Forrester Research, Inc.

George Colony - CEO Mike Morhardt - CSO Mike Doyle - CFO

Timothy McHugh - William Blair & Company LLC Bill Sutherland - Emerging Growth Equity Vincent Colicchio - Noble Financial

Good afternoon and thanks for joining Forrester's Q4 and full year 2014 conference call. In my segment of the call I will give you state of the year summary outlining the company’s 2014 performance and looking ahead to plans for 2015.

Following my remarks Mike Morhardt, Forrester’s CSO will summarize our progress in building a larger and more productive sales organization and Mike Doyle Forrester’s CFO will then give a financial review of the fourth quarter and full year for 2014 Mike, Mike and I will then questions. I am pleased to report that Forrester changes earnings in revenue guidance for 2014.

Our sales team made plan for the year and we are looking forward to continued improvements in our performance for 2015 building on our momentum. Since the beginning of 2013 we have been transforming Forrester both strategically and operationally.

We have invested in people technology and new products and I would like to use this time to summarize where we stand in each of our initiatives. I have talked extensively in past calls about Forrester’s strategic shift around the age of the customer.

To summarize in the summer of 2013 the executive and the Forrester Board made the decision to focus the company’s products on helping client succeed in the emerging era of empowered customers. This change is highly challenging for our clients and Forrester helps on three levels.

One, Forrester’s data enables clients to better understand their customers. Two, we guide marketing and strategy executives on how to win and retain those customers.

And three, we lead technology management clients to create the system to serve those customers. Most importantly we do one, two and three in concert for clients and this is when we have the greatest impact on their businesses.

How is the strategy being received? In 2013 we calculated that approximately $8.5 billion of 2014 renewals were at risk, primarily in the technology management space.

I am happy to report that our retention rate in fact improved two points on a dollar basis year-over-year. Well our transition is not fully completed our focus on helping clients with the emerging challenge of the BT are highly relevant.

At the Wall Street Journal CIO conference which I spoke at in San Diego last week, I had coffee with the CIO who used Forrester years ago but is not currently a client. And he asked me what you guys doing now?

When I described our strategy he had a quick reaction, wow! What you are doing is very different from the other companies I get advice from.

Your research would be a very big help to me and to the marketing executives of my company as we strive to win and retain customers. Now admittedly the business technology market is smaller than the IT business.

We estimate that total technology management expenditures in the U.S. in 2015 will be $1.1 trillion, with 75% going to IT and 25% to BT.

But the BT business segment is growing at twice the rate of IT and it is underserved as research relative to the IT market. We estimate that only 10% of CIOs have built mature BT agendas and that represents the large and growing market space that Forrester uniquely serves.

Uncertainty in BT eclipses that of IT creating more demand for research and guidance. I want to say few words about consulting.

As you know we have been on a two year journey to move project consulting out of the hands of analysts and into a specialized project consulting team. This group is now growing to 134 people.

We have encountered two challenges on this voyage; firstly we have had to prove to our clients that dedicated consultant can give high quality work compared with what was provided by analyst. In the transition we have moderated this dynamic by keeping analysts involved in some large projects as subject matter experts.

In addition we have slowed down the transition of work from analyst to consultant in response to the market. We had expected to be in the 50-50 equilibrium by early 2015 we now expect to achieve this goal by the end of the year.

The second challenge was maintaining high utilization of consultant. We had originally organized consultants by the role they served but this resulted in uneven utilization.

As we move into 2015 Victoria Bough, the Head of Consulting has organized teams by three solution, customer experience, business technology and digital business. These spaces represent pressing challenges for our clients and we expect this change to improve utilization and consulting deal flow.

We launched the dedicated project consulting group to achieve two goals; one, better research and two, better consulting. By focusing analyst back on research production, we believe that research output would increase and research quality would improve.

That happen in 2014, with a number of reports create by research increasing 48% and the number of Forrester Waves increasing 13%. Leadership of research and customer satisfaction of research and consulting increased in 2014.

Mike Morhardt will give us update on sales shortly, but I wanted to say a few words about this part of our business. Mike has now completed his second year as Head of Sales of the company.

He has made many positive changes to the way that Forrester sells, from a high level his impact has been most acutely felt in three areas, leadership, methodology and strategy. Mike has been able to attract and retain strong leaders to run large segments of the sales force, John Besemeres runs Forrester west and John McNerney who has taken the helm in Europe are examples of the quality of leaders that Mike has been able to bring into the business.

