Forrester Research (FORR) Q3 2019 Earnings Call Transcript

Forrester Research (FORR -1.53%)
Q3 2019 Earnings Call
Oct 24, 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 November 23, 2019 and can be accessed by dialing 1-888-843-7419 or internationally 1-630-652-3042. Please reference the passcode 6194408 followed by the #. Before we begin, I'd like to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Words such as expects, believes, anticipates, intends, plans, estimates or similar expressions are intended to identify these forward-looking statements. These statements are based on the company's current plans and expectations, and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Some of the important factors that could cause actual results to differ are discussed in our reports and filings with the Securities and actual results -- I'm sorry, with 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'll now hand the call over to George Colony.

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

Thank you for tuning into the Forrester Q3 2019 call. After my remarks, Kelley will discuss developments in the Forrester sales force, followed by Mike Doyle who will give a financial update for the quarter. We will then take questions. The year continues to progress well with Forrester at the upper end of revenue guidance and exceeding EPS targets.

Client retention was at 73%, two points above Q3 of 2018. And client enrichment, the average growth of client accounts, was at 111%, up two points from Q3 2018 and up three points when compared with Q2 of 2019. In a year when we were busy integrating SiriusDecisions and rolling out new offerings, we are pleased that we've been able to show continuing improvements in our metrics and financial performance. I'd like to turn first to integration.

The value proposition of the new Forrester is simple but powerful. In the age of the customer where customer obsession has become imperative for companies to succeed and survive, Forrester provides No. 1 vision: what is coming, what are the future opportunities, what are the external threats, and what are the looming competitive dynamics? Helping companies see around the corner is a traditional strength and focus of Forrester and it enables clients to increase their speed. Two, strategy.

Once companies have a clear view of the future, Forrester works with them to plan what they should, what technologies to invest in, how to organize, what skills to acquire, where to focus executive attention; and what markets to attack. Legacy Forrester and SiriusDecisions have long records of directing client strategy. Having the right strategy enables companies to beat competitors. And then finally No.3, execution.

Once companies see the future and have the right strategy, SiriusDecisions can direct them on how to operate, what frameworks to deploy, how to make decisions based on fact, how to apply best practices and benchmarks, and how to harmonize operations. The Sirius Way enables our clients to align B2B marketing, sales and product into optimize a revenue engine to grow faster. And we recently completed some research on 6,000 user companies with more than $1 billion in revenue. Forrester clients are 34% more profitable than the average large user corporation.

Highly engaged Forrester clients are 54% more profitable. In addition, companies that align marketing, sales and product in the Sirius Way grow 19% faster than average and they are 15% more profitable. So our portfolio of vision, strategy and execution enables Forrester to serve clients in ways that traditional research and consulting firms cannot. And Forrester's board of clients, this is a group of clients that advise the company on strategy, was in Cambridge in early October.

They believe that Forrester's expanded offering through SiriusDecisions will be valuable to them and their organizations. In the marketplace, this deal continues to make a lot of sense. Now the structural integration of the two companies is nearly complete with research, sales, consulting, events and learning now working together. The new Forrester will capture revenue synergy on four levels.

No. 1, cross-sell. Selling Sirius to Forrester clients and selling Forrester to Sirius clients. No.

2, global expansion. Selling Sirius more aggressively in EMEA and Asia. Three, role expansion. It's extending the Sirius research model into new roles including IT, security and risk and customer experience.

And then finally, No. 4, vertical expansion. Selling Sirius into new markets including precision manufacturing, B2B telecom and financial services. I'd like to spend a few moments to update you on the progress of new products at Forrester.

FeedbackNow, Forrester's real-time customer experience cloud, had a number of new business wins in the quarter, including Love's Travel Stops in the U.S. in London, Luton Airport. It has been sold primarily by a dedicated sales force through Q2, but in Q3 we began to see more involvement from the general sales force. And in fact, a Forrester sales person signed a $1 million-plus deal for FeedbackNow in the third quarter.

