FORR (2019 - Q3)

Good afternoon, and thank you for joining today's call. With me today are George Colony, Forrester's Chairman of the Board and CEO; Kelley Hippler, Forrester's Chief Sales Officer; and Mike Doyle, Forrester's Chief Financial Officer. George will open the call, Kelley will follow George to discuss sales, and Mike Doyle will discuss our financial. We'll then open the call to Q&A. A replay of this call will be available until November 23rd, 2019 and can be accessed by dialing 1 (888) 843-7419 or internationally 1 (630) 652-3042. Please reference the passcode 6194408#. 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 based on the Company's current plans and expectations, and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Some of the important factors that could cause actual results to differ are discussed in our reports and filings with the Securities and Exchange Commission. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. I will now hand the call over to George Colony. George C

Thank you for tuning into the Forrester Q3 2019 call. After my remarks, Kelley will discuss developments in the Forrester salesforce followed by Mike Doyle who will give a financial update for the quarter. We will then take questions. The year continues to progress well with Forrester at the upper end of revenue guidance and exceeding EPS targets. Client retention was at 73% two points above Q3 of 2018, and client enrichment, the average growth of client accounts was at 111%, up two points from Q3 2018, and up three points when compared with Q2 of 2019. In a year when we are busy integrating SiriusDecisions and rolling out new offerings, we are pleased that we've been able to show continuing improvements in our metrics and financial performance. I’d like to turn first to integration. The value proposition of the new Forrester is simple, but powerful. And the age of the customer where customer obsession has become imperative for companies to succeed and survive Forrester provides number one vision. What is coming, what are the future opportunities, what are the external threats, and what are the looming competitive dynamics? Helping companies see around the corner is a traditional strength and focus of Forrester and it enables clients to increase their speed. Two, strategy. Once companies have a clear view of the future, Forrester works with them to plan what they should do, what technologies to invest in, how to organize, what skills to acquire, where to focus executive attention and what markets to attack. Legacy Forrester and SiriusDecisions have long records of directing client strategy, having the right strategy enables companies to beat competitors. And then finally, number three, execution. Once companies see the future and have the right strategy, SiriusDecisions can direct them on how to operate, what frameworks to deploy, how to make decisions based on fact, how to apply best practices and benchmarks and how to harmonize operations. The Sirius Way enables our clients to align B2B marketing, sales and product, and to optimize a revenue engine to grow faster. And we have recently completed some research on 6,000 user companies with more than $1 billion in revenue. Forrester clients are 34% more profitable than the average large user corporation. Highly engaged Forrester clients are 54% more profitable. In addition, companies that align marketing, sales and product in the Sirius Way grow 19% faster than average and they are 15% more profitable. So our portfolio of vision, strategy and execution enables Forrester to serve clients in ways that traditional research and consulting firms cannot. And Forrester’s Board of clients, this is a group of clients that advise the company on strategy was in Cambridge in early October, they believe that Forrester’s expanded offering through SiriusDecisions will be valuable to them and their organizations in the marketplace. This deal continues to make a lot of sense. Now the structural integration of the two companies is nearly complete, with research, sales, consulting, events and learning, now working together. The new Forrester will capture revenues synergy on four levels. Number one, cross-sell, selling Sirius to Forrester clients and selling Forrester to Sirius clients; number two, global expansion, selling Sirius more aggressively in AMEA and Asia; three, role expansion is extending the Sirius research model into new roles, including IT, security and risk, and customer experience; and then finally number four, vertical expansion, selling Sirius in the new markets including precision manufacturing, B2B telecom and financial services. Let's spend a few moments to update you on the progress of new products at Forrester. FeedbackNow, Forrester's real time customer experience cloud had a number of new business wins in the quarter, including Love's Travel Stops in the U.S. and London Luton Airport. It has been sold primarily by a dedicated salesforce through Q2. But in Q3, we began to see more involvement from the general salesforce and in fact a Forrester salesperson signed a 1 million plus deal for FeedbackNow in the third quarter. In addition to FeedbackNow, Forrester's new certification business continues to outgrow our plan. Completion rates for certification clients and this is the number of clients who complete the full course. Currently stands at 93% well exceeding, learning industry benchmarks. And in addition 37% of the clients who have completed the program are displaying their Forrester certification badges on LinkedIn. And this is a proxy for the market and credential value of the product. The Zero Trust certification program, which trains clients on Forrester's unique, security, and risk philosophy, had a very successful third quarter launching with 18 clients. In the last week, we have launched the first SiriusDecisions that certification offering B2B marketing. And we're going to be expanding this product on a continuous basis through 2020 and beyond. Certification as a reminder is syndicated with profit margins equivalent with our research offerings. We continue to retire debt incurred with the SiriusDecisions acquisition. In Q3, we have paid down $77.6 million of our debt, including $6 million of discretionary payments on our line of credit. So to conclude, we continue to make significant progress with the integration of SiriusDecisions and the role of FeedbackNow and certification. The vision, strategy and execution portfolio that we have built resonates with our clients and it points the company toward accelerated growth and higher renewal rates. And now I will pass the call over to Kelley Hippler, Forrester's, Chief Sales Officer. Kelley?