In the largest segments of the sales force America East, America West and premiere accounts Mike’s designated leaders beat their plans in 2014 and have demonstrated the ability to shift into higher growth. Secondly, Mike had built a strong methodology in sales running the play as Mike is fond of saying.

This method is trained perfected and driven by a strong sales operations group which Mike had built over the last two years. Finally, Mike had expertly navigated the change in Forrester go-to-market strategy, leading his sales teams to embrace the Age of the Customer and to revel in our difference in the marketplace.

Mike certifies entire sales force on the Age of the Customer, a major reason why the sales team achieved plan in 2014. We still have work to do in sales primarily around improving cross sell, decreasing the cost of sales and improving the productivity of sales which in 2014 still lags historical productivity levels for the company.

For the ground work that he laid in 2013 and 2014, position sales could take on these challenges in 2015 and beyond. Want to spend a few moments discussing products, Mike Doyle will give numbers on the performance of individual products, I am not going to go into detail here, but I do have two overall observations.

Firstly, the move to dedicated product management has vastly improved our line of site, clearly designating responsibility for specific products. Now this may sound obvious but remember the prior to 2014 there was no product organization at the company, responsibility from improving management products was clear at best and opaque at worse.

So this has been a major operational improvement over the last 15 months. Secondly, the product organization is clearly chartered with launching at least one new syndicated product per year.

In 2014, this product was the Forrester customer experience index, a metric which measures the value, ease, enjoyability and loyalty of 920 brand experiences worldwide. Unlike other metrics such as net promoter, CX Index yield direct actionable advice on how companies can improve their customer experience relative to competitors, into wider marketplace.

If you consider Forrester’s charter of helping client be customer obsess, the CX Index moves us from theory to real continually updated facts about how companies are actually performing. We expect the CX Index to be incorporated into how our clients operate and early example is the large European insurance company that is considering using the CX Index as a compensation metric for executives.

The Forrester CX Index got off to a fast start in the fourth quarter of 2014 and we expect quick expansion of the product next year -- this year. Turning now to 2015, as reported in today’s press release, the company has reduced its headcount by 50 people, approximately 4% of our worldwide headcount.

We took this action for two reasons; number one, to align resources to our new strategy and two to increase company efficiency. As I have explained you earlier, we continue to perfect our organization, engagement model and product model to most effectively drive our strategy and having clients win, serve and retain customers.

We want to ensure that we have the right workforce to accomplish those goals. Additionally, we have planning to grow our operating margin in 2015 and this means that we must be as efficient and streamlined as possible.

In 2015, we will grow bookings, revenue, operating margin and earnings per share, we will also grow headcount, and we are planning to end 2015 with headcount up 7% worldwide. Turning now to capital structure.

In 2014 Forrester bought back approximately 2 million shares at a cost of 73.2 million. Our weighted shares outstanding is now 18.2 million shares.

Our cash balance now stands at approximately $100 million, the target that we set 18 months ago. Our Board authorized another $25 million for the buyback program and we expect to opportunistically buy our shares during 2015.

So to conclude, the voyage that we began in 2013 is beginning to yield results. We achieved our bookings goal for 2014, our strategy is resonant in the marketplace, research production is up dramatically, consulting quality is improving and our newest products are gaining traction.

We have much more work to do and we will certainly have set back on this voyage, but we're headed in the right direction, we have momentum. Thank you for listening to my remarks and I am now going to turn the call over to Mike Morhardt, Forrester's Head of Sales.

Mike?

Thanks, George. In Q4 and throughout 2014 the sales organization continued to demonstrate strong progress to our goal of consistent double-digit bookings growth.

The Age of the Customer as a go to market strategy is resonating with our clients and prospects which gives us great confidence in the size of our market opportunity. We saw good signs across many of the sales teams and the metrics we track.

From a sales perspective as George mentioned the global sales organization achieved their plan 2014. Our three largest groups North America East, North America West and the Premier Accounts Group our global account organization all hit plan and grew for the year.

They represent roughly 70% of our plan and showed strong performance throughout 2014. Our international business development team made up of our partners also hit plan and showed strong year-over-year performance.

Our new business team after a slow start to the year grew by -- grew year-over-year after a strong Q4 and they are fully staffed going into 2015. As I mentioned in our last call we hired a new sales leader as George mentioned in Europe John McNerney.

He hit the ground running and while Europe did not hit plan they did grow year-over-year by mid-single digit. John has quickly made changes to the leadership team in Europe and I am confident they will be back on track in 2015.

