Forrester Research (FORR) Q1 2019 Earnings Call Transcript

Forrester Research (FORR -0.64%)
Q1 2019 Earnings Call
April 30, 2019 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon. 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 financials.

We'll then open the call to Q&A. A replay of this call will be available until May 30, 2019, and can be accessed by dialing 1 (888) 843-7419 or internationally at 1 (630) 652-3042, and please reference the passcode 8715326 followed by the pound key. Before we begin, I'd like to remind you that this call will contain forward-looking statements with 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 turn the call over to George Colony.

George Colony -- Chairman of the Board and Chief Executive Officer

Thank you very much for listening to Forrester's 2019 Q1 investor call. I will begin with an update on the quarter; Kelley Hippler, head of sales, will give a short brief on the sales organization; and Mike Doyle, Forrester's CFO will then give a financial review for the quarter. I'm happy to report that the company's positive momentum from 2018 has continued into 2019 with Forrester achieving its booking goals for the quarter. In Q1, pro forma revenue achieved top end guidance and pro forma earnings per share exceeded guidance for the quarter.

The U.S. performed well and we're seeing signs of recovery in our European business. Asia Pacific continues to lead all regions in growth with bookings there moving forward 15% year over year. The APAC sales force has been the first across to sell the SiriusDecisions product line in their book for SD deals in the quarter.

2019 will be a busy year for the company, so we're very pleased to be kicking off with solid results. Forrester is developing three capabilities for clients: One, strategy; two, real-time customer experience; and three, operations. Legacy Forrester's Research, events, consulting and boards is focused in the strategy. Real-time customer experience will include the real-time customer experience cloud that we're currently assembling via two acquisitions for 2018, FeedbackNow and GlimpzIt.

The SiriusDecisions product line, which we acquired in January, forms the core of our operational capability. Our strategy products performed well in the first quarter. They're focused on helping business and technology leaders build customer obsession to drive growth continues to resonate. We are working on digitizing and transforming the strategy research product experimenting with new forms of research that will connect with clients when they need it in realtime, and we're on this in future calls.

The development of our real-time customer experience cloud continued on schedule. The first iteration of the CX cloud based on our physical FeedbackNow input devices continued to have big wins in the quarter. We renewed and extended our relationships with the airports of Paris and Düsseldorf Airport in Germany, while rolling out pilots at Heathrow in the U.K. Forrester's Federal Government Sales Group won several pilot deals in the U.S.

and the Asia Pacific sales teams signed our first contract in Australia. Turning to our operations capability. I'm pleased to report that the integration of SiriusDecisions is proceeding on plan. Having integrated a number of companies over the years, we know that the most important factor governing ultimate success is culture.

And while there is still much more work to do, the two company share the same core values, and we are united around what we value most in our business and that is building a unique and valuable client experience. SiriusDecisions is quickly proving to be highly complementary to Forrester. Our coverage now ranges from business-to-business to business-to-consumer, and it extends their influence to new roles, such as Chief Sales Officers and Chief Product Officers. SiriusDecisions largest event Summit 2019 will be held in Austin, next week with over 4,000 clients and prospects in attendance.

There will be 80 Legacy Forresterits at the event and 130 Legacy Forrester clients attending. At the event, we will roll out the 2019 marketing, sales and product agendas for B2B companies and also new capabilities in the SiriusDecisions portal and data command center. SiriusDecisions and Forrester operations in Boston and Singapore have already merged and more officers will come together as the year progresses. So to conclude, our very full year of integrations and new development has begun well.

We're looking forward to the challenges of 2019, but more importantly, we're eager to capitalize on the very big opportunities that our three capabilities are opening for the company. Now I'd like to turn the call over to Kelley Hippler, who will provide a sales update. Kelley?

Kelley Hippler -- Chief Sales Officer

Thank you, George. In Q1, the legacy Forrester sales organization continued our positive momentum from 2018. The customer engagement model or CEM, Forrester's go-to-market strategy, is continuing to add value for our customers while driving positive results for Forrester. Our agreement value has grown 12% versus prior year.