Thank you, George. Q3 marked another solid quarter for the Forrester sales organization with growth across all geographic regions. Legacy Forrester are 12 month rolling client retention is holding steady and we increased our enrichment rates. Q3 mark the 11th consecutive quarter that productivity of our ramped reps improved. The customer engagement model continues to drive positive results for the business and more importantly, greater value for our clients as we focus on the outcomes they're looking to achieve. Our decision earlier this year to move the SiriusDecisions sales team under Forrester leaders produced improved results in Q3. As we prepare to finish out the year on a positive note, we are turning our attention to 2020 planning. We've conducted a deep analysis of our clients and prospects including buying centers, budgets and customer feedback on how they want to engage with us. Based upon this work, we are moving to a fully integrated sales and customer success organization, operating under the customer engagement model that has helped fuel Forrester's growth. In 2020, Forrester reps will be selling SiriusDecisions products and SiriusDecisions reps will be selling Forrester products. This go-to-market approach will enable us to deliver the full value proposition of the new Forrester by providing clients with guidance around vision, strategy, and execution. With that, I would like to turn the call over to Mike Doyle to review our Q3 financial results.

Thanks very much, Kelley. I will now begin my review of Forrester's financial performance for the third quarter of 2019, including a look at our financial results, the balance sheet at September 30, our third quarter metrics, and the outlook for the fourth quarter and full-year 2019. Please note that the income statement numbers I'm reporting are pro forma and exclude the following items: impact on revenue from the acquisition-related fair value adjustment to deferred revenue, stock-based compensation expense, amortization of intangibles, acquisition and integration costs and net gains and losses from investments. We continue to utilize an effective tax rate of 31% for pro forma purposes for 2019. In addition, we'll continue to highlight the impact of SiriusDecisions on our consolidated results by indicating year-over-year performance with and without the acquisition in the relevant section of my comments. For the third quarter, Forrester delivered pro forma revenue at the upper end of guidance and earnings per share that exceeded guidance. Organic revenue grew at a rate of 8% compared to last year at 9% on a constant currency basis. Expenses were favorable do in part to lower than planned headcount and continued expense management, resulting in earnings that surpassed guidance. Now, let me turn to a more detailed review of our third quarter results. Forrester's third quarter revenue increased by 30% to $110.3 million from $84.9 million in the third quarter of 2018. SiriusDecisions impacted growth by approximately 22% in the quarter. Third quarter research services revenue increased by 35% to $76.2 million from $56.3 million, and SiriusDecisions impacted growth by 30% in the quarter. Research services revenue represented 69% of total revenue for the quarter. Second quarter advisory services and events revenue increased by 19% to $34 million from $28.6 million and SiriusDecisions accounted for 6% of growth in the quarter. Advisory services and events revenue represented 31% of total revenue for the quarter. Our international revenue mix was 22%, down 1% from 23% in the third quarter of 2018. SiriusDecisions impacted international revenue mix by a negative 2% for the quarter. I would now like to take you through the product activity behind our revenues, 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, as well as operational tools to drive growth in a complex and dynamic market. Research revenue increased by 48% for the third quarter of 2019; SiriusDecisions accounted for 43% of the growth for the quarter. Onto our Connect offerings, which encompasses our leadership boards, executive programs, as well as our certification products. Leadership boards provide peer connections to allow clients to collaborate and create plans born from practical experience. Executive Programs pair clients with former C-level executives, trusted partners who clients can count on to help them make the big calls. Our certification products provide companies with training and certification opportunities for their teams that combine hands-on activities with instruction from Forrester analysts. As of September 30, 2019, Forrester leadership boards and executive programs had a total of 1,469 members, flat compared to prior quarter, and up 2% compared to prior year. Connect revenue