Forrester Research Inc (FORR) 2017 Q4 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; and Mike Doyle, Forrester's Chief Financial Officer. George will open the call and Mike Doyle will discuss the financials. We'll then be opening the call to Q&A. A replay of this call will be available until March 9, 2018. It can be accessed by dialing 1 (888) 843-7419, or internationally at 1 (630) 652-3042. Please reference passcode 5657678#.

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 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 without -- as a result of new information, future events or otherwise.

I'll now hand the call over to George Colony.

Good afternoon, and thank you for joining Forrester's Q4 and Full Year 2017 Conference Call. I will give an overview of the quarter and the year. Mike Doyle, our CFO, will give a financial review of the fourth quarter and full year and guidance for 2018. Kelley Hippler, Forrester's Chief Sales Officer, who typically joins this call, is presently in Hong Kong at our Asian kickoff, so she will not be with us.

2017 was the fourth year that Forrester has focused on its Age of the Customer strategy, and it was the first year of our transition to the new selling model, what we call the Customer Engagement Model or CEM. We believe that the strategy and the new sales structure are having positive impact on our business results. The fourth quarter, in particular, showed improvement in our key metrics as we beat our financial guidance and sales targets in the quarter. Additionally, the company exceeded its financial guidance for full-year 2017, turning in better-than-expected results in revenue and earnings per share.

Now as you remember, Forrester believes that the worldwide economy is being transformed by empowered demanding customers. In this age, companies must create compelling experiences that deliver value and connect with B2C and B2B consumers on an emotional level. Forrester works with business and technology leaders to build customer-obsessed strategies that drive growth.

We are specialized to help companies do 3 things: one, understand their customers; two, revolutionize marketing to win the new customers; and three, build business technology that serves and retains customers.

When we began this journey 4 years ago, many large corporations had not yet recognized the sea change in the economy. And in previous calls, I've said that we were, in fact, ahead of many firms. But now companies like Amazon, USAA and Barclays Bank are leveraging their superior customer approaches to stand out in their markets. And this is not simply a feel-good dynamic. These companies are achieving significantly higher revenue growth as compared to competitors.

So for large companies, maintaining leadership in this world is not easy. 15% of the 1,000 firms in our Customer Experience Index saw their ratings drop in 2017, and we predict that in 2018, 30% of firms will see a decline in their results. The antidote is for companies to increase spending on business technology, these are the systems that deliver simple and compelling digital experiences for customers. And we see that happening, with spending on BT increasing 55% since 2013 while spending on a back-office technology remained flat.

This means that the market is coming to Forrester, that the place where we have chosen to focus is expanding and opening new opportunities for us to grow. As the CIO of TD Bank in Canada recently stated to me, and he said, "we now measure system outages in terms of customer impact instead of raw hours and data loss. We look at the number of customers affected, the severity of the interruption of customers and impact on metrics like customer satisfaction." And that is the thinking of a customer-obsessed company.

A second reason that we saw acceleration in the fourth quarter was our new selling model. In 2017, we experienced a 1.3% increase in client retention, a 2% increase in dollar retention and a 3.5% increase in enrichment. Clients who are in the new model contributed to most of these improvements. In North America, we are now 100% in the new model, with clients transitioned to core and premier and with all premier teams now fully staffed with client executives, customer success managers and solution partners. In premier accounts that have been in the model for 12 months, we saw significant upticks in renewal rates, driven by CSM activity and enrichment driven by SPs. The core team in Nashville is now fully staffed and in permanent offices. By the end of 2018, all clients will be in the model, worldwide.

Now I have talked on previous calls about our efforts to grow our user business and I'm happy to report that we are seeing results on that front. In 2017, client retention rates of users increased 3%, dollar retention increased 3% and enrichment was up 4.3%. In Q4, user research bookings increased 9.8% year-over-year.

So 3 long-term bets are beginning to pay off: one, focus on the Age of the Customer; two, the transition to a new selling model; and three, our commitment to expanding our user business. There is obviously still much work to be done on all 3 fronts, but we feel that we are on the right track.