Enrichment remained strong as our clients seek a greater role and greater impact from Forrester. Q1 also marked the ninth consecutive quarter that productivity of our ramped reps improved. In addition, we saw a decrease in sales repetition and an increase in the percentage of sellers getting to plan during Q1. With the sales model that is generating consistent results, our efforts are shifting toward integrating our recent acquisitions.

We have expanded the number of sellers partnering with FeedbackNow to bring the ability to manage and respond to customer experience in realtime to more of our clients and prospects. George shared a number of reasons why we found the SiriusDecisions' acquisition so attractive including, but not limited to, SiriusDecisions complementering -- complementing Forrester's traditional strategy coverage guiding our clients on what to do with operational coverage of how to do it. The strategy plus operations combination is both symbiotic and powerful. In addition, SiriusDecisions will also open 4 new paths for revenue synergy, including: one, cross-selling between Sirius and Forrester clients; two, selling SiriusDecisions through the Forrester sales channel internationally; three, selling Sirius into new vertical markets starting with financial services and healthcare; and four, introducing the Sirius methodology to new roles, such as customer experience, IT and security and risk professionals.

Feedback from clients continues to reinforce the deal Logic. We have experienced short-term attrition with the SiriusDecisions sales channel, while concerning the remedy to address this is similar to the approach we took with the CEM. I am confident that our team will successfully navigate this short-term challenge, and more importantly, both sales teams will benefit from leveraging the model that is working well for legacy Forrester client. With that, I would like to turn the call over to Mike Doyle to review our Q1 financial results.

Mike Doyle -- Chief Financial Officer

Thanks, Kelley. I'll now begin my review of Forrester's financial performance for the first quarter of 2019, including a look at our financial results, the balance sheet at March 31, our first-quarter metrics, and the outlook for the second quarter of 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 any net gains and losses from investments.

For 2019, we're utilizing an effective tax rate of 31% for pro forma purposes. In addition, this quarter's results include SiriusDecisions, which we acquired on January 3 of this year. The impact of SiriusDecisions on our consolidated results is meaningful and I'll highlight the impact on year-over-year performance in the relevant sections of my comments. For the first quarter, Forrester delivered pro forma revenue that achieved the top end of guidance and pro forma operating margin and earnings per share that exceeded guidance.

We delivered strong performance during the quarter, while we began the process of integrating SiriusDecisions, the largest acquisition in Forrester history. Even excluding the impact of SiriusDecisions, we have double-digit top-line growth, driven by our research, connect, analytics, advisory and consulting products. Our expenses came in lower than targeted due to good cost controls and conservatism in our forecast to offer any unexpected cost relating to integrating SiriusDecisions. Now let me turn to more detailed review of our first-quarter results.

Forrester's first-quarter revenue increased by 34% to $104.6 million from $77.7 million in the first quarter of 2018. SiriusDecisions impacted growth by approximately 24 points in the quarter. First-quarter research services revenue increased by 40% to $72.3 million from $51.7 million, and SiriusDecisions impacted growth by 34 points in the quarter. Research services revenue represented 69% of total revenue for the quarter.

First-quarter advisory services and event revenue increased by 24% to $32.2 million from $26 million and SiriusDecisions accounted for 6 points of growth in the quarter. Advisory services and other revenue represented 31% of total revenue for the quarter. International revenue mix was 21%, down three points from 24% in the first quarter of 2018. SiriusDecisions brought down the international revenue mix by two points for the quarter.

I would now like to take you through the product activity behind our revenue starting with Forrester Research. Forrester's Public Research and decision tools enable clients to better anticipate and capitalize on the disruptive forces affecting their businesses and organizations. They believe Forrester Research provides insights and frameworks as well as operational tools that drive growth in a complex and dynamic market. Research revenue increased by 54% in the first quarter of 2019, it's driven in part by increased reprints revenue.

SiriusDecisions accounted for 49 points of the growth for the quarter. On to our connect offerings, which encompass our leadership boards, Executive Programs as well as our learning products. Leadership boards provide peer connections to our clients to collaborate and create plans born from practical experience. Executive Programs pairs clients with former C-level executives, trusted partners who clients can count on to help them make big calls.

And our learning products provide company the training and certification opportunities for their teams that combine hands-on activity with instruction from Forrester analyst. As of March 31, 2019, Forrester leadership boards and executive programs had a total of 1,474 members, down 1% compared to the prior quarter and up 5% compared to prior year. Connect revenue increased by 10% for the first quarter of 2019, driven in part by our new learning offerings. SiriusDecisions accounted for six points of that growth.