In addition to FeedbackNow, Forrester's new certification business continues to outgrow our plan. Completion rates for certification clients, and this is the number of clients who complete the full course, currently stands at 93%, well exceeding learning industry benchmarks. And in addition, 37% of the clients who have completed the program are displaying their Forrester certification badges on LinkedIn. And this is a proxy for the market and credential value of the product.

The Zero Trust Certification program, which trains clients on Forrester's unique security and risk philosophy, had a very successful third quarter launching with 18 clients. In the last week, we have launched the first SiriusDecisions certification offering, B2B Marketing. And we're going to be expanding this product on a continuous basis through 2020 and beyond. Certification, as a reminder, is syndicated with profit margins equivalent with our research offerings.

We continue to retire debt incurred with the SiriusDecisions acquisition. In Q3, we have paid down $77.6 million of our debt, including $6 million of discretionary payments on our line of credit. So to conclude, we continue to make significant progress with the integration of SiriusDecisions and the rollout of FeedbackNow and certification. The vision, strategy and execution portfolio that we have built resonates with our clients and it points the company toward accelerated growth and higher renewal rates.

And now I will pass the call over Kelley Hippler, Forrester's chief sales officer. Kelley?

Kelley Hippler -- Chief Sales Officer

Thank you, George. Q3 marked another solid quarter for the Forrester sales organization with growth across all geographic regions. Legacy Forrester 12-month rolling client retention is holding steady, and we increased our enrichment rates. Q3 marked the 11th consecutive quarter that productivity of our ramped reps improved.

The customer engagement model continues to drive positive results for the business, and more importantly, greater value for our clients as we focus on the outcomes they are looking to achieve. Our decision earlier this year to move the SiriusDecisions sales team under Forrester leaders produced improved results in Q3. As we prepare to finish out the year on a positive note, we are turning our attention to 2020 planning. We've conducted a deep analysis of our clients and prospects, including buying centers, budgets and customer feedback on how they want to engage with us.

Based upon this work, we are moving to a fully integrated sales and customer success organization operating under the customer engagement model that has helped fuel Forrester's growth. In 2020, Forrester reps will be selling SiriusDecisions products and SiriusDecisions reps will be selling Forrester products. This go-to-market approach will enable us to deliver the full value proposition of the new Forrester by providing clients with guidance around vision, strategy and execution. With that, I would like to turn the call over to Mike Doyle to review our Q3 financial results.

Mike Doyle -- Chief Financial Officer

Thanks very much, Kelley. I will now begin my review of Forrester's financial performance for the third quarter of 2019, including a look at our financial results, the balance sheet at September 30, our third-quarter metrics and the outlook for the fourth-quarter and full-year 2019. Please note that the income statement numbers I'm reporting are pro forma and exclude the following numbers -- following items: impact on revenue from the acquisition related fair value adjustments to deferred revenue, stock-based compensation expense, amortization of intangibles, acquisition and integration costs, and net gains and losses from investments. We continue to utilize an effective tax rate of 31% for pro forma purposes for 2019.

In addition, we'll continue to highlight the impact of SiriusDecisions on our consolidated results by indicating the year-over-year performance with and without the acquisition in the relevant section of my comments. For the third quarter, Forrester delivered pro forma revenue at the upper end of guidance and earnings per share that exceeded guidance. Organic revenue grew at a rate of 8% compared to last year at 9% on a constant currency basis. Expenses were favorable due in part to lower than planned headcount and continued expense management, resulting in earnings that surpassed guidance.

Now let me turn to a more detailed review of our third-quarter results. Forrester's third-quarter revenue increased by 30% to $110.3 million from $84.9 million in the third quarter of 2018. SiriusDecisions impacted growth by approximately 22% in the quarter. Third-quarter research services revenue increased 35% to 76.2 million from 56.3 million, and SiriusDecisions impacted growth by 30% in the quarter.