increased by 11% for the third quarter of 2019, driven mainly by our certification offering. SiriusDecisions accounted for 4% of the growth. Our analytics products helped clients understand and anticipate dynamic and changing B2B and B2C customers. Our services provide a view into potential future change and offer powerful measures and models to create a blueprint for growth. For the third quarter, revenue increased by 4% driven by FeedbackNow, which accounted for 5% of the growth in the quarter. Forrester's advisory and consulting offerings help clients apply Forrester's intellectual property to drive action across the enterprise, enabling them to move and act faster and smarter in a market that rewards customer obsession, speed and agility. Revenue increased by 18% for the third quarter, driven by strong delivery and higher utilization of our consultants and analysts. SiriusDecisions accounted for 5% of the growth in the quarter. Our Events business provides leading content via immersive experiences focused on enabling professionals in customer experience, digital transformation, privacy and security, sales and marketing. In the third quarter, we held three events, customer experience in Singapore, security and risk in Washington, D.C. and our third quarter SiriusDecisions road show. Third quarter Events revenue increased by 56% with 25% of the growth related to SiriusDecisions. Legacy Forrester Events revenue grew 31% despite having one less event in the quarter, compared to last year. I will now highlight the expense and income portions of the income statement. Operating expenses for the third quarter increased by 30%, and were $99.1 million compared to $76.4 million in the prior year. Cost of services and fulfillment increased by 29% with 22% of the growth related to SiriusDecisions and the remainder driven by higher legacy Forrester headcount and annual merit increases. Selling and marketing expenses increased by 34% with 25% of the growth due to SiriusDecisions and the remainder due mainly to higher headcount, merit and commissions. General and administrative costs increased by 23% of 11% growth related to SiriusDecisions, and the remainder due to higher professional services, higher headcount and merit increases. Overall headcount increased 26% compared to the third quarter of 2018 with 22% of the growth due to SiriusDecisions. At the end of the third quarter, we had a total staff of 1,785, including products and advisory services staff of 673 and total salesforce of 699. Products and advisory services headcount increased by 24% year-over-year, with 18% due to SiriusDecisions. Total salesforce increased by 34% year-over-year with 32% due to SiriusDecisions. Operating income was $11.1 million or 10.1% of revenue compared to operating income of $8.4 million or 9.9% of revenue in the third quarter of 2018. Interest expense for the quarter was $1.9 million as compared to no interest expense in the third quarter of 2018. Net income for the quarter was $6.5 million and earnings per share was $0.34 on diluted weighted average shares outstanding of 18.7 million, compared with net income of $6 million, and earnings per share of $0.33 on 18.4 million diluted weighted average shares outstanding in the third quarter of 2018. Now I'll review Forrester's third quarter metrics to provide more perspective on the operating results for the quarter. These metrics are inclusive of acquisitions when appropriate. 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, 2019, agreement value was $355.2 million, up 38% from the third quarter of 2018. SiriusDecisions impacted third quarter agreement value growth by 26%. As of September 30, 2019, our total for client companies was 2,867, up 22% compared to last year and essentially flat compared to the second quarter. SiriusDecisions impacted Q3 client count growth by approximately 17%. Client count, unlike our retention and enrichment metrics is a point-in-time metric at the end of each quarter. As we mentioned last quarter, we have updated the methodology we used to calculate client retention, dollar retention and enrichment to focus on account level activity as opposed to contract level activity. Additionally, we have broadened the products and services included in the calculation, which better reflects our solutions-oriented approach to serving our clients. Historical values have been restated to allow for the appropriate comparisons. The retention and enrichment metrics reflect legacy Forrester performance and exclude the impact of our recent acquisitions. Forrester's client retention rate was 73% for the second quarter, unchanged compared to last quarter and up two points compared to last year. Our dollar retention was 90%, unchanged compared to last quarter and prior