Our analytics products help clients understand and anticipate dynamic and changing B2B and B2C customers. Our services provide a view into the potential future change and offer powerful measures and models to create a blueprint for growth. For the first quarter, revenue increased by 13%, driven by FeedbackNow, which accounted for 10 points of growth in the quarter. Forrester Advisory and consulting offerings help clients apply Forrester's intellectual property to drive action across the enterprise, enabling them to act faster and smarter in a market that rewards customer obsession, speed, and agility.

Revenue increased by 23% for the first quarter, driven by healthy backlog entering the New Year and higher utilization of our consultants and analysts. SiriusDecisions accounted for five points of growth in the quarter. Our events business provides leadership, provides leading content via immersive experiences focused on enabling professionals and customer experience, digital transformation, privacy and security, sales and marketing. First quarter is typically quite in our Events business.

We held our SiriusDecisions Canada Summit in Toronto, and our multicity account based marketing road show in the Eastern United States. I'll now highlight the expense and income portions of the income statement. Operating expenses for the first quarter increased by 28% and were $99.7 million, compared to $77.9 million in the prior year. Cost of services and fulfillment increased by 32% with 24 points of growth related to SiriusDecisions and the remainder driven by higher legacy Forrester headcount, annual merit increases and professional services expense.

Selling and marketing expenses increased by 27% with 26 points of that growth due to SiriusDecisions. General administrative cost increased by 24%, with 21 points of the growth related to SiriusDecisions, and the remainder due to higher professional services and salaries and benefits. Overall headcount increased 29% compared to the first quarter of 2018 with 25 points of growth due to SiriusDecisions. At the end of the first quarter, we had a total staff of 1,779, including products and advisory services staff of 664 and total sales force of 694.

Products and Advisory Services headcount increased by 27% year over year with 18 points due to SiriusDecisions. The total sales force increased by 34% year over year, entirely due to SiriusDecisions. Operating income was $4.9 million or 4.7% of revenue compared to an operating loss of approximately $100,000 or 0.2% of revenue in the first quarter of 2018. Interest expense for the quarter was $2.4 million, compared to no interest expense in the first quarter of 2018.

Other income for the quarter was a negative $270,000, compared to a negative of $118,000 in the first quarter of 2018. Net income for the quarter was $1.6 million and earnings per share was $0.08 on diluted weighted average shares outstanding of $18.7 million, compared with a net loss of $177,000, a loss per share of a penny on 18 million diluted weighted average shares outstanding in the first quarter of 2018. Now I'll review Forrester's first-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 revenues already been recognized. As of March 31, 2019, agreement value was $345.3, up 40% from the first quarter of 2018. SiriusDecisions impacted Q1 agreement value growth by approximately 28 points. As of March 31, 2019, our total for client companies was 2,850, up 21% compared to last year.

SiriusDecisions impacted Q1 client count growth by approximately 19 points. Client count, unlike our retention and enrichment metrics, is a point in time metric at the end of each 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've broaden the products and services included in the calculation, which better reflects our solutions-oriented approach to serving our clients.

A more detailed definition of this new methodology will be included in our first-quarter 10-Q filing. Historical values have been restated to allow for the appropriate comparisons. The retention in metrics reflect legacy Forrester's performance and excludes the impact of our recent acquisitions. Forrester's client retention rate was 72% for the first quarter, up one point compared to last quarter and is compared to last year.

Our dollar retention rate was 90%, unchanged compared to last quarter and as compared to last year. Forrester's enrichment rate was 106% for the first quarter, down from 109% last quarter and down from 110% in Q1 of 2018. We continue to calculate client and dollar retention rates and enrichment rates on a rolling 12-month basis during the fluctuations which can occur between quarters, but that deals that close earlier 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 March 31, 2019 was $75 million, which is a decrease of $65.3 million from $140.3 million at year-end 2018. The decrease in cash was due to the funding of the SiriusDecisions acquisition, which I will explain in more detail. Cash paid for Sirius net of cash acquired was $239.4 million, of which $175 million was funded with debt and $64.4 million was funded with cash on hand.

