Forrester (FORR) Q4 2025: AI Access Bookings Top $5M, Driving Client Count Turnaround
Forrester’s AI Access product catalyzed its first quarterly client count increase since 2021, signaling early traction for its AI-centric pivot. While core research and consulting revenues declined, management is doubling down on AI investment and restructuring underperforming segments, with 2026 set as a reset year focused on research contract value growth. Investors should watch how the sharper AI product portfolio and sales execution translate into sustained client wins and margin stability amid continued macro and segment headwinds.
Summary
- AI Product Adoption Accelerates: AI Access exceeded expectations, fueling new client growth and win-backs.
- Restructuring Tightens Focus: Consulting and events are being streamlined to prioritize high-margin research contracts.
- 2026 as Inflection Year: Execution on retention and AI initiatives will determine Forrester’s return to growth.
Business Overview
Forrester Research provides research, advisory, and event services to enterprises, helping clients make technology and business decisions. The company’s revenue is generated primarily from subscription-based research contracts (“contract value,” or CV), with additional contributions from consulting (advisory, content marketing, and, until now, strategy consulting) and events. The research segment is the largest, now approaching 80% of total revenue as Forrester exits lower-margin and volatile activities.
Performance Analysis
Forrester’s Q4 2025 results reflected continued top-line contraction, with revenue down year-over-year across all segments. The research business, which now comprises the majority of revenue, posted a mid-single-digit decline, while consulting and events segments saw sharper drops, particularly as strategy consulting bookings fell more than 50% and events revenue slid on lower sponsorship and attendance.
Despite these declines, several operational metrics turned positive: client count increased sequentially for the first time in over three years, client retention improved by four points year-over-year, and the share of multi-year research contracts rose to 72%. Notably, the new AI Access product delivered over $5 million in bookings since its September launch, serving as the primary driver of new logos and win-backs. Free cash flow remained positive at $18 million, aided by disciplined cost management and an 8% reduction in workforce as part of a broader restructuring.
- AI Access Outpaces Expectations: The product’s adoption contributed to faster deal cycles and a meaningful uptick in new client acquisitions.
- Structural Shift to Recurring Revenue: Research now nears 80% of total revenue, as consulting and events are repositioned or downsized.
- Retention Lifecycle Gains Traction: Execution of a standardized retention process and new customer success leadership drove improved retention and reduced churn.
While operating income and margins compressed, management’s actions to sunset unprofitable strategy consulting and overhaul events are designed to stabilize the business and fund AI investment, setting the stage for a potential return to growth in research contract value in 2026.
Executive Commentary
"In 2025, we launched a product based on AI, AI Access. In Q4, unique users of Forrester AI was up 55% year over year. The number of prompts was up 65% year over year. AI increases the value of our research, making it more accessible to clients and enabling them to create new and original content, like a board of directors deck, from Forrester's data and models."
George Colony, Chief Executive Officer and Chairman
"We are starting to see some meaningful areas of improvement in the business. This includes early success with our new AI access product, which had over $5 million of bookings since its launch in September, along with an increase in the portion of CV on multi-year contracts in the prior year. We also saw client retention improve throughout the year, and client count increased sequentially in the fourth quarter for the first time since late 2021."
Chris Finn, Chief Financial Officer
Strategic Positioning
1. AI-Centric Product Portfolio
Forrester has made AI the centerpiece of its product strategy, with AI Access and Forrester AI (formerly Izola) positioned as differentiators against generic large language models. Management emphasizes proprietary data, original analysis, and human expertise as unique value drivers, with AI now embedded in both client-facing and research creation workflows.
2. Subscription Research as Core Focus
The company is shifting its revenue mix decisively toward high-margin, recurring research contracts by sunsetting volatile strategy consulting and retooling events. This strategic narrowing aims to improve margin reliability and reduce exposure to cyclical or government-driven revenue swings.
3. Retention and Sales Execution Overhaul
A standardized retention lifecycle, new customer success leadership, and a revamped sales approach—especially in North America—are central to Forrester’s 2026 plan. The goal is to drive up wallet retention, reduce churn, and increase multi-year contract penetration, leveraging AI Access as a wedge for both new and returning clients.