In Asia-Pac we saw slowdown in growth in several of the key markets that we serve. The issues were isolated to a couple of key geographies like China.

We also saw some process issues with our consulting business. The pipelines have improved in China and we have changed several of the processes that were slowing us down in the consulting business.

From a metric perspective we also saw continued improvement. As George mentioned client retention was up 2% from 84% to 86%.

Discounting was down for the eighth straight quarter. Sales attrition was down significantly in Q4, but flat for the year.

The percentage of reps hitting plan came in 11 points higher than 2013. And sales productivity improved slightly.

And as George mentioned we're laser focused on specific productivity drivers to accelerate our gains. In order to capitalize on demand for our products and services we're continuing our sales expansion efforts.

We ended 2014 up 9% in quarter bearing headcount. Our goal is to grow by 10% in 2015 and potentially accelerate that expansion as the opportunity presents itself.

We're continuing to expand the sales organization geographically which supports our goal of getting our reps closer to their clients and their prospects. We also believe that we're under penetrated in most of our accounts and by adding new sales people we were able to drop the average number of accounts per rep which leads to better client retention, better cross sell and a stronger overall account growth.

We will also be building on an inside sales organization to focus on our smaller accounts. This lower cost channel will serve our smaller clients with less potential.

This will free up our field base teams to focus on better penetrating through cross sell within our larger client organizations. Q4 represented continued progress and momentum for the sale organization.

In 2015 our sales strategy is now changing. We will continue to drive for improved productivity focused on improving client retention rates and expand our sales organization to our localization strategy as well as an inside sales model.

With that I will turn it over to Mike Doyle for the financial update.

Great, thanks very much, Mike. I'll now begin my review of Forrester’s financial performance for the fourth quarter of 2014, 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 2015.

Please note that the income statement numbers I am reporting are pro forma and they exclude the following items: the amortization of intangibles, stock-based compensation expense, reorganization costs and net losses from investments. Also for 2014, we are utilizing an effective tax rate of 38% for pro forma purposes.

The actual effective of tax rate for the full year was approximately 41%. For the fourth quarter and full year Forrester met revenue and pro forma op margin and achieved the top end of EPS guidance.

The fourth quarter culminates the year of significant progress for Forrester in a number of key areas. In February last year we laid out an ambitious agenda both strategically and operationally.

George and Mike shared with you the significant progresses made with the Age of the Customer strategy and the improvements in our research, product, consulting and sales organization. This progress had a direct and positive impact on our financial result for 2014.

All of the financial targets we set back in February of 2014 for revenue, operating margins, EPS and returning value to shareholders were achieved. Now let me turn to more detailed review of our fourth quarter and full year results.

Forrester’s fourth quarter revenue increased by 4% to 80.7 million from 77.5 million in the fourth quarter of 2013. The volatility in global currencies in the later part of 2014 resulted in a 2 points of negative impact to overall revenue growth for the quarter.

Fourth quarter research and services revenue increased 5% to 53.8 million from 51.4 million last year and represented 67% total revenue for the quarter. Fueled by our research and data offerings we continue to see acceleration of revenue growth in our syndicated business but it’s tempered somewhat by poor performance in some more matured leadership board counsel.

Fourth quarter advisory services and event revenue increased 3% to 26.9 million from 26.1 million in the fourth quarter of 2013 and represented 33% of total revenue for the quarter. Growth in consulting and advisory revenue was delivered by our research analysts and consultants, was partially offset by decline in our events business.

As noted during our third quarter call the build-out of consulting organization is complete and overall headcount revenue growth has begun to moderate in this segment of our business. The international revenue mix was 25% in the period ending December 31, 2014 compared to 27% in the same quarter of last year.

The majority of this decline is attributable to the strengthening U.S. dollar although growth in our domestic revenue continues to outpace our international revenue growth on an FX neutral basis.

I would now like to take you through our activity behind our revenue starting with research. Forrester had 67 live playbooks at the end of the fourth quarter, additionally 555 new research documents were added to role view and we hosted 31 webinars to the total live attendance of 873 in the fourth quarter not including the increasing proportion of clients that now download a recording of the webinars for future playback.

As of December 31, 2014 the top three research roles for the CIO was 8313 members applications development and delivery 6236 members, enterprise architecture with 4589 members. The Forrester Leadership Boards are pure offering for senior executives experienced a slight revenue decline on a year-over-year basis in the fourth quarter.