We also paid $4.6 million of debt issuance cost this quarter. Cash from operations was $26.5 million for the quarter compared to $7.8 million in the first quarter of last year. Debt payments were $21.6 million during the quarter, including $20 million of discretionary payments on our revolver. Debt outstanding at March 31, 2019, was $153.4 million.

We received $3.4 million in cash from options exercised in our ESPP for the quarter as compared to $2.5 million in the first quarter of last year. Accounts receivable as of March 31, 2019 was $69.1 million, compared to $62.2 million as of March 31, 2018. Our day sales outstanding at March 31, 2019, was 63 days compared to 73 days at March 31, 2018. And accounts receivable over 90 days was 4% at March 31, 2019 compared to 8% at March 31, 2018.

Deferred revenue at March 31, 2019 was $191.6 million, an increase of 23% compared to March 31, 2018, with approximately 20 points of this growth coming from SiriusDecisions. In closing, we're very happy with the first-quarter performance. We've closed three acquisitions in the last 12 months, while continuing to sustain momentum in our legacy Forrester business. We had good operating performance across all product segments and maintained tight expense management driving stronger than expected profit performance.

Our cash flow was up significantly year over year, which gave us the opportunity to pay down $20 million on our revolving line of credit. We have begun the integration of SiriusDecisions, and as Kelley mentioned, we're experiencing increased attrition in our SD sales team. This is not unusual post-acquisition, and we expect it will settle as the year progresses. Overall integration is on track, and we're very excited about what SiriusDecisions beings to Forrester.

As George mentioned, we're headed into a busy second quarter highlighted by SiriusDecisions Summit, which attracts over 4,000 people. We will continue to focus on acquisition and integration, while driving strong operating performance. Now let me take you through over specifics on guidance for the second quarter and full year of 2019. And our guidance excludes the following: the fair value adjustment, the acquired deferred revenue from the Sirius acquisition of $4.5 million to $5.5 million for the second quarter and $10 million to $12 million for the full-year 2019, amortization of intangible assets which we expect to be $6 million to $6.5 million for the second quarter and between $24 million to $26 million for the full-year 2019.

Stock-based compensation expense of $2.7 million to $2.9 million for the second quarter and $11 million to $12 million for the full-year 2019. Acquisition and integration cost of $1.5 million to $2 million for the second quarter and $6.5 million to $7.5 million for the full year of 2019, and any investment gains and losses. Forrester is providing second quarter 2019 financial guidance as follows: pro forma revenues of approximately $130 million to $134 million; pro forma operating margin of approximately 13.5% to 15.5%; a pro forma effective tax rate of 31%; and pro forma earnings per share of $0.57 to $0.61. Our full-year 2019 guidance is as follows: pro forma revenues of approximately $475 million to $487 million; pro forma operating margin of approximately 10% to 12%; pro forma effective tax rate of 31%; and pro forma diluted earnings per share of approximately $1.55 to $1.67.

We provided guidance on a GAAP basis for the second quarter and full-year 2019 in our press release and 8-K filed today. Thanks very much, and I'm going to turn the call back over to the operator for the Q&A portion of our call. 

Questions and Answers:

Operator

Thank you. [Operator instructions] And your first question is from Tim McHugh. Tim, your line is open.

Tim McHugh -- William Blair and Company -- Analyst

Yes. Thanks. Just I guess, first, there is a comment in there about on the integration of Sirius with the sales force, a little bit of turnover there, I guess. Can you put a little more color around the size of the turnover, I guess, how meaningful, and what's -- I guess, any qualitative comments around what it is and then, I think maybe surrounding that also then how that impacts plans to think about reconciling the sales models versus your legacy approach? Thanks.

Kelley Hippler -- Chief Sales Officer

Tim, it's Kelley. Thank you for the questionnaire. In terms of the attrition, I'd say it's probably running about what we experienced when we put the customer engagement model in place, and I think any time there is a major change to a selling motion, whether it be through a change in structure or an acquisition, you're going to have some folks that potentially want to explore other opportunities. I would say the positive for us here is that a lot of the attrition that did occur were folks that were into our hunter roles so it has an impact on client relationships by and large and our ability to drive enrichment up-selling cross-sell, which is really the focus of our work here with the integrations.