Now Mike is going to review the effects of the new tax law on Forrester, but I wanted to give an overview of how we're going to manage this change. As you all know, Forrester's federal corporate rate will drop for 2018. In addition, we will be able to repatriate cash held outside of the U.S. at a lower cost than under the previous law. We plan to invest approximately 50% of the tax cut back into our business, spending the money on the development of new products and the digital transformation of existing products. The remaining 50% will be returned to shareholders in the form of increased earnings per share.

For funds held overseas, we are currently planning to retain that money to be used for M&A activities outside of the U.S. and to invest in the expansion of our international business operations. We have no current plans to bring those funds back into the U.S. although M&A activities based here could trigger a repatriation.

As I've talked about on previous calls, the priority of our cash -- of our use of cash are as follows: one, to invest back into the business; two, for M&A activity; and three, returning value to shareholders through dividends and share repurchase. The new tax structure has not changed those priorities.

While I'm on the topic of investments, I wanted to give a brief summary of 2 areas of focus in 2018. One, the real-time customer experience measurement; and two, new digital delivery of our research.

On the last call, I referenced the experimental consumer app that Forrester has built, called Tap. This app enables consumers to give quick feedback and ideas for improvement to locations and brands. We have been testing and enhancing the app through Q4, primarily in the Boston market, with 2 smaller tests in San Francisco and London. This app is the first element of the real-time customer experience platform, a multi-input facility by which companies can track and improve their customer experience in real time. We believe that demanding customers will require companies to be continually enhancing their experiences and fixing problems on a minute-to-minute basis, and we're exploring how we can launch products into this space to help companies do just that. And I will update investors on future calls on this effort. And also by the way, you can get Tap by going to www.downloadtap.com.

We will also invest in updating our products to connect to our changing clients. Through our measurement and tracking tools, we see that the behavior of our users is shifting. They are consuming our reports, analytics, graphics and data in new ways. As examples, through experimentation, we have found that 60-second audio analyses on the Forrester iPhone and Android apps have 4x more click-through rates than a one-page written brief. Forrester's podcast, which was launched midyear 2017, has quickly grown to 90,000 downloads, and we will shortly go over the 100,000 mark.

In 2018, our Head of Technology, Steve Peltzman, will be spearheading a number of additional tests of new content forms, forms that could potentially replace the written report, data sheets and other deliverables over the next 3 years.

Our goal is to make our products more accessible and valuable to our clients in a time when their habits and behavior are changing. We are already seeing success through our Forrester Research app, with our notification click-through and monthly sessions doubling in 2017.

A quick comment on company culture. For the second year in a row, Forrester was on the list of Glassdoor top companies. This is important for 2 reasons; one, it's an indication of the health of the internal culture; and two, 100% of prospective employees view Glassdoor before applying and accepting a job at the company. So the high ranking is increasing our ability to hire the best and the brightest.

We had our Q4 board meeting yesterday, and our 2 newest board members were present: Neil Bradford and Jean Birch. Neil is the former President of Forrester U.S., who left the company in 2006 and has been the CEO of 3 research companies in the U.K. since that time. Neil brings deep research business experience to the board as well as an intimate knowledge of our operations. Jean has been the CEO of several publicly traded companies and brings valuable experience in how B2C user organizations are digitally transforming.

After the addition of Neil, Jean and our 3 other new board members, the Forrester board is well structured to carry the company into a faster growth, more highly innovative future.

So in conclusion, I'm very pleased with our performance in 2017, and especially with our overperformance in the fourth quarter. We've done a lot of hard work over the last 3 years to put us in the right position to grow the company at faster rates, and it appears that, that hard work is now beginning to pay off. And now I'd like to turn the call over to Mike Doyle, who will provide a financial update. Mike?