Research services revenue represented 69% of total revenue for the quarter. Second quarter advisory services and events revenue increased by 19% to 34 million from 28.6 million, and SiriusDecisions accounted for 6% of growth in the quarter. Advisory services and events revenue represented 31% of total revenue for the quarter. Our international revenue mix was 22%, down 1% from 23% in the third quarter of 2018.

SiriusDecisions impacted international revenue mix by a negative 2% for the quarter. I'd now like to take you through the product activity behind our revenues, starting with Forrester Research. Forrester's published research and decision tools enable clients to better anticipate and capitalize on the disruptive forces affecting their businesses and organizations. We believe Forrester Research provides insights and frameworks, as well as operational tools to drive growth in a complex and dynamic market.

Research revenue increased by 48% for the third quarter of 2019. SiriusDecisions accounted for 43% of the growth for the quarter. Onto our connect offerings, which encompass our leadership boards, executive programs, as well as our certification products. Leadership boards provide peer connections to our clients to collaborate and create plans borne from practical experience.

Executive programs pairs clients with former C-level executives, trusted partners who clients can count on to help them make the big calls. Our certification products provide companies with training and certification opportunities for their teams that combine hands on activities with instruction from Forrester analysts. As of September 30, 2019, Forrester leadership boards and executive programs had a total of 1,469 members, flat compared to prior quarter and up 2% compared to prior year. Connect revenue increased by 11% for the third quarter of 2019, driven mainly by our certification offering.

SiriusDecisions accounted for 4% of the growth. Our analytics products helps clients understand and anticipate dynamic and changing B2B and B2C customers. Our services provide a view into potential future change and offer powerful measures and models to create a blueprint for growth. For the third quarter, revenue increased by 4% driven by FeedbackNow, which accounted for 5% of the growth in the quarter.

Forrester's advisory and consulting offerings help clients apply Forrester's intellectual property to drive action across the enterprise, enabling them to move and act faster and smarter in a market that rewards customer obsession, speed and agility. Revenue increased by 18% for the third quarter, driven by strong delivery and higher utilization of our consultants and analysts. SiriusDecisions accounted for 5% of the growth in the quarter. Our events business provides leading content via immersive experiences focused on enabling professionals in customer experience, digital transformation, privacy and security, sales and marketing.

In the third quarter, we held three events: Customer Experience Singapore, Security and Risk in Washington DC, and our third-quarter SiriusDecisions Roadshow. Third-quarter events revenue increased by 56% with 25% of the growth related to SiriusDecisions. Legacy Forrester events revenue grew 31%, despite having one less event in the quarter compared to last year. I will now highlight the expense and income portions of the income statement.

Operating expenses for the third quarter increased by 30% and were 99.1 million compared to 76.4 million the prior year. Cost of services in fulfillment increased by 29% with 22% of the growth related to SiriusDecisions and the remainder driven by higher legacy Forrester headcount and annual merit increases. Selling and marketing expenses increased by 34% with 25% of the growth due to SiriusDecisions and the remainder due mainly to higher headcount, merit and commissions. General and administrative cost increased by 23% with 11% growth related to SiriusDecisions and the remainder due to higher professional services, higher headcount and merit increases.

Overall headcount increased 26% compared to the third quarter of 2018 with 22% of the growth due to SiriusDecisions. At the end of the third quarter we had a total staff of 1,785, including products and advisory services staff of 673 and total sales force of 699. Products and advisory services headcount increased by 24% year over year with 18% due to SiriusDecisions. Total sales force increased by 35% year over year with 32% due to SiriusDecisions.

Operating income was $11.1 million, or 10.1% of revenue, compared to operating income of $8.4 million, or 9.9% of revenue, in the third quarter of 2018. Interest expense for the quarter was $1.9 million as compared to no interest expense in the third quarter of 2018. Net income for the quarter was 6.5 million and earnings per share as $0.34 on diluted weighted average shares outstanding of 18.7 million, compared with net income of 6 million and earnings per share of $0.33 on 18.4 million diluted weighted average shares outstanding in the third quarter of 2018. And now I'll review Forrester's third-quarter metrics to provide more perspective on the operating results for the quarter.