So while it certainly was unfortunate, it's nothing that we think will hinder our ability to get to our plans for the year. With that said, we do have a number of cross-selling and up-sell programs that we're looking to launch across both sales forces, shortly after Summit, to try to help continue to drive that collaboration and make sure that we need the guidance that Mr. Doyle just communicated. So we are working on that.

And again, a lot of it is to be expected very similar to what we experienced when we moved into the customer engagement model. I would also say having visited all the offices, most of them multiple times, at this point, there is a really good and talented sales force there, some people that are very engaged and very excited to be part of the Forrester, sales force moving forward, and I think it's just noise that you would expect with any acquisition.

Tim McHugh -- William Blair and Company -- Analyst

Have you moved sales force in totally onto your sales composition model, and its kind of sales management approach? I know it's slightly different at Sirius than Forrester, has that change been made, I guess, at this point?

Kelley Hippler -- Chief Sales Officer

That work is under way as part of our integration work streams. And what we're also really wanting to make sure that we do is look for best practices across both organizations. So whether it would be the technologies that we're using, the methodology, obviously, the Sirius IT brings a lot around the areas of sales enablement that we are leveraging as well as what their sales force is doing, that is work that we are already doing and expect to have concluded by next January.

Tim McHugh -- William Blair and Company -- Analyst

OK. That's helpful. And then just on the ASV growth. Can you -- I know you broke it down by kind of some of the business units or product areas.

But I guess, maybe just qualitatively, I think, the last couple of quarters it's really been more the advisory piece than more the kind of learning solutions that you've added that have been maybe driving a bit of more of the ASV growth. So what was kind of that core traditional research business ASV growth on an organic basis if we looked at that this quarter and maybe how that compares versus the prior two?

Mike Doyle -- Chief Financial Officer

Tim, this is Mike. We are still getting, I would say, a healthy portion of our growth, more on the advisory side. That said, we're seeing research pick up a bit, we had overall -- I'm very happy with the growth in the quarter. And on a cumulative basis for legacy Forrester, I think we're seeing the kinds of movement, we wanted to see.

Analytics has picked up, we're -- probably we were struggling with that little over a year ago. So we're seeing the kinds of things come across that we wanted to see. So research is still not yet at a double-digit level, which is where we want it to be, but I think we are starting to see real progress there. As you heard from Kelley, overall agreement value on legacy Forrester is up 12%, and that's a consistent run of improvement on agreement value over the last 4 quarters.

So we're really happy with what's going on, but I will say, never satisfied with where we are with research, I think, George has pushed us pretty hard, that's got to be double-digit over the long haul because that's really what drives the profitable. And again we're seeing the right kind of movement. But we're still -- the bulk of -- the bigger growth is still coming out of our advisory businesses and learnings to your point.

Tim McHugh -- William Blair and Company -- Analyst

OK. And then just lastly, on the sales force, how much longer, I mean, that is a pretty healthy overall ASV growth rate, what's kind of organic with the sales force still flat and I understand you've been pushing productivity. How much more room is there before we need to see the sales force start growing more meaningfully to support ongoing ASV growth?

Kelley Hippler -- Chief Sales Officer

Sure, that's a great question, Tim, and I think we are now getting to a place where with the growth that we are having we will be looking to start modestly expanding heads, I would also say, we wanted to be very thoughtful about it, knowing that we were -- there was a high propensity that this acquisition was going to close in January, knowing that we were going to take onboard a large number of sellers, and wanted to make sure that we had adequate territory and CV to support all of the headcount that we have. So I think given the current trajectory, we do plan to start expanding heads in a modest way toward the back end of the year while still driving productivity. We do still believe that we want to be doing both moving forward, so not just doing one or the other. So I just want to put that caveat out there as well.

Tim McHugh -- William Blair and Company -- Analyst

Sure thing.

Operator

And your next question comes from Allen Klee with Maxim Group. Allen, your line is open.

Allen Klee -- Maxim Group -- Analyst

Yes. Hi. Compliments on the quarter. I was coming it to this thinking this was the one quarter that we might have to worry about in the year with everything, but great job.