Thanks, George. I'll now begin my review of Forrester's financial performance for the fourth quarter of 2017, including a look at our financial results, the balance sheet at December 31, our fourth quarter metrics and the outlook for the first quarter and full year 2018. 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 2017, we continue to utilize an effective tax rate of 40% for pro forma purposes. For the fourth quarter of 2017, Forrester delivered revenue and pro forma earnings per share that exceeded the top end of guidance. We experienced solid revenue growth that was driven in part by double-digit growth in our non-syndicated offerings and some acceleration of onetime revenue from the first quarter of 2018. We did initiate investments in products and infrastructure in the fourth quarter, particularly for our data products, which we plan to continue throughout 2018. In addition, we absorbed some unplanned expenses and adverse currency impact. Despite these additional expenses, we achieved our margin guidance.

I do want to make a comment regarding our Q4 2017 GAAP EPS performance. For Forrester, like many U.S. companies, the impact of the Tax Cuts and Jobs Act will have a positive effect on our tax rate for 2018 and beyond, which will result in meaningful tax savings.

There was an adverse impact of $1.6 million to our Q4 2017 GAAP earnings as a result of revaluing our deferred tax assets at the new lower rate and a toll charge for deemed repatriation of earnings.

Turning to sales performance for a moment, let me update you on our sales CEM initiative. We are happy with the way 2017 finished, with 5 of the 6 sales teams showing healthy, year-over-year growth in the fourth quarter. The sales teams in the new selling model the longest demonstrated the best year-over-year improvements. In addition, the year-over-year improvement in our retention and enrichment metrics reinforce we are on the right track with our CEM initiative. One area, which Kelley has made significant progress, has been the rightsizing of sales territories. That is ensuring each sales rep has a target-rich territory based on our key verticals. Kelley's belief is that this will enable greater sales productivity, going forward, with the net result being low single-digit headcount growth required in 2018 to achieve our sales objectives.

Moving onto products. We learned a good deal from our clients about what they want to see in our products. Real-time customer experience, a better digital platform and multiple ways to access our products and services and consume them are some of the more important aspects that they mentioned. During 2017, we rolled out improved digital platforms for our data business, upgraded our mobile apps and made additional investments in our data and digital infrastructure, which will continue in 2018. We believe these investments enhance our products and help our clients build customer-obsessed strategies that drive growth.

Now let me turn to a more detailed review of our fourth quarter results. Forrester's fourth quarter revenue increased by 8% to $90.4 million from $83.4 million in the fourth quarter of 2016, and increased 7% on a currency-adjusted basis. Fourth quarter research services revenue increased by 3% to $55.9 million from $54.2 million last year. On a constant currency basis, research revenue increased 2% and represented 62% of total revenue for the quarter. Contributing to the revenue increase in the fourth quarter was our reprints business, where client demand resulted in accelerated fulfillment of our Q1 backlog.

Fourth quarter advisory services and event revenue increased by 18% to $34.5 million from $29.2 million in the fourth quarter of 2016, and by 17% with constant currency and represented 38% of total revenue for the quarter. This strong growth was driven by double-digit revenue growth in our consulting, content marketing and advisory businesses.

Our international revenue mix was up -- was 24%, up 2 points from 22% in the fourth quarter of 2016 and up 1 point on a constant currency basis.

I'd now like to take you through the product activity behind our revenue, starting with Forrester Research. Forrester's published research and decision tools enable clients to better anticipate and capitalize on the disruptive forces affecting their businesses and organizations. We believe Forrester Research provides insights and frameworks to drive growth in a complex and dynamic market. In the fourth quarter of 2017, Forrester's Research library included 50 playbooks, the addition of 355 new documents and we hosted 34 webinars for our clients.

On to our Forrester Connect offerings, which encompass our leadership boards and executive programs. Forrester Connect services are designed to help clients connect with peers and Forrester's products and professionals and coach executives to lead far-reaching change within their organizations. As of December 31, 2017, Forrester Connect had a total of 1,439 members, up 1% compared to last year and flat to the third quarter of 2017.

Our data products and services are designed to provide fact-based customer insights to our clients. Clients can leverage our data products and services or choose to have us conduct custom data analysis on their behalf. For the fourth quarter, revenue decreased by 1%. We are seeing near-term disruption in data revenue as we roll out new products. We expect this to be minimal as we move into 2018.

