FORR

Forrester is a shrinking research-and-advisory franchise trading at a distressed 0.5x sales. Revenue has fallen every year since the 2022 peak — $538M → $481M → $432M → $397M, with FY2025 down 8.2% — and the MD&A explicitly guides to further 'anticipated future declines in consulting revenue.' The eye-popping FY2025 headline (-$119M net income, -$6.28 diluted EPS, -94.3% ROE) is misleading: operating income was -$113M yet the company generated +$21.1M of operating cash flow (up from -$3.9M in 2024), so the loss is overwhelmingly a non-cash impairment — management writing down the carrying value of a business the market has already re-rated. That's a real signal of eroding franchise value, not an immediate solvency event.

The balance sheet is the reason this isn't a sell/avoid. Long-term debt is zero; the only borrowing is a $35M revolver draw, and on March 12, 2026 the facility was extended to March 2029 (albeit shrunk from $150M to $50M with a new minimum-liquidity covenant), with management stating full covenant compliance and expected compliance for the next 12 months. Cash is $63.3M and gross margin remains a healthy 70.3%. Current liabilities ($240M) exceed current assets ($213M), but that understates liquidity: research is 75% of revenue, is renewable, and is billed in advance, so a large slice of current liabilities is deferred revenue rather than a cash claim.