When I -- one thing that stood out to me is, the growth rate that you saw with Sirius, I think you said something like 24%. When you've made your -- last quarter, when you gave your guidance, I believe, you're guiding to like 15%. So was there something special about how they did this quarter? Or is it more that they're really tracking kind of like what they did a year before in terms of the growth?

Mike Doyle -- Chief Financial Officer

Yes. Allen, I think, the 24% that you're thinking, it is really 20%. They are -- when you do our year-over-year comparisons, essentially what we're doing is capturing revenue this year for combined Sirius and Forrester, last year was just Forrester. So 24 points of our 34% growth in revenue was attributable to the addition of SiriusDecisions, they didn't grow at a 24% rate.

It is just the increment of them coming onboard so --

Allen Klee -- Maxim Group -- Analyst

Got it. Thank you. And then the customer feedback efforts you're making. Can you maybe just go into a little bit more about how -- where you are and all that?

George Colony -- Chairman of the Board and Chief Executive Officer

George here, Allen. So I talked about the real-time customer experience cloud, which we're currently developing. It's first iterations, I said in my remarks, is the physical FeedbackNow input. You can think about this as really as three parts of the cloud, there is all the inputs.

I am going to explain this in very simple terms, all the inputs, the analytics engine, which is where GlimpzIt came into the picture, because that is driven by an AI, by an AI approach now -- that's of course -- the skills will be acquired with GlimpzIt. And then the third element of the customer experience cloud is the outputs to the client, and a lot of these are in realtime via SMS or by sometimes with notification. So those are the three elements. The current state of the the cloud is we have a form of it, which is built around the FeedbackNow capabilities, with the physical inputs on the front end.

Their analytics engine and then their notifications to clients. But that's -- we're 10% of the way to what -- with the full customer experience cloud is going to be. And so what's going on in the background is lots of development, lot of -- we are spending lot of resources on developing the analytics engine, more inputs and the way we are going to be outputting to clients. So we are currently in bunch of alphas, we will be -- we expect to be offering it sometime in the September-October time frame for the first SKU of the fuller cloud.

And I'm sorry if that confused you, but -- it is amazing to be on the marketplace talking to clients about realtime, whether they are selling software, whether they are selling applications, whether they are selling -- whether you're at an airport, whether you're on a train, almost every company that we meet with is fascinated with, and is now focused on how they'll measure real-time experience, it's really two parts, monitoring the experience, and then being able to improve the experience in realtime, which is what we are aiming for here. So I hope that helps.

Allen Klee -- Maxim Group -- Analyst

No, that's great. That should be valuable to customers. And then just -- can you help us understand bigger picture with when you get through integrating Sirius with Forrester? How you think about the impact that the overall profitability and growth rate? How we can think of the company as kind of a trend that it would be on?

Mike Doyle -- Chief Financial Officer

Yes. Allen, it's Mike. Look we love the Sirius product, it is highly syndicated. And it really helps fill the void for us, I mean, to George's point it's that third platform that we felt we needed, it really gets very much at how do people operationalize change and make things happen.

So we love the syndicated portion of it, it is a high-growth company, and our goal is, despite a little hiccup we have right now, is to continue to find a way to get that to stay at a healthy double-digit growth company that legacy Forrester is doing the same thing. So we expect that as we roll into 2020 that we're leaving the year with both businesses running at healthy double-digit rates from a booking standpoint, which will translate into very healthy revenue growth, a higher syndicated mix as we go into 2020. Again, because Sirius brings a nice syndicated component. And the net result of that is the expanding operating margins, which both for legacy Forrester and for SiriusDecisions.

So we look at this as really Sirius helping us set the table to get to more expansive margins in 2020, when -- what that's going to be -- it's difficult to say, is it 200 basis points probably, but we haven't given guidance out that far yet, but that's how we are thinking about this business that this is the year to digest it, get it on board, make sure that we've integrated it well that we have packaged it up as part of a larger Forrester solution for our clients, and roll into 2020 with a lot of momentum on across all product lines.