Forrester Consulting, which includes our advisory and consulting services, saw total revenue for the fourth quarter increase 23%. Utilization was high across all our [service] segments and we also converted some revenue backlog from the first quarter of 2018.

Forrester had 5 events in the fourth quarter of 2017. In Europe, we held 2 events in London: our new Privacy and Security Forum; and our Customer Experience Forum. In the U.S. we held 3 events: our B2B Marketing Forum in Austin; our Customer Experience Forum in San Francisco; and our new forum on new technology in Boston. Event revenue increased by 9% year-over-year.

I'll now highlight the expense and income portions of the income statement. Operating expenses for the fourth quarter increased by 12% as reported and 10% on a currency-adjusted basis and were $80.7 million compared to $72 million the prior year. Cost of services and fulfillment increased by 11% as reported, and 9% with constant currency due to higher headcount, merit and increased professional services. Selling and marketing expenses increased by 15% and increased by 13% with constant currency, driven by higher headcount and merit increases. General administrative costs increased by 9% and increased 7% on a constant currency basis due to merit increases and higher professional services costs.

Overall headcount increased by 1% compared to the fourth quarter of 2016 and as compared to the third quarter of 2017. At the end of the fourth quarter, we had a total staff of 1,392, including a research and consulting staff of 515 and a total sales force of 539. Research and consulting headcount decreased by 1% compared to the fourth quarter of 2016 and increased by 1% sequentially. Total sales force increased by 3% compared to the fourth quarter of 2016 and increased 2% sequentially.

Operating income was $9.7 million or 10.8% of revenue compared with $11.5 million or 13.8% of revenue in the fourth quarter of 2016. This is a decrease of 15% year-over-year.

Other income for the quarter was $53,000 compared to $366,000 in the fourth quarter of 2016.

Net income for the quarter was $5.9 million and earnings per share was $0.32 on diluted weighted average shares outstanding of 18.3 million compared with net income of $7.1 million and earnings per share of $0.38 on 18.6 million diluted weighted average shares outstanding in the fourth quarter of 2016.

And now I'll review Forrester's fourth 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 December 31, 2017, agreement was -- agreement value was $242.9 million, up 2% from the fourth quarter of 2016 and up 3% on a constant currency basis.

As of December 31, 2017, our total for client companies was 2,409, down 1% compared to last year and up 1% compared to last quarter. 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 December 31, 2017, flat compared to last quarter and up 1% compared to last year. Our dollar retention rate was 88%, flat compared to last quarter and up 1% compared -- 1 point compared to last year.

Our enrichment rate was 96% for the period ending December 31, 2017, up 2 points compared to last quarter and up 3 points 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 December 31, 2017 was $134.1 million, which is a decrease of $4 million from $138.1 million at year-end 2016. Cash from operations was $700,000 for the quarter as compared to $6.2 million in the fourth quarter of last year.

We received $4.6 million in cash from options exercised for the quarter as compared to $6.7 million in the fourth quarter of last year. We did not repurchase any stock during the fourth quarter and we paid a dividend of $3.4 million or $0.19 per share during the quarter.

Accounts receivable at December 31, 2017 was $70 million compared to $58.8 million as of December 31, 2016. Our day sales outstanding at December 31, 2017 was 71 days compared to 65 days at December 31, 2016. And accounts receivable over 90 days was 4% at December 31, 2017 compared to 3% at December 31, 2016.

And deferred revenue at December 31, 2017 was $145.2 million, an increase of 8% compared to December 31, 2016, an increase of 6% on a constant currency basis.

So in closing, we finished 2017 achieving the financial objectives established at the beginning of the year. We beat our revenue and EPS targets and achieved our targeted operating margin. We returned $53.6 million to our shareholders in the form of share buybacks and dividends and more importantly, set ourselves up to improve our performance in 2018.

We made significant progress on our key strategic priorities in 2017. We established and built out a core selling team in our new Nashville office; we completed the rollout of the CEM initiative in North America; and began our European rollout. This has resulted in improvement across our key customer metrics of retention and enrichment.