year. Forrester's enrichment rate was 111% for the third quarter, up three points compared to last quarter, and up two points compared to last year. We continue to calculate client and dollar retention rates and enrichments 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 proper trend information. Now I'd like to review the balance sheet. Our cash at September 30, 2019 was $67.6 million, which is a decrease of $72.7 million from $140.3 million at year-end. The decrease in cash was due to the funding of SiriusDecisions acquisition, which I will explain in more detail. Cash paid for Sirius net of cash acquired was $237.7 million, of which $175 million was funded with debt, and $62.7 million was funded with cash on hand. We also paid $4.6 million of debt issuance costs as a part of the transaction. Cash from operations was $12.3 million for the quarter, as compared to $9 million in the third quarter of last year. For the first nine months of 2019, cash from operations was $45.9 million, which is an increase of 23% from the 2018 period. Debt payments were $7.6 million during the quarter, including $6 million of discretionary payments on our revolver. For the first nine months of 2019, debt payments were $40.7 million, including $36 million of discretionary payments. Debt outstanding at September 30, 2019 was $134.3 million. We received $1.3 million in cash from options exercised and our ESPP program for the quarter as compared to $7.5 million in the third quarter of last year. Accounts receivable at September 30, 2019 was $54.6 million compared to $38.6 million as of September 30, 2018. Our days sales outstanding at September 30, 2019 was 47 days compared to 42 days as of September 30, 2018. And accounts receivable over 90 days was 6% at September 30, 2019 compared to 5% as of September 30, 2018. Deferred revenue at September 30, 2019 was $168 million, an increase of 31% compared to September 30, 2018. In closing, we had a very good quarter. Pro forma revenue performed at the upper end of expectations. EPS exceeded guidance and cash flow was up 23% on a year-to-date basis, which allowed us to continue to paydown our debt. To date, we have paydown $40.7 million, bringing our debt outstanding to $134.3 million, leaving the balance sheet in good shape. Our current full-year pro forma guidance has revenue growth in the range of 31% to 33% and EPS growth in the range of 12% to 16%. In addition, as we finish out 2019 and enter 2020, we have worked through most of the SD attrition issues and the legacy salesforce attrition is below historical averages. This fully integrated salesforce will enter 2020 selling all Forrester products and services, which allows us to realize the revenue synergy of the combined companies. Despite this, our shares are currently trading at a historically low PE range based on the recent share price movement. We’ve not given guidance for 2020 you should expect healthy topline growth and accelerating earnings per share growth. We expect cash flow to continue to improve, which will allow us to paydown debt and utilize our cash in other ways to enhance shareholder value. Now let me take you through the specifics of our guidance for the fourth quarter and full-year 2019. Our guidance excludes the following: the fair value adjustment to the acquired deferred revenue from the Sirius acquisition of approximately $0.8 million for the fourth quarter and $11.3 million for the full-year 2019; amortization of intangible assets of approximately $5.7 million for the fourth quarter and $22.7 million for the full-year of 2019; stock-based compensation expense of $3.2 million for the fourth quarter and $11.6 million to $11.8 million for the full-year 2019; acquisition and integration costs of $1.2 million to $1.5 million for the fourth quarter, and $9 million to $9.3 million for the full-year 2019; and any investment gains and losses. Forrester's providing fourth quarter 2019 financial guidance as follows. Pro forma revenues of approximately $121 million to $126 million; pro forma operating margins of approximately 11% to 13%; pro forma effective tax rate of 31%; and pro forma earnings per share of $0.45 to $0.50. Our full-year 2019 guidance is as follows. Pro forma revenues of approximately $469 million to $474 million; pro forma operating margin of approximately 10.5% to 11.5%; pro forma effective tax rate of 31%; and pro forma diluted earnings per share of approximately $1.53 to $1.58. We have provided guidance on a GAAP basis for the fourth quarter and full-year 2019 in our press release and 8-K filed today. Thanks very much and I am now going to turn the call back over to the operator for the Q&A portion of our call.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Andrew Nicholas. Your line is now open.