4. Data and Actionable Research Expansion
Forrester is investing in more actionable, “all-seasons” research and proprietary data sets. Initiatives like Blueprints, which provide step-by-step execution guidance, and expanded B2B buyer insights are designed to increase client engagement beyond major transformation cycles and drive deeper integration with client workflows.
5. Events and Consulting Realignment
Events are being reimagined as smaller, regional, peer-focused forums to address travel budget constraints and maximize sponsor and attendee value. Consulting will focus on advisory and content marketing, with strategy consulting exited entirely due to persistent government contract instability and margin pressure.
Key Considerations
Forrester’s 2025 results mark a transitional phase, with the company betting on AI-driven differentiation and a leaner operating model to restore growth and margin stability.
Key Considerations:
- AI as Growth Engine: AI Access’s initial traction validates the pivot, but sustained adoption and competitive insulation from generic AI remain critical.
- Cost Structure Reset: The 8% headcount reduction and exit from strategy consulting are necessary, but may weigh on short-term revenue and require careful execution to avoid client disruption.
- Retention Lifecycle Execution: Early signs are positive, yet broad-based improvement in wallet retention is needed, especially in North America and government-exposed segments.
- Product Portfolio Breadth: Expansion of embedded and team-oriented AI offerings will test Forrester’s ability to cross-sell and deepen client relationships.
- Event Model Shift: Smaller, localized events must deliver meaningful sponsor ROI and client engagement to offset lost scale from legacy formats.
Risks
Forrester faces ongoing macroeconomic uncertainty, particularly in government and U.S. corporate segments, which continues to impact consulting and research renewal rates. The shift away from strategy consulting and large-scale events could compress near-term revenue, while the success of AI Access and new research offerings is not yet proven at scale. Competitive pressure from public and private AI models, as well as the risk of execution missteps in retention and sales transformation, remain key watchpoints for investors.
Forward Outlook
For Q1 and full-year 2026, Forrester guided to:
- Revenue of $345 to $360 million, a 9% to 13% YoY decline, reflecting the exit from strategy consulting and events overhaul.
- Operating margins of 6% to 6.5%, with research approaching 80% of revenue mix.
- Earnings per share of $0.72 to $0.82 for the year.
Management highlighted:
- Second-half weighted improvement as new product launches and retention gains accrue.
- Continued investment in AI as a strategic differentiator, funded by cost savings from restructuring.
Takeaways
Forrester’s 2026 trajectory hinges on the scalability of its AI-driven product strategy and the ability to translate operational improvements into sustained contract value growth.
- AI Access Momentum: Early bookings and new client wins underscore the potential for AI-led differentiation, but broader adoption and margin impact remain to be seen.
- Restructuring Risks and Rewards: The exit from strategy consulting and event format overhaul are bold moves to stabilize the business, but introduce revenue headwinds and execution complexity.
- Retention Lifecycle as Key Lever: Consistent execution on retention and cross-sell will be essential to offset macro softness and drive a return to growth in 2026 and beyond.
Conclusion
Forrester’s Q4 and full-year 2025 results mark a decisive pivot toward an AI-first, research-centric business model. While near-term revenue and margin headwinds persist, early AI Access momentum and operational restructuring position the company for a potential inflection in contract value growth. Execution on retention, sales, and product innovation will determine whether Forrester can capitalize on its AI investments and restore durable client and shareholder value.
Industry Read-Through
Forrester’s results reinforce the urgency for professional services and research firms to embed AI as both a product differentiator and operational enabler. The company’s move to exit volatile consulting and reimagine events mirrors broader industry trends toward recurring revenue and margin resilience. Early client mistrust of public AI models, as cited on the call, suggests an opening for proprietary, expert-driven AI solutions—yet also signals heightened competition as private AI becomes table stakes. For firms reliant on government or cyclical enterprise spending, Forrester’s restructuring highlights the need to diversify revenue streams and double down on client retention and embedded value. The industry should watch closely how AI products impact client acquisition, retention, and pricing power as the research and advisory landscape rapidly evolves.