We made significant investments in digitizing our business model, with investments in iPad, iPhone and Android apps, enhanced versions of most of our data products and improved web experience. We plan to accelerate our efforts in this area in 2018 as we're receiving favorable response from our clients. As a result, we plan to utilize half of the expected savings from the tax rate cut, approximately $2 million pretax, to reinvest in further product digitization.

We continue to innovate with our products -- with the executive team -- with the executive program team access and other products showing meaningful growth in 2017, helping drive improved growth in our user business. We feel very good about what we've accomplished and the results suggest it is resonating with our clients. We expect that our performance will improve at accelerated rates in 2018 as we look to build on the success of this past year.

Now let me take you through the specifics of our guidance for the first quarter and full year 2018. As a reminder, our guidance excludes the following: amortization of intangible assets, which we expect to be approximately $200,000 for the first quarter and approximately $700,000 for the full year 2018; stock-based compensation expense of $2 million to $2.2 million for the first quarter and $8.3 million to $8.8 million for the full year 2018; and any investment gains and losses. We expect foreign currency effects to benefit revenue growth by approximately 1% -- or 1 point in 2018 with a corresponding impact to expenses and EPS for 2018.

The guidance that I will discuss now and that we issued in our press release earlier today reflects our projected foreign currency rates for 2018. We expect the following changes versus 2017: the euro to appreciate approximately 5%; the British pound to appreciate approximately 5%; and the Canadian dollar to appreciate approximately 4%. Forrester will be adopting the new revenue rules effective as of January 1, 2018. Although we do not expect there will be a significant effect on our full year results, there will be approximately $1 million of revenue from expired event tickets that will no longer be recognized in the first quarter, rather will be recognized during the remainder quarters of the year based on the number of events held in each quarter. In addition, the company will no longer capitalize and amortize our data survey costs, which will result in higher costs in the first quarter of the year and lower costs for the remainder of the year. In addition to these items, our first quarter margin is negatively impacted by the initiative spend that I mentioned and the fact that our revenue beat in the fourth quarter of 2017 ate into our backlog for consulting and reprint revenues as we enter into 2018.

Forrester is providing first quarter 2018 financial guidance as follows: total revenues of approximately $77 million to $80 million; pro forma operating margin of approximately 1% to 3%; a pro forma effective tax rate of 31%; and pro forma diluted earnings per share of approximately $0.03 to $0.07.

Our full year 2018 guidance is as follows: total revenues of approximately $352 million to $360 million; pro forma operating margin of approximately 10% to 11%; a pro forma effective tax rate of 31%; and pro forma diluted earnings per share of approximately $1.38 to $1.45.

We provided guidance on a GAAP basis for the first quarter and full year 2018 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 the call.

(Operator Instructions) And our first question comes from Tim McHugh from William Blair.

I just want to follow up on the investment spending or the decision to reinvest part of the tax benefits. I guess, can you walk through why, I guess, just -- I get that it's obviously a kind of a windfall of cash flow, but you've also been investing the last few years. So were these things that were on a wish list that you just couldn't get to before? Or, I guess, talk me through the thought process.

I think, from our standpoint, Tim, we looked at these -- we have a running list of initiatives that we keep, strategic initiatives, as part of our broader 5-year plan. And I think there's a combination of factors that enter into our decision to do more in '18, certainly the tax rate helped. I think, more importantly, what George described in the beginning is we are beginning to see this resonate in a very real way. And I think we're trying to accelerate the investments in these key areas, frankly, to build growth at a much faster rate. So the tax rate reduction certainly helps because it helps to sort of fund that and still, the net result is a higher EPS year-over-year than we would've expected otherwise. But it did create the opportunity to invest in what we see as very high growth potential for Forrester.

Tim, George here. I think it just enabled us to grow faster. These are investments we would have maybe delayed if we hadn't had the -- if the windfall hadn't been there. But we're just glad to be able to accelerate, as an example, the real-time customer experience platform, we get to that faster than we would have. So it's just speeding us up, which we like.

