the full value of the council. And we've got to address some of the other councils.

Cliff, just so you know, Vince, is spending a lot of his time here -- I think he estimated in the board meeting yesterday about 40% of his time will be spent on FLBs, which makes sense. It's a big business for us. We've got to get back on track.

And then, as far as BT RoleView, I think you said that some packaging changes were made. If I'm right on that, is there any early feedback on that? And what changes may be ahead for that area?

So, the big news there, Vince is, as we looked at BT RoleView and we looked at the migration of clients that may have been in traditional IT organizations, we made a change in our packaging to offer both BT and M&S content in one single research seat or FLB. And what we've found -- we launched that in September. We saw an immediate uptick both in pipelines and bookings in September. We haven't seen a launch like this in a while. It's been great. Salespeople have been very excited about it. The clients are excited about it.

The way to sort of position it is that a client is now getting the full story. A lot of the BT clients that we have wanted access to the M&S content. A lot of the M&S clients really need to understand the BT piece of it. This gives them the full understanding of what they need to do to be successful. And while it's sold at a premium, we've seen the uptick move incredibly quickly just in one month.

I don't want to get too detailed here, but what's happening is, in companies who are moving hard toward the customer, we always see a very strong cooperative effort between the CIO and the CMO. And business technology is really happening in a very densely collaborative space between those two different groups of executives. And so, as it turns out, a lot of the CIOs are reading -- or they were most interested in a lot of the research we were creating for the CMO and vice versa. As it turns out, BT really is running across these two sets of executives. That's really what this seat is intended to serve.

Okay. George, you mentioned that you're seeing the longer sales cycles, but seeing better increased client engagement, which sounds positive. Are there any metrics you track internally that tell that story?

Well, Vince, I'll take this. It's Mike. We are seeing a lot longer sales cycles. We track our pipelines. And so, we can see that the deal size, both at an opportunity and when we close it, are larger. They involve more products and services in each one of the proposals that we're generating. And we're dealing with a larger number of individuals in any one deal. That's partially just what has happened in commercial markets, in general, with more individuals getting involved, but it's partially based on the type of work we're doing.

An example might be a customer experience project. 10 years ago, we might have worked with one IT professional or one marketing executive. Now, we're working with project teams from various parts of the business to design a solution. And it's taking longer. We're trying to streamline both the products and services that we're offering so it's easier to buy.

I think what's also on here, Vince, is that with the -- having built the consulting organization, we're getting big deals. Or, at least, we're getting onto the playing fields to compete for those deals. I'm talking about $500,000, $600,000 deals. And it's a level of complexity and it's a level of buying that we just haven't been doing in the past. So, it's changing how we're actually approaching those types of buyers.

Okay. I'll go back in the queue. Thanks, guys.

Thanks, Vince.

Tim McHugh, William Blair.

Yes. This is Samir (ph) calling in for Tim. Hey, guys.

Hi.

I heard you talk about some events on APAC. But did you throw out a number for the total number?

We had four events in the quarter, which is consistent with what we did last year. Third quarter.

Okay. Got you. And then I just had a question about your Customer Experience Index. I know you talked about it a little bit before. But can you maybe talk about how that's progressing and how you see that coming into shape?

Sure. So, as we'd mentioned, we had a soft launch for Customer Experience Index in Q4 of last year. We got out of the gates with not actually having product on the street and we saw a great uptick based on what clients were looking for. They were looking for a product like this.

Over the course of the year, from a product performance perspective, we're on track, which is great. I think we're learning some things as we go along. We thought that the clients were going to buy for one specific reason, which was guidance on how they should be improving their customer experience in really in an internal way.

What we found is there's many reasons why clients purchase the index. Some is, it's from a benchmarking perspective, where they're looking to compare themselves to peers. They also do it from a competitive perspective. They want to understand what they're weaknesses of their competitors are when it comes to customer experience. So, it's opened up a lot of doors.

We're learning a lot about the sales cycles, as well. As you might expect, that a decision like this, especially, might have an impact on the executive team at some of the organizations because some are compensated on the results. And so, those sometimes take longer and have more eyes on them. But, we're pleased with the progress so far. But we're looking to make changes to the CX Index as we go into 2016 to make it more interactive with our clients.

Yes. What it's doing is it's getting us to new levels in these companies. I'm not going to tell you who this is, but very large financial services company in the U.S. and I was with the executives and I said, "Do you know that you are in the bottom quartile in CX in the U.S. and that, in the last two surveys, you actually dropped? 40% of your customers now consider you to have poor or very poor customer experience." And they all looked at me like, "Hmm, we're spending tens of millions of dollars in this space." And I said, "Well you're not getting the return from this."

And that's vaulting us to up to new levels in these companies and getting -- it is -- look, this is going to be absolutely critical to how companies grow revenue. We actually proved -- I don't want to go into too much detail here -- but we spent a lot of time researching how better customer experience can actually drive revenue faster. And we've actually proved it in certain markets.

So, it's getting us into new spaces, higher levels in organizations. And I think it's done exactly what we wanted it to do.

Alright. Sounds good. And then if I could just squeeze one last one in. So, with Cliff's new role, do you expect any significant changes or initiatives as a result of him coming onboard and kind of taking on his new role?

That's why he has the new role.

Was there anything that you'd want to discuss?

At this point, no. And I would just say that the goal -- and Cliff's well aware of this because he's very good at this, just like he did in research -- is that he will make changes. There's no question about that. But we're going to continue to move the business forward. We don't hit the pause button. These are things that need to be done in flight.

So, he did it with research and it was very effective, to George's point earlier. And we look for the same on the product side. I think he's diving in right away and looking to see where we can add value and make changes to get meaningful short-term hits and also more meaningful long-term hits.