These metrics are inclusive of acquisitions when appropriate. Agreement value. This represents the total value of all contracts for research and advisory services in place without regard to the amount of revenue that has already been recognized. As of September 30, 2019, agreement value was 355.2 million, up 38% from the third quarter of 2018.

SiriusDecisions impacted third-quarter agreement value growth by 26%. As of September 30, 2019, our total for client companies was 2,867, up 22% compared to last year and essentially flat compared to the second quarter. SiriusDecisions impacted Q3 client count growth by approximately 17%. Client count, unlike our retention and enrichment metrics, is a point-in-time metric at the end of each quarter.

As we mentioned last quarter, we've updated the methodology we use to calculate client retention, dollar retention and enrichment to focus on account level activity as opposed to contract level activity. Additionally, we have broadened the products and services and included in the calculation, which better reflects our solutions-oriented approach to serving our clients. Historical values have been restated to allow for the appropriate comparisons. The retention an enrichment metrics reflect legacy Forrester performance and exclude the impact of our recent acquisitions.

Forrester's client retention rate was 73% for the third quarter, unchanged compared to last quarter and up two points compared to last year. Our dollar retention was 90%, unchanged compared to last quarter and prior year. Forrester's enrichment rate was 111% for the third quarter, up three points compared to last quarter and up two points compared to last year. We continue to calculate client and dollar retention rates and 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 proper trend information. Now I'd like to review the balance sheet. Our cash at September 30, 2019 was 67.6 million, which is a decrease of 72.7 million from 140.3 million at year end. The decrease in cash was due to the funding of SiriusDecisions acquisitions, which I will explain in more detail.

Cash paid for Sirius, net of cash required, was 237.7 million of which 175 million was funded with debt and 62.7 million was funded with cash on hand. We also paid 4.6 million of debt issuance costs as a part of the transaction. Cash from operations was 12.3 million for the quarter as compared to 9 million in the third quarter of last year. For the first nine months of 2019, cash from operations was 45.9 million, which is an increase of 23% from the 2018 period.

Debt payments were 7.6 million during the quarter including $6 million of discretionary payments on our revolver. For the first nine months of 2019, debt payments were 40.7 million, including 36 million of discretionary payments. Debt outstanding at September 30, 2019 was 134.3 million. We received 1.3 million in cash from options exercised in our ESPP program for the quarter as compared to 7.5 in the third quarter of last year.

Accounts receivable at September 30, 2019 was 54.6 million compared to 38.6 million as of September 30, 2018. Our day sales outstanding at September 30, 2019 was 47 days compared to 42 days as of September 30, 2018. And accounts receivable over 90 days was 6% at September 30, 2019 compared to 5% as of September 30, 2018. Deferred revenue at September 30, 2019 was 168 million, an increase of 31% compared to September 30, 2018.

In closing, we had a very good quarter. Pro forma revenue performed at the upper end of expectations, EPS exceeded guidance, and cash flow was up 23% on a year-to-date basis, which allowed us to continue to pay down our debt. To date, we have paid down 40.7 million, bringing our debt outstanding to 134.3 million, leaving the balance sheet in good shape. Our current full-year pro forma guidance has revenue growth in the range of 31 to 33% and EPS growth in the range of 12 to 16%.

In addition, as we finish out 2019 and enter 2020, we have worked through most of the SD attrition issues, and the legacy Forrester sales force attrition below historical averages. This fully integrated sales force will enter 2020 selling all Forrester products and services, which allows us to realize the revenue synergy of the combined companies. Despite this, our shares are currently trading at a historically low PE range based on the recent share price movement. While I've not given guidance for 2020, you should expect healthy top line growth and accelerating earnings-per-share growth.

We expect cash flow to continue to improve, which will allow us to pay down debt and utilize our cash in other ways to enhance shareholder value. Now let me take you through the specifics of our guidance for the fourth-quarter and full-year 2019. Our guidance excludes the following. The fair value adjustment to the acquired deferred revenue from the Sirius acquisition of approximately $0.8 million for the fourth quarter, and 11.3 million for the full-year 2019.