Okay. And can you talk -- in the bookings, it seemed like it was obviously nice to see some improvement in the quarter. How much of that is coming in from the traditional research business versus the kind of the consulting or advisory types of -- parts of the business? And, I guess, how does that impact how you think about the margins over the next few years and the predictability of what you expect for next year -- or this year?

I mean, I think, look, we had healthy bookings in our consulting and advisory, but we've been happy with the performance of what we'd say our core research business is. So I think that part has been good and been very encouraging. I think we've made meaningful progress there. I think we've been very encouraged by what happened, to George's point, this year-end. As we look at our product set, year-over-year, we've got, frankly, the bulk of our products growing in a meaningful way, whereas, a year ago it was probably less than half. And so we feel really good about it, and core research being one of them.

I think digital is helping us here, Tim, especially in the data space. And the work that we're doing around the new forms and the new ways to deliver the research. As I said, we've doubled the iPad and Android use and also the iPhone use, so it's -- we're feeling good about the syndicated side of our business as well.

And our next question comes from Vincent Colicchio from Barrington Research.

Mike, you've mentioned that 5 of the 6 teams had healthy growth. Was that -- the one that did not, was that Europe? Can you let us know about that?

Actually, no. Europe, we had a good quarter in Europe. We were pretty happy. Europe rebounded nicely. And so we're hoping this is the beginning of a real trend. I think they're getting some benefit from CEM. But also, I think, some leadership stabilization, things are starting to happen there that we're feeling good about.

The economy is improving too.

Yes it is. So we've got that going. I think it was really the West team, which was the last North American to go into the market, has struggled a bit. They've made some -- in addition to the CEM changes, they're making some leadership changes and transition. And we think that's temporal. But no, we're actually happy with what's going on in Europe right now and feel really good. I mean, we've got 5 of the 6 teams really moving well and showing good numbers. It was very, very encouraging. And more importantly, I think the notion the teams that have been in this model the longest have performed consistently better and had a really good year is very encouraging. Because as the rest of the teams continue to sort of ramp up, if you will, and come down their learning curve, we're going to see that this performance will continue to accelerate.

And then, as you rightsize the sales territories, are you seeing any meaningful pushback in terms of the culture?

No. I actually think the sales teams are frankly very excited about the rightsizing because I think they felt, in the past, that we put them out in territories that weren't necessarily target-rich. I think the old model of just higher sales headcount, put them in the field and they'll find sales opportunities, frankly, it wasn't that effective, I think. This notion of taking a step back, looking at the territories and try and match them up appropriately with the resources, the sales folks are happier with that because it's a much better opportunity. And I think what they've done is balance more existing AV so that they start with an existing book of business to work from and a list of target candidates that fit nicely with the target verticals that are in our space. So I actually think this is a good all-around for everybody.

If you look at the new selling model, Vince, we're going to be asking for growth in those territories, over time. With the AV growth -- we're getting net agreement value increase in each of those territories. So to do that, Kelley really had to give them a very legitimate group of clients and in a territory which is well-endowed with opportunities. So it's really a precursor to the growth of those territories, over time.

And then with the momentum improving in the quarter, your accounts receivables -- your DSOs ticked up quite a bit. Do you see that normalizing in the first half?

Yes. I wasn't too concerned with that. I mean, we did notice that, but I'm -- I think I'm not too concerned. I think we will have -- our Q1 numbers may be a little bit impacted. We rolled out, with the new revenue model, we're also in the midst of changing systems, so we finished up 2017 with a systems changeover and moving everything out of Siebel into Salesforce. So what we'll probably see is a little slower cash collection in Q1. So we may see some impact in Q1, but I think by the end of the first half, we'll be back to normal. I'm not concerned about the quality of the receivables. I'm very comfortable with our collection process.

And our next question comes from Allen Klee from Sidoti & Company.

I wanted to go back to the question on your first quarter guidance. Help me understand, if you're going to reinvest back half of the tax savings, wouldn't your bottom line results be better? Why are you modeling it that EPS is going to be down year-over-year?