Hi. This is actually Trevor Romeo in for Andrew. Thank you for taking the call here. First question would just be, does it look like the pro forma revenue and EPS guidance were both lowered slightly at the midpoint for the full-year, despite you coming in at the high end or above the guidance this quarter? So is there a change in the outlook for the fourth quarter compared to what would have been implied previously? And if so, what would be driving that?

Trevor, the answer is – this is Mike Doyle. The answer is, no. We typically tightened up our guidance in the fourth quarter. The fourth quarter includes both consulting and advisory, which it's easy to shift and bleed into one quarter or the other. So we tend to be a little conservative as we put out our numbers. So it doesn't reflect a fundamental change in our view on the business. I think if we look at our full-year numbers and look at how they stack up relative to what we gave last time and earlier in the year, there's not all that much different. So now there's no fundamental change. I think it's just a tightening up of things and probably a little bit of conservatism that we try and put into our guidance.

Okay, fair enough. That is helpful. And then I think at the end there, you mentioned Mike, looking forward initially the 2020, we could expect a healthy topline and accelerating EPS growth. So I know there's a lot of, I guess noise in the cost structure right now due to the integration. But where – I guess where do you think margins can go over time?

Our expectation is that we're going to expand margins. What we've said is that it's going to be somewhere between a 100 basis points to 200 basis points. So we haven't given specific guidance. We have talked about that, both when we first brought on SiriusDecisions and talked about what we thought it would mean to us and our view hasn't changed on that front. I think our expectation is that, we've got some cost synergies, but the bigger opportunity here is the revenue synergy. And with Kelley combining the sales teams that we now have a fully integrated Forrester salesforce going into 2020, we think that's where there's going to be some big opportunities. So that's what we're building towards, we look for margins to expand at a 100 basis points to 200 basis points as we roll into 2020.

Okay, great. And if I could sneak in one more. So I know you mentioned that the salesforce attrition for Sirius would kind of be – that the bulk of the challenges would be behind you going into 2020. So along with that, did you see improvement there relative to last quarter? I think you'd said it was something like 27% last quarter?

Actually, I'm going to let Kelley answer. I think last quarter, I think we’re running at 37%. So I think both.

Okay.

[Indiscernible] having them.

Sure. So thanks for the question. In terms of attrition overall as a company, we are in line with the year-ago numbers. We have seen some more attrition in pockets in the SiriusDecisions sales side, which was disappointing, is definitely part of any integration. I think we've sort of seen it come and go in a couple of different ways. You have sort of those folks who left immediately because they're easy prey for recruiters, whenever an acquisition gets announced then I think we saw a little bit of a second wave from those who sort of have question whether or not they can be successful in the new company. But what I will say for those that are here and engaged, we've seen some great performances, and we have a number of really talented reps and managers who we do expect to play an increasingly larger role for us, as we continue to grow in scale. So we've had a couple of waves of it, but we do see it starting to taper back down.

And I think about it financially from our perspective, Trevor look I think the notion and it's appropriate to look at attrition because it is always important in this business because as you replace headcount, which we're doing and we’ll continue to do. Those are ramp time. What excites me, I think as we get into 2020 is that we've got to Kelley's point; a core group of SD reps who are performing well that I think are excited to be a part of something much larger. And the legacy Forrester reps where we've had lower than normal attrition this year who were very excited about selling a fully integrated product. So we go into the year with a good sized sales team is now selling everything and that was not the case during the course of this year. So I get excited about that. And yes to Kelley's point, we always going to have a normal level of attrition and that does create a little bumpiness, and then I think that's a normal course and we're working our way through that. But I'm really excited about the combined salesforce. So I think that's what gives us a lot of confidence as we think about 2020. And we still love this product. It is a great product. To George's point, the clients love it. So we're going into 2020 feeling really good about what's happening.

Okay, great. Thank you very much. That color was all very helpful. Thanks.

Our next question comes from Vincent Colicchio. Your line is now open.

Yes. George, a macro question for you. Are you seeing anything change in terms of a customer sentiment on the economic side in the U.S. and internationally and also in terms of tech spend sentiment?

No, but we did put out – one of our economist put out a report saying the tech spending in Europe would be fairly challenged next year. But in Asia and the U.S., the numbers actually look quite good. The Board of clients is here a couple of weeks ago, Vincent and we talked a lot about this and they didn't look at these guys as well. They did not broach the top of topic and we did not see anything from them. I'm actually headed to Asia tomorrow. I'll be there next week. So it'll be interesting to see what I see out there. But generally, there's a lot of political terminal obviously and Europe continues to be a bit of a basket case, but generally, no flashing lights at this point.

One comment I would add too. We've been at a couple conferences and had been on the road so I talked to a lot of folks and you're not seeing it. I think there are some aspects of manufacturing, particularly as a result of some of the China activity that are impacted, that's not a vertical that we target. So I think we don't necessarily get impacted by that. So that's helped us somewhat. And again, to George's point, not to say something won't happen, but everything we're seeing right now is still reasonably positive.

And our Asia business did quite well in Q3.

Yes.

And on the SD side in terms of – this is for Kelley, I think. So Kelley has there been any change in the seniority of the people leaving on the salesforce side?

Thanks Vince for the question. I would say we've not seen any shift in terms of the seniority of the folks that are leaving. It's been pretty much distributed across the population. What I will say is that people that we are recruiting and bringing onboard to backfill, we are hiring with the success profiles that we've used historically here at Forrester to put into the customer engagement model. So the folks are backfilling with on average, are bringing in a little bit more experienced than potentially those that left. But I would say as we look across those departures, it's pretty evenly distributed across our different teams and experience levels.