I think, too, Cliff is, one, he's very commercial. And, two, very fast. And I'd say, number three, a little bit squishy, but he's a very collaborative executive team.

Great partner.

Yes, great partner.

Alright. Thanks, guys.

Good. Thank you.

Bill Sutherland, Emerging Growth.

Thanks a lot. Hello, guys.

Hey, Bill.

Hey, Bill.

I want to -- in the guidance, Mike Doyle, I was kind of curious about, for the quarter, you're FX thinking on revenue.

You know, I think, from our perspective, our assumption is that essentially we haven't baked in any material declines or appreciation on any of the currencies. So, if there is some movement -- and I have seen some forecasts that the euro dips again in the fourth quarter -- but we don't have that factored in. So, we pretty much are holding the line on currencies at this point, Bill.

And then I noticed a lower operating margin assumption for the fourth quarter, Mike. I didn't know kind of what the thought process that is there, relative to both the prior quarter and a year ago.

Yes, no. It's a good question, Bill. There's a couple things going on there. First, we've got -- we're making some investments to support some things we want to do in sales and we've got other operational investments that we're putting in there. In addition, the fourth quarter is our biggest quarter, from bookings standpoint, still.

So, frankly, we always hedge our bet a little bit because it can be difficult at times to predict commission expense. I'm actually kind of hopeful our expense numbers get blown out because the commissions are so huge. But we hedge our bet a little bit here, Bill.

And so, we're probably a shade conservative on the expense side, but that's by design because it's just the most volatile period we have as a company just because of the size of bookings that occur in the last three months.

Sure, makes sense. Michael Morhardt, on the quota-bearing rep additions; well, it was down slightly quarter over quarter, but you're running mid to high single digit head count growth there. And is that kind of where you want it to be? Are you sort of thinking, now that they're more seasoned overall, you're going to be -- with the products realigned and so forth -- looking for productivity gains to make sure the booking growth is 10% or higher on that rep base?

Well, we're always looking for productivity gains. That's a big piece of it. As we look at headcount growth, as we go into the next couple of quarters, Bill, one of the things that I think George mentioned and I mentioned; we need to take a good hard look at the types of deals and the types of clients that we're going after. And I think we have to be a lot more disciplined and targeted in the types of organizations.

We have clients that are our ideal client profile. They buy everything from Forrester and buy into the age of the customer. And we need to be able to target like clients and prospects in a more sophisticated way. And we're doing that.

And what that means is I'm reluctant to make bets on additional headcount until we know exactly how they're going to pay off. So, you may see the headcount growth slow, as we go in; ready to ramp it up as soon as we know we have it right, but we want to make sure we're thoughtful about this and we start to see those productivity gains.

And remind me on the event business; is that -- are the salespeople there dedicated to events?

Yes, they are. So, there's a dedicated sponsorship sales team and a dedicated attendee sales team.

Okay.

They do collaborate closely with the research and consulting sales teams. But there's a dedicated team for that.

I will tell you -- this is George here, Bill -- that the person we've hired to run events is actually coming out of a sales background. He's not a content background. He's coming from a commercial sales background. We expect --

Just as a reminder, too, we hired a new head of sales for events, who's still in place, and that was about -- I want to say nine or 10 months ago. So, she's in place. This is now the person who actually runs the overall event business for us. So, we think that would be a good complement. We didn't lose our head of sales. She's still there. And this is the guy who's going to run the overall business.

We feel like, going into Q4, we've got some of our bigger events and we've been seeing some good activity from a sales perspective as far as prospects and attendees. So, we see some decent momentum, too.

Well, how was -- you said sponsorship revenue was down 20% in the third quarter. What was attendance like?

I think we're actually feeling a little better about the attendance piece. It's off a bit, but it's better. I think the problem is we started to struggle last year with attendance in the third and fourth quarters. That has the lag effect on sponsors, as Mike will tell you, having run one of these businesses before. So, now, for us, the challenge is building that back. And I think that's one of the focuses. So, I think that we're kind of targeting to see that build now.

So, sponsorship is down, Bill, but seats are now coming back up, which is a good sign.

Right. So, you'll see that business swing next year. I mean you're not counting on the fourth quarter, even though -- I forget how many events you have fourth quarter.

No. I think we're -- what we're counting on is really the fourth quarter to begin the build, right? And I think that the sales teams have started to come together. I think they've staffed up nicely. I think the new head of events is going to help us a lot.

And, just as a reminder, Q3 is a small event quarter. It's about 400,000, Bill. So, the percentages can be a little deceiving. Q4 is a little bit bigger. But, for us, the key is continuing to build attendance, to George's point. That's what excites sponsors and that brings them back in the door. And I think, having interviewed and met with this guy that we're bringing in, I think he brings, to George's point, a great commercial background and I think he's going to help us jumpstart this. I mean he's got to do a lot of heavy-duty --

And just one of the other things that George pointed out; this group rolled up to Cliff previously. It now rolls up to Cliff again. And, in the six to eight weeks Cliff's been onboard, we've seen remarkable changes operationally, as well; as far as just getting the trains to run on time as far as getting our 2016 event calendar out there. There's a number of things that just make an event business hum. And Cliff's already all over those.

And the guy we're bringing in to run the overall business ran a business actually larger than our business. And he also ran an events business in the media and research space, as I said in my remarks.

Sounds promising. Thanks, guys. I appreciate it.

Thanks, Bill Appreciate it.

We have no further questions at this time. I will now turn the call over for final comments.

Okay. Thanks very much, everyone. George and I are going to be out on the road in the fourth quarter. We plan to be in New York and in Montreal. In addition, we are presenting at the Barclays conference in December, their technology conference. So, we're looking forward to seeing as many people as possible during the fourth quarter. So, thanks very much.

Thank you.

Thank you.

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