We did however see double-digit membership growth in seven of our 15 counsels, with today’s reorganization announcement we are streamlining counsel to better match demand and allow investment in those counsels with higher growth potential. As of December 31, 2014 Forrester Leadership Board had a total of 1636 members down 7% compared to the same time last year with declines in both business technology and marketing and strategy.

Our data business continues to be a critical part of our value proposition. We survey over 400,000 consumers in 21 countries representing 80% of global GDP and over 60,000 businesses in 10 countries represented 66% of global IT spending.

This data provides our B2C and B2B clients with actionable insights and issues ranging from enhancing social media strategy to developing and deepening brand equity, to aligning sales and marketing with customer demand. And also give their analysts the most accurate and timely facts they need to drive their research forward.

On a year-over-year revenue increased by 18% for the fourth quarter driven by custom data cuts and non-syndicated fulfillment of consumer techno graphics. In our advisory and consulting business total revenue for the fourth quarter increased 4% compared to the prior year.

I mentioned to you that during our third quarter call that results within our consulting practices were mix and this is extended into the fourth quarter. We are busy applying the license learned including shifting resources to where we see the most need, streamlining our leadership and updating our business model to ensure we are taking full advantage of opportunities that exist in the marketplace.

It should be noted that for the fourth consecutive quarter our consulting organization roughly doubled its output compared to the same period last year. This result continues to align with and support our strategy free up more of our analyst time to create and deliver even more world class research content and client support.

In our events business we hosted five forms in the fourth quarter of 2014. In Chicago the form for application and development professional as well as the Form for e-business and channel strategy professionals, in California the Form for CMOs and CIOs and the Form for customer experience professionals West and in the UK the Form for customer experience professionals EMEA.

Events revenue declined on a year-over-year basis by 14% in the fourth quarter driven by decline in sponsorship booking. Sales leadership turnover in this segment of our business hampered progress in 2014; we have hired a new leader for that group and our strength in selling organization with a commitment to getting back to growth in 2015.

I will now highlight the expense and income portions of the income statement. Operating expenses for the fourth quarter were 71.6 million, up 1% from 71 million in the prior year.

Cost of services and fulfillment increased by 3% compared to the fourth quarter of 2013, due to the staffing of our consulting and product organizations merit increases and were partially offset by lower headcount in our research group and lower incentive bonuses. Selling and marketing expenses increased by 7% due mainly via the growth of our sales force, higher commissions expense as our reps continue to achieve better results compared to last year and merit increases.

General and administrative costs decreased by 20% due to the reductions in professional services, consulting fees as well as external recruiting fees. Overall headcount increased by 5% as of December 31, 2014 compared to the same period last year.

At the end of the fourth quarter, we had a total staff of 1,351 including a research and consulting staff of 518 and a sales staff of 510. Research and consulting headcount was up 9% versus prior year and up 1% compared to September 30, 2014.

Total sales headcount increased by 5% versus prior year, and up 3% as compared to September 30, 2014. Sales rep headcount increased by 9% compared to the fourth quarter of 2013 while fully ramped sales rep headcount grew by 11% over the same period.

Operating income was $9.1 million or 11.2% of revenue compared with $6.5 million or 8.4% of revenue in the fourth quarter of 2013. Other income for the quarter was 217,000, up from 32,000 in the fourth quarter of 2013.

Net income for the fourth quarter was 5.7 million and earnings per share was $0.31 on diluted weighted average shares outstanding of 18.5 million compared with net income of $4 million and earnings per share of $0.20 on 20.3 million diluted weighted average shares outstanding in the fourth quarter of last year. Now I'm going to 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, 2014 agreement value was 231.7 million, an increase of 7% from the fourth quarter of 2013.

As of December 31, 2014, our total for client companies was 2,431, down 21 from September 30, 2014 and down 40 compared to the fourth quarter of 2013. 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, 2014, unchanged from the prior quarter and up 3 points compared to last year. Our dollar retention rate decline by 1% or 1.88% compared to the prior quarter but improved by 2 points compared to last year.

Our enrichment rate was 97% for the period ending December 31, 2014, unchanged compared to the prior quarter and compared to December 31, 2013. 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. As of December 31, 2014, there were 2.4 roles per client, unchanged compared to the prior quarter and prior year.

Now, I would like to review the balance sheet. Our total cash in marketable securities at December 31 was 104.5 million, down 50.6 million from 155.1 million at year-end 2013, with the reduction due to the success of our share repurchase program which totaled 73.2 million of stock repurchased during 2014.