Amortization of intangible assets of approximately 5.7 million for the fourth quarter and 22.7 million of the full-year 2019. Stock-based compensation expense of 3 to 3.2 million for the fourth quarter and 11.6 to 11.8 million for the full-year 2019. Acquisition and integration costs of 1.2 to 1.5 million for the fourth quarter, and 9 to 9.3 million for the full-year 2019. And any investment gains and losses.

Forrester's providing fourth-quarter 2019 financial guidance as follows. Pro forma revenues of approximately 121 to 126 million. Pro forma operating margins of approximately 11 to 13%. Pro forma effective tax rate of 31%.

And pro forma earnings per share of $0.45 to $0.50. Our full-year 2019 guidance is as follows. Pro forma revenues of approximately 469 to 474 million. Pro forma operating margin of approximately 10 and a half to 11.5%.

Pro forma effective tax rate of 31%. And Pro forma diluted earnings per share of approximately $1.53 to $1.58. We have provided guidance on a GAAP basis for the fourth-quarter and full-year 2019 in our press release and 8-K filed today. Thanks very much, and I'm now going to turn the call back over to the operator for the Q&A portion of our call.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Andrew Nicholas. Your line is now open.

Trevor Romeo -- Analyst

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

Mike Doyle -- Chief Financial Officer

Trevor, the answer is -- this is Mike Doyle -- the answer is no. We typically tighten up our guidance in the fourth quarter. And you know, the fourth quarter includes both consulting and advisory, which it's easy to shift and bleed into one quarter or the other. So we tend to be a little conservative as we put out our numbers.

So it doesn't reflect a fundamental change in our view on the business. I think if we look at our full-year numbers and look at how they stack up relative to what we gave last time and earlier in the year, there's not all that much difference. So, no, there's no fundamental change. I think it's just a tightening up of things and probably a little bit of conservatism that we try and put into our guidance.

Trevor Romeo -- Analyst

OK. Fair enough. That is helpful. And then I think at the end there you mentioned, Mike, in looking for initially the 2020 that we could expect a healthy top line and accelerating EPS growth.

Because I know there's a lot of I guess noise in the cost structure right now due to the integration. But where -- I guess where do you think margins can go over time?

Mike Doyle -- Chief Financial Officer

Our expectation is that we're going to expand margins next year. What we've said is that it's going to be somewhere between 100 to 200 basis points. So we haven't given specific guidance. We have talked about that both when we first brought on SiriusDecisions and talked about what we thought it would mean to us, and our view hasn't changed on that front.

I think our expectation is that we've got some cost synergies, but the bigger opportunity here is the revenue synergy. And with Kelley combining the sales teams, and we now have a fully integrated Forrester sales force going into 2020, we think that's where there's going to be some big opportunity. So that's what we're building toward. We look for margins to expand at 100 to 200 basis points as we roll into 2020.

Trevor Romeo -- Analyst

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

Mike Doyle -- Chief Financial Officer

Actually, I'm going to let Kelley answer. I think last quarter I think we were running at 37%. So I think we'll -- I'll have her finish, tackle that one now.

Kelley Hippler -- Chief Sales Officer

Sure. Thanks for the question. In terms of attrition overall as a company, we are in line with the year-ago numbers. We have seen some more attrition in pockets in the SiriusDecisions sales side, which while disappointing, is definitely part of any integration.

I think we've sort of seen it come and go in a couple of different ways. You have sort of those folks who left immediately because they're easy prey for recruiters whenever an acquisition gets announced. Then I think we saw a little bit of a second wave from those who sort of questioned whether or not they can be successful in the new company. But what I will say for those that are here and engaged, we've seen some great performances.

And we have a number of really talented reps and managers who we do expect to play an increasingly larger role for us as we continue to grow and scale. So we've had a couple of waves of it, but we do see it starting to taper back down.