And George, I've been seeing a lot of feedback now type of things in airports. So I don't know if that's you guys or not. Is there more competition or is there just what would you say about how that market is evolving?

You can figure out if it's us, if you look closely…

I didn't look closely enough, obviously, sorry.

Also were three buttons are green, yellow, red. The businesses you have – you’re happy or not number one and we are very, very close number two, and then you have a lot of little tiny guys out there. I actually like this because it's a very – it's an immature early market and we liked that because it means that we can land and expand here and we're doing that. I going to tell you in that business, now I'm just talking with the physical side of the cloud. Having the Forrester backing has really, really accelerated that business. We're getting – we have a lot of big elephants out there right now, which is terrific. So again, you're going to see a lot of little guys out there, but it's really a two horse race at this point.

Thanks guys. Nice quarter.

Thanks Vince.

Thanks Vince.

And our final question comes from Allen Klee. Your line is now open.

Hello. Sorry about that. So in terms of the overall salesforce, do you have a sense of where you want that to be kind of percentage wise by the end of the year and kind of how you think about the timing of the productivity?

So we're in the early stages of planning, Allen. What I will say is our top priority, right now is back filling the headcounts that has departed. But based on early stage planning, we're probably looking at high single-digit growth for quota carriers for next year, but we'll hone in on that as we get further into Q4. So we will be expanding quota carriers, most likely high-single digits because we also don't want to move away from the focus and traction that we're getting around driving productivity and want to make sure that we're balancing those two things as we move forward because that will also help us with improving margin as we go forward to not just go out and hire a bunch of heads, but also continue to drive the productivity of those that we have here with us.

Okay. And I'm not sure if I missed this. Did you provide like what the organic growth rate of the legacy business was and if we could think about what Sirius was, if it was on last year for both of them?

I mean we had – we did talk about it. We talked about organic revenue growth rate of 8%, which is if you look on a constant currency, Allen, it was around 9%. I think for similar, I think the, what you have for SiriusDecisions is a low single-digit quarter from a revenue perspective. And I think that's a function to some of the attrition that we had earlier in the year. And we're just feeling the effects of that. And again, I think that's the – it's a temporal effect that will work through and then that will – next year the numbers will be dramatically different. So overall though, I think good organic quarter, and we're seeing – again with the settles in, we're going to see a lot of goodness. Sirius is the big growth story for us next year. So we're pretty excited about that.

Okay. And then last thing, you said that for next year, you're not giving guidance, but you said healthy topline and accelerating bottom line. Just what does accelerating bottom line mean? Does that just mean that it'll be growing or growing relative to something?

Yes. What it means is that right now we're expecting this year with guidance that we're growing at a 12% to 16% rate over a year ago. I'm saying it'll be a faster rate, so it's not going to be 12% to 16% next year. It'll be something larger than that in terms of EPS growth. And again, it's driven in part by – it's primarily driven by the full integration of SiriusDecisions. So you're adding revenue synergies, you're adding some cost synergies and that should drive very healthy earnings per share growth year-over-year. So it's going to be better than the growth we're experiencing this year. So that's what I was trying to get at. We're going to have obviously fully refined guidance in the February call, but I wanted to at least give a perspective on how we're seeing it right now. We're still in the midst of our budgeting process. So we will fine tune that in the coming February. Early February, we'll have the final numbers out for folks.

Okay. Maybe one last question. I know you took on debt related to the SiriusDecisions acquisition you had been paying it down. When do you think that you might feel comfortable with using some free cash flow to buyback stock? I know that's a hard question to answer, but if you had any thoughts on that?

I think it happens every quarter. I mean we sit down with the Board and the discussion really centers around, what's the best use of cash to drive shareholder value? Is that paying down debt? Is that buying down – is it buying back stock? Is it looking at internal investment or the potential acquisitions that are tucking out there? And it's an exercise we go through quarterly with the Board. Obviously, I think we have a – in February, there is a larger meeting and we'll probably talk a lot about it there, but it is something that George and the Board discussed literally every quarter.

Okay. Thank you so much.

You bet.

Thanks, Allen.

Thank you.

I will now turn the call over to Mike Doyle, Forrester's Chief Financial Officer for closing comments.

Yes. Thanks very much everyone for joining the call. We are planning to be out and speaking with a lot of folks during the course of the quarter, so we do appreciate all your interest in Forrester. Thank you.

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