Cash from operations was 900,000 for the quarter as compared to a negative 1.6 million in the fourth quarter of last year. We received 2.2 million in cash from options exercised for the quarter as compared to 2.9 million in the fourth quarter of last year.

We also paid a dividend in the fourth quarter which amounted to 2.9 million or $0.16 per share. Accounts receivable at December 31, 2014 was 67.4 million compared to 77.5 million as of December 31, 2013.

Our day sales outstanding at December 31, 2014 was 77 days compared to 92 days at December 31, 2013. And accounts receivable over 90 days was 3% at December 31, 2014 compared to 4% at December 31, 2013.

Deferred revenue at December 31, 2014 was 144.6 million, down 5% compared to December 31, 2013. Deferred revenue plus future accounts receivable was down 6% compared to the prior year.

Our future accounts receivable balances are amounts to be invoiced in the future for clients with multi-year deals or scheduled payment terms. The year-over-year decrease in deferred revenue plus future AR was due primarily to two factors.

First, changes in foreign currency rate caused a 2 point reduction and second which is more strategic was a purposeful shift of the renewal of approximately $10 million of contracts from December 2014 into the first quarter of 2015 through the use of 13 month of contracts back in December of 2013. This shift had the effect of reducing the growth rate of deferred revenue and future accounts receivable by approximately 4 points at the end of 2014.

Let me talk about capital structure. Over the last few years we have aggressively looked to return to value to shareholders.

We targeted cash in the balance sheet of approximately a 100 million using our excess cash for share repurchase and dividends. In 2013 and 2014 we have repurchased approximately 5.2 million shares at a cost of $191.4 million.

We began our quarterly dividend in 2011 and have increased our payout $0.04 per year every year. The net result of these actions has been increased share price and reduced cash on our balance sheet to 104.5 million.

So to recap, in closing we’ve had a productive year. Let me highlight just a few of our major accomplishments.

We completed the staffing and restructuring of our product research and consulting organizations. Successfully rolled out our Age of the Customer strategy and embedded it in the fabric of our sales, research, market and product offerings.

Continued our investment in the sales organization, technology that will enhance the customer experience and improve productivity and in new products. We met our financial targets for 2014 and achieved our targeted capital structure objective of returning value to shareholders through share repurchase and dividend.

Established the foundation for Forrester to grow bookings, revenue, margin and earnings per share in 2015 while still investing in our sales organization, technology and data products. Now let me take you through the specifics of our guidance for the first quarter and full year 2015.

Before I get into the details I would like to discuss a couple of things. First let me discuss the impact of foreign exchange on our guidance for 2015.

Clearly the foreign currency markets have entered the period of extreme volatility. Forrester currently has approximately 26% of its business outside the U.S.

this volatility will have an impact on Forrester's revenue and earnings per share performance. Accordingly we have based our outlook with the expectation that the major currencies we are exposed to outside the U.S will decline from 2014 averages by the following.

We expect the Euro to decline between 10% and 15%, the Pound Sterling between 7% and 12%, Canadian Dollar between 7% and 12% and the Australia Dollar between 10% to 15%. The outlook that I will go through reflects the views of these currencies and has as an average impact on revenue and earnings per share guidance for 2015 of approximately $7 million for revenue and approximately $0.08 on earnings per share.

We are not however foreign exchange experts, so we will keep you updated each quarter as to major changes in our outlook for these currencies and we will update our guidance accordingly. The second item is following George's earlier point about building momentum in our business.

We typically don't go two years out on guidance but we did want to give you our preliminary view and thinking about 2016. This is FX neutral and is very preliminary.

We expect that 2016 would have revenues that break double-digit growth in the 10% to 11% range. We would expect to add between 300 basis points and 400 basis points in margin and look for EPS in the range of a $1.45 to $1.60 again this is preliminary but we wanted our investors to understand how we're thinking about 2016.

Now let's get to the specifics on 2015. As a reminder our guidance excludes the following.

Amortization of intangible assets, which we expect to be approximately 300,000 for the first quarter and approximately $1 million for full year 2015; stock-based compensation expense of between 2.1 million to 2.3 million for the first quarter and between 9 million and 9.5 million for the full year 2015; reorganization cost of between [3.7] million for the first quarter and 3.5 million to 4 million for the full year 2015 in any investment gains and losses. Forrester is providing a first quarter 2015 financial guidance as follows: total revenues of approximately 74.5 million to 77.5 million; pro forma operating margins of approximately 5% to 7%; pro forma effective tax rate of 38%; and pro forma diluted earnings per share of approximately $0.13 to $0.17.