Look, you can see from our full year, obviously, the EPS is growing nicely. And I think what's happening, there's a couple of things going on. The change in accounting rules meaningfully impact how we treat event ticket revenues. So effectively, we would normally have a block of event revenue, ticket revenue that would fall in Q1, happened every year. And that's now going to follow when the events occur, which our events really begin in Q2 of this year. So that...

And no events in Q1.

Right. So that goes away. There's an impact in terms of the way data survey costs are being treated. We used to spread them over the course of 12 months, as people used the survey. The regs basically push for that cost impact to hit as you spend, so, essentially, almost like a cash basis. So that's driven up costs. So that's -- those 2 things are meaningful impact. In addition, we had strong performance, as you can see, both on reprints and consulting revenue in the fourth quarter. Some of that is, frankly, backlog that we expected to hit the first quarter, and it's meaningful. So that's definitely coming out. So those things are impacting us in the first quarter. Clearly, you can see from our full year guidance, we expect all of those things to stabilize. They are truly temporal in terms of the impact and it falls primarily in Q1, so it creates sort of an odd situation for us in Q1. Lower revenues due to the backlog effect and the effect of the event ticket revenue, which is -- all that's meaningful. And then more costs coming in, plus initiative costs coming in during the first quarter. So the combination of those 2 things compresses margin. And historically our first quarter has always been our lowest earnings quarter because we have no events. We typically see sort of consulting revenue, other things come down. So it's normally a low quarter. But you have all your normal expenses, as a matter of fact, some expenses sort of come up in the first quarter. All of your tax related to comp comes up. So we're seeing a little bit more compression than normal due to some of these changes that I mentioned. But again, for the full year, we feel pretty confident. This is just, I think, a Q1 aberration.

Okay. And then sort of following on that. For your full year guidance, you're not really modeling, I don't believe, operating margin expansion. Is that -- would that be due to accounting reasons, or any other reason?

No. It's really due to investment. It's not due to accounting. It's due to our desire to invest back in the business. So what we've looked at is -- and this gets to the question Tim was asking. And I think we looked at tax saves that we had and decided to put an additional $2 million of expense back onto the books in the form of investment to go continue to double down on product digitization. And so that's had an impact. To your point, that's correct that we've seen basically, on a percentage basis, margins that are approximately flat year-over-year. Obviously, the EPS guidance shows growth of 13% to 19%. So we -- clearly, earnings per share is going up or opting to push back and spend money to drive additional growth.

Okay. And how much cash did you say, if any, you were planning to repatriate or you did?

We're not, at this point, planning to repatriate any cash. I think what we're -- we're continuing to look at our M&A pipeline and look at investment opportunities overseas. And so we've made, at this point, we've made a conscious decision that the cash will stay there. Until we determine that in fact we need it, either back here, to George's point, I think you referenced if there was, in fact, a large M&A opportunity in the U.S. then we'd obviously have to consider bringing it back. So we'll look at those things as the year progresses, but for now, we were opting to keep the cash right where it is.

Okay. And finally, I don't think you bought back any shares in the quarter. Just any thoughts -- or maybe what your authorization is and any thoughts on how you're thinking about that, going forward?

I mean, we -- in our release today, we announced that we increased our authorization by an additional $50 million. And I think that was -- our authorization had dropped about $20 million. And last year, we spent $40 million. So I think the board felt it appropriate to replenish. And as always, we'll be opportunistic when we think it's appropriate and we think that the stock is at a reasonable price. I'll reiterate the point George made that our primary uses for cash are: internal investment, number one; acquisition opportunities, if we believe they're appropriate for the company; and then third being essentially returning cash to shareholders in the form of the dividend, which we announced we'll increase that to $0.20 per share per quarter. And share repurchase will be opportunistic as it always has been for us.

And we have no further questions at this time. Thank you, ladies and gentlemen. Go ahead.

Thanks very much everyone. I appreciate you joining the call. And we will be out visiting with investors during the course of the quarter, so we look forward to seeing you soon. Thank you.

Thank you.

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