George Colony -- Chairman of the Board and Chief Executive Officer

And lots of revenue synergy as Kelley talked about in her remarks, the synergy around selling SiriusDecisions outside of U.S., and they had a very, very small profile internationally and globally, as an example, I mentioned this on the last call, if you look at every large telecom in the world whether it's Sprint's Telecom or Deutsche Telekom whatever, they all have a B2B sales force. So there is capability for us to sell the SiriusDecisions solutions into those, into every telecom company in the world and those were entities that were never called out by the SiriusDecisions sales force. So the revenue synergy globally also takes SiriusDecisions into new roles, to take it into new verticals. So it's -- I'm not going to make some promises about very, very high-growth rates, but our plan this year, I think is a conservative plan, which has really not factored in a lot of the synergies that we speak, that we're going to capture in 2020, 2021.

We're very optimistic.

Allen Klee -- Maxim Group -- Analyst

That's great. Thank you so much.

Operator

[Operator instructions] And your next question comes from Vincent Colicchio with Barrington Research. Vincent, your line is open.

Vincent Colicchio -- Barrington Research -- Analyst

Yes. Just a couple from me, most of mine were asked. George, you talked about new business signings in the customer experience side. Just curious, is the level of new signings then the pipeline, is that coming in better-than-expected? What does that look like?

George Colony -- Chairman of the Board and Chief Executive Officer

I would love to say it is better-than-expected from what we acquired. I guess, I don't think we really understood the potential here Allen -- Vince, it is -- you have to realize it's a very new market for us. We did not sell in most of the places where FeedbackNow is located, as an example, we would sell to the high-level customer experience executive in these companies, but they are selling to the -- at the operational level, very different customer, very different types of companies. Today, I got an email from the guy who runs a business force and he said we got three new wins, and these are companies we never would have called on before.

So it's a very surprising business. Our strategy in the U.S. is to go after airports and to go after very large venues where we can install many, many devices, because as you know, every time someone hits that button they see -- they will see the Forrester brand. And then also if we were installing in very large traffic areas that's where we tend to get most of our leads.

CEO's walk up to the buttons, they look at it and say, this is kind of cool, and then they will email us or they will hit the website and contact us, that's a new lead. So it -- Kelley may have a different view, and Mike may have a different view here, but I can say it's a very surprising business. Remember, it's just the arrowhead of the arrow of the full customer -- real-time customer experience cloud. But it is wonderful to be able to have a foothold in those companies where we will be able to sell the larger digital version of the cloud as well in the future.

But it's a -- so I'd say, we're very happy with that acquisition, that was a good move not only tactically in revenue-wise and bookings-wise, but also strategically.

Vincent Colicchio -- Barrington Research -- Analyst

Kelley, just kind of a general question, but the new sales model appears to be performing well, and we've talked before about it performing best in regions where it has been in place to the longest period of time. So I guess, is that still the case and then are there any regions where there are some concerns with the new model?

Kelley Hippler -- Chief Sales Officer

Sure. I would say it's still holds that the areas where the model has been in place the longest is where we're seeing the most impact on client engagements, so that would be North America. This is the second full year that Europe and Asia Pacific will be in those models, so we do expect to see those engagements. Scores continue to rise, which we know will lead to increased retentions.

So it is continuing to perform as designed, and we see the best results where it has been in place the longest and we have the most seasoned customer success managers working with those clients.

Mike Doyle -- Chief Financial Officer

I'd say from my standpoint Vince, I'm very happy with the results here, right. It's one of those deals we have been at this now for three years, and it's very cool to see it performing so well.

Vincent Colicchio -- Barrington Research -- Analyst

That's good to hear. That's it for me. Thanks, guys.

Operator

Thank you. [Operator instructions] I am currently standing by for questions. OK. And there are no further questions at this time.

I would like to turn the call back over to Mike Doyle.

Mike Doyle -- Chief Financial Officer

Thanks very much. And thanks to all of you for joining the call. We are excited about 2019. George and I will be out on the road, and we will also be presenting at a few conferences.

So we look forward to seeing a lot of you over the next few months. So thanks again, and I appreciate you joining us.

Operator

[Operator signoff]

Duration: 43 minutes

Call Participants:

George Colony -- Chairman of the Board and Chief Executive Officer

Kelley Hippler -- Chief Sales Officer

Mike Doyle -- Chief Financial Officer

Tim McHugh -- William Blair and Company -- Analyst

Allen Klee -- Maxim Group -- Analyst

Vincent Colicchio -- Barrington Research -- Analyst

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