Our full year 2015 guidance is as follows: total revenues of approximately 325 million to 333 million; pro forma operating margins of approximately 9.5% to 10.5%; pro forma effective tax rate of 38% and pro forma diluted earnings per share of approximately $1.05 to $1.13. We have provided guidance on a GAAP basis for the first quarter and full year 2015 in our press release and 8-K filed today.

Thanks very much. And now I'm going to turn the call over to the operator for the Q&A portion of the call.

Just want to ask more about the consultant business in comments that you made there. I guess one, how low is utilization and how did that compared to your expectations and secondly, I guess when you talked about having to shift some people around versus how you had them organized prior around role.

How much of the consultant forces being shifted? And lastly I guess how easy is it to shift people around to the extent that you hired them for?

Supposedly, I guess the consult there have some expertise around certain roles?

Tim its Mike Doyle. So I think first of all we went into this year as we were building out the organization, utilization in the traditionally I would say should we expect the consulting force to be utilized approximately 70%, but obviously we were building in, people coming on, people had to ramp up and also we were sort of feeling our way.

We have some consultants frankly who went beyond 70% utilization in the areas frankly that were very, very hot and I think one of the challenges we ran into Tim was that candidly we probably over hired in some areas and fell short in other and so what we saw during the year was having to flex analysts back into project consulting to pick up some of that work and look at the analysts who frankly maybe where we over hired and see if they were in areas that were approximate to other roles that we were seeing at a much hotter, could they migrate over. So I would say that it’s difficult to point to I think some areas we had analysts were probably 20% underutilized and others as I said who were exceeding capacity and working well beyond what we had expected.

So I don’t think -- and I think we will this year, but I don’t think it would be very useful to give you sort of an aggregate utilization for the year because we had so many analysts coming in during the year, ramping and utilizing, so the full year utilization numbers look a little strange. So how we looked at it internally was once we had someone fully ramped are they exceeding the 70% number or about 70% number or they not.

And I would say that as we got into the year we were probably seeing little more than half were hitting that 70% and good chunk that were fallen in the ranging a little to a lot short and we tried to rotate accordingly and fill the voiding demand because it’s clearly demanded there with analyst activity. And today the action reflects basically a look at those folks who we didn’t believe could migrate over to the hot areas, and I think we have now right sized and balanced the organization where we are going to get very healthy utilization.

Our targets are and our utilization targets and how we plan that business are very similar to our peers in this space, I mean they look nearly identical and then we will be adding to that organization as the business grow. So I feel good about where we are.

And I think I am learning to trust them.

This George here Tim. I think it was less of a crisis and more of really a market adjustment and organization adjustment.

And so I think this was -- we saw that coming and we were going to have made in a major adjustments at the end of the second year and we did that.

And I guess is it right size has been for ’15 or when you talk about ’16 profitability go up; is that a big swing factor where you are expecting that to I guess correct in ’16?

I think it’s right science for ’15 and then I think what we are going to see is as we build out our plan for ’16 we are going to be adding heads in consulting as demand continues to grow we will continue to grow that business. And I will say as you get into ’16 you are going to see faster growth in our syndicated business than you do in what I call consulting and advisory businesses.

But we are going to continue to hire consultants just we will continue to hire analysts because demand for our business is going to grow. We don’t think that its [capped] at where it should be right now.

But you won’t see the big spike up for example that we saw this year as we were building out the organization where we had a significant number of heads. I think you are going to see much slower rate of headcount growth in consulting going forward and the same in research.

I think it’s going to grow as we see demand and we’ll add heads accordingly.

And the internal sales team, how much of that is a lower cost to serve existing customers versus really more focused on and I guess maybe serving customers that you didn’t service much in the past?

Little bit of bolt Tim. So we have various sized clients.

These clients were sort of populated across all the various sales teams. We have centralized these organizations that are lowering their average revenue.

We have a specific set of products that we sale them, which are not discounted and we serve that with some of our junior sales teams as they come up through the ranks. So it's a combination of existing clients that we have taken away from some of the field base teams to help their effectiveness and also as we attract new clients and target new markets this inside sales team is a great tool for that, for smaller -- again smaller clients.

And then lastly Mike, I missed a little bit of what you said at the end, but I heard the comment in there somewhere about I guess opportunistically looking for repurchases in 2015 and it seems like you didn’t buy at least a lot of stock in Q4 at least relative to what you are and the page you were on earlier in the year, I guess are we at a point where you're not going to be as aggressive as you were then during the prior, I guess two years?

I think that’s probably a fair statement Tim, we’re going to be opportunistic the past couple of years we’ve been frankly in the market very regularly and we’ll continue to be and to buy shares opportunistically, we gotten our balance sheet to a level that we wanted to achieve, which is we brought our cash balances down dramatically and so that would by default suggest that our activity is going to turn left to repurchase, I think it's going to look more at internal investment and acquisition as we go forward. I think we are, we’re ready for that sort of thing and actually really we were this year, but our cash balances are at a good place, we’ll continue to buy opportunistically our share prices present that opportunity, we certainly don’t want or expect share count to grow, so minimal but we’re looking to keep it, so it's flat could be our target and look more towards acquisition and internal investment as uses for cash and uses for leverage in the business meaning go out and borrow if we have to for the right acquisition.

So Mike Morhardt, I guess I’ll start with you on securities, what do you think when you said you could potentially be growing the account reps faster than 10%, I man that’s your target, what are the gaining factors, I mean what are you looking to see before you step on the accelerator more?

Well, big part of that is how we are doing against our bookings plan. So if things are tracking and we’re seeing, we have confidence about the size of our market and our ability to go after it.

We are building out strong territory, as George mentioned we have now an alpha team that helps build out these territories that we think can be productive pretty quickly and we’re seeing improve productivity in the reps that are one-year to 18 months. So it gives us a lot of confidence that if we get to end of the first quarter, end of the second quarter and all systems are green then I approach towards you Mike and ask to see if we can accelerate this.

As Mike mentioned, our rep headcount got up to 11% this year, I’d like to be in double-digits and definitely for this year and with the potential to accelerate as we get into the second half.

Yes, Bill this is an example, last year we were in the February call, at that point in time we talked about Mike adding 6% net to his quota of carrying reps and we ended at 9%. So, we’re going to be opportunistic as one of the reasons why we wanted to give a little bit of a picture for ’16, I mean we are really and truly about and George is going to pushing it hard internally that getting momentum back in the business, getting us back to healthy double-digit top-line revenue numbers, very healthy margins and I think as we see opportunity and as Mike seems progressing we’re going to continue to add a head pickup in that area.

The ramped rep are at a level now where we can kind of make educated connections between booking growth and the sales force expansion or is it still little bit of a lag that we should take into account?

There is a little bit of lag, but I think as you look at ramps headcount were, there is a couple of different levers here, they are making sure that our attrition stabilizes and drop, they are making sure that we’re ramping these folks effectively and creating the right territories, but yes you can -- there is always going to be a lag if we’re hiring 10%, 12%, we may not pick up all of that in form of just sales expansion that’s why we’re looking to improve productivity as well to price increases and through other productivity driver. So there will be a lag but not a dramatic one.

So Mike Doyle on the deferred revenue in future AR, so it would have been flat adjusted for FX and the renewal shift is that correct?

Yes that’s right Bill, I mean with an interesting quarter and what we’ve said it’s a preferable metric over AV although agreement value was probably a better indicator of how we were doing, and Mike since he’s come on board he’s consciously look to as best he can better level what’s going on with would be within the quarter where deals being book. So, he started this push back in ’13 and also by the way in the fourth quarter of this year moved out another 8.8.

So, we had a similar arrangement that’s going to impact next year’s numbers, but it's so offset because you’re getting a coming back sort of into '15. So this is a conscious decision on Mike's part to try and move AV and it had a very real impact otherwise deferred revenue and future [indiscernible] would have been flat year-over-year.

The question sort of asking as well the lack of growth in that line and what's that about?

I think there is some noise there Bill because as I look at our internal numbers I tend to see AV as a better indicator directionally of where we are headed and what can happen from a bookings standpoint. Normally, I tend to -- AV can be -- can create some of you don't know but in this insistence and in this quarter deferred revenue did.

Okay.

Yes and we can probably have a flip in deferred revenue Q1 of '15 this quarter versus last year that's going to have odd noise going the other way, so we’ll try as best we can to porch that out in each call.

In events was and in the quarter was attendance sounds as well as sponsorship?

Attendance figures were actually good Bill, it's sponsorships that were off. And so I think we had some sales turnover that absolutely impacted sponsorship sales in the back half and I think we have brought a new sales leader she comes from an event background, I think she is going to do a great job.

We're also looking to upgrade the sales talent there and that activity has been going on, so I think that part is good. So I think details were good which means we're going to get sponsors back, I think it's more of sponsorship -- you got to get sponsorship sale and Mike Morhardt comes from better background in this than I am.

It's a different sale and you need some to be a little more senior so I think we're trying to attract that kind of talent. As long as the attendees are there the sponsors will show.

Yes that's what I was thinking. And then and George couple of things you have mentioned -- you have made a comment in the consulting section of your remarks about 50-50 equilibrium as a goal, is that meaning analysts to consultant on a given project is that what you are referring to?

Yeah, there is no answer which I did not get into as you remember Bill we do two types of consulting one we call advisory consulting which is the one or two days or speeches where we can simply sell with volume and then we do project consulting.

All right I see what you are doing. Okay.

Okay. So at the end of the day when we continue the transition the 50% is advisory consulting being prepared by analyst and that's by the higher price it is very, very short it's applied to [indiscernible] don’t give a speech network and then the project consulting will be performed by the project consulting team, so we will end up at a 50-50 split.

And the reason it's happening a bit later than you hoped is related to what?

I think it's really when I talk to the support it's really organizationally -- the market signals or organizational signals I think we're just we had some in precision there in Q3 and Q4. What's really great about this is that we have shown a lot of agility in our ability to have analysts perform more consulting and to slow the transition down.

They really stepped up in Q4 analysts back into the consulting firm. So we're doing this -- the great deal is we have a lots of knobs to turns and so it’s good leverage to pull and we're showing a lot of agility here.

So this is not a crisis this is just a little bit of slower transition.

Mike I am curious how the European business performed relative to plan in the quarter and I know in recent quarters you guys have said that the economic backdrop was not bad enough that it should stopped us from improving in Europe, do you think that's still the case for 2015?

Like -- Like Mike Morhardt gave some color after me. I think that's absolutely still the case -- I think where we have made leadership changes in region we're looking at those regions that have performed incredibly well despite what are not the best economic headwinds to sell into I think that we still have a lot of opportunity and I think the new sales leader there is already demonstrating that.

So where we have had we have made leadership changes, we're seeing improvement, we have made other leadership changes that I think are going to bear fruit in 2015. So, now I am still feeling like we're going to get our numbers in Europe.

And I did not say it's easy and I am not -- because I am sure we have some Europe folks up from the sales team who are listening to the call and think yeah this the CFO talking its always easy but I do think we're going to get to our numbers. I think there are a lot of good things going on there right now.

So, Asia-Pac on the other hand to Mike's point earlier was with macro winds absolutely slowed us down in the second half but that's not the case in Europe there is opportunity there for us.

I have spent a lot of time in Europe in the last quarter -- two quarters. And what I would say Europe is about the Age of the Customer dynamic, so they are about a year behind us.

So if you imagine 15% of U.S CIOs our ability to beat the agenda it’s that's probably someone near at 5% and 7% in Europe. So but for us that really represents an opportunity.

The interest areas as high it is in the U.S -- I would say a little bit lower in Asia but so they are probably about a year behind us but the interest is very, very intense in Europe, around Age of the Customer.

And then just one, so from a European sales team performance perspective we did see good mid-single digits year-over-year performance which is a good sign and so we started to see the team ramp up as we got into the second half of the year. We made some leadership changes in Q4 some additional ones as we ran into the first part of this year and the team is ramped up and ready to go.

There are definitely some macroeconomic components to it, but our opportunity is huge there. We are not backing off of what we can think -- what we think we can do from a growth perspective.

And then Mike what about Q2 we would be thinking about for 2015 and ’16 respectively?

I think we will probably have another point decline in queue for 2015, because essentially what’s happening now is we have a large fully ramped consulting organization so we are going to continue to sale that and then I think you are going to see the reversal, I think in ’16 you are see queue go back the other way. We have not walked away from our target of about 70% of our business coming from syndicated, so I think you will see a swing back the other way probably another point going back or two in ’16.

So this should be the bottoming out year for queue and then we are going to start marching back towards 70%.

Great, thanks very much. I appreciate everyone joining the call.

George and I will be out on the road in the course of the quarter we want to talk as many people as we can. I think we have got a lot going on in a good way.

So we will be scheduling time, we have to see folks. So thanks again for attending the call.

And will see you soon.