Mike Doyle -- Chief Financial Officer

Yeah, and as I think about it financially from our perspective, Trevor, look, I think the notion -- and it's appropriate to look at attrition because it is always important in this business, because as you replace headcount, which we're doing and we'll continue to do, there's a ramp time. What excites me I think as we get into 2020 is that we've got, to Kelley's point, a core group of SD reps who are performing well that I think are excited to be a part of something much larger. And the Forrester, legacy Forrester reps where we've had lower than normal attrition this year who were very excited about selling a fully integrated product. So, we go into the year with a good size sales team that's now selling everything, and that was not the case during the course of this year.

So I get excited about that. And yes, to Kelley's point, we're always going to have a normal level of attrition, and that does create a little bumpiness. And then I think that's a normal course and we're working our way through that. But I'm really excited about the combined sales force.

I think that's what gives us a lot of confidence as we think about 2020. And we still love this product. It is a great product. To George's point, the clients love it.

So we're going into 2020 feeling really good about what's happening.

Trevor Romeo -- Analyst

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

Operator

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

Vincent Colicchio -- Analyst

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

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

No, but we did put out -- one of our economists put out a report saying that tech spending in Europe would be fairly challenged next year. But in Asia and the U.S., the numbers actually look quite good. The board of clients this year, a couple weeks ago, Vince, and we talked a lot about this. And they didn't -- I'm looking at these guys as well.

They did not broach the topic. We did not see anything from them. I'm actually headed to Asia tomorrow. I'll be there next week.

So it'll be interesting to see what I see out there. But generally, there's a lot of political turmoil, obviously, and Europe continues to be bit of a basket case. But generally, no flashing lights at this point.

Mike Doyle -- Chief Financial Officer

One comment I would add. We've been at a couple conferences and have been on the road, so I talk to a lot of folks, and they're not seeing it. I think there are some aspects of manufacturing particularly as a result of some of the China activity that are impacted. That's not a vertical that we target, so I think we don't necessarily get impacted by that.

So that's helped us somewhat. And again, to George's point, I'd say something won't happen, but everything we're seeing right now is still reasonably positive.

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

And our Asia business did quite well in Q3.

Mike Doyle -- Chief Financial Officer

Yes.

Vincent Colicchio -- Analyst

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

Kelley Hippler -- Chief Sales Officer

Thanks, Vince, for the question. I would say we've not seen any shift in terms of the seniority of the folks that are leaving. It's been pretty much distributed across the population. What I will say is the people that we are recruiting and bringing on board to backfill, we are hiring with the success profile that we've used historically here at Forrester to put into the customer engagement model.

So the folks who we're backfilling with on average are bringing in a little bit more experience than potentially those that left. But I would say as we look across those departures, it's pretty evenly distributed across our different teams and experience levels.

Vincent Colicchio -- Analyst

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

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

You can figure out if it's us. If you look closely it says --

Vincent Colicchio -- Analyst

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

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

Also, we've three buttons. We're green, yellow, red. The businesses, you have -- happy you're not No. 1, and we are very, very close to No.

2. Then you have a lot of little tiny guys out there. I actually like this because it's a very, it's an immature early market. And we like that because it means that we can land and expand here, and we're doing that.

I got to tell you, in that business, and I'm just talking about the physical side of the cloud, having the Forrester backing has really, really accelerated that business. We're getting -- we have a lot of big elephants out there right now, which is terrific. So again, you're going to see a lot of little guys out there, but it's really a two horse race at this point.

Vincent Colicchio -- Analyst

Thanks, guys. Nice quarter.

Operator

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

Allen Klee -- Analyst

[Inaudible] modules and things that are getting added. Thank you.

Operator

Allen, your line is now open.

Allen Klee -- Analyst

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

Kelley Hippler -- Chief Sales Officer

So we're in the early stages of planning, Allen. What I will say is our top priority right now is backfilling the headcount that has departed. But based on early stage planning, we're probably looking at high-single digit growth for our quota carriers for next year, but we'll hone in on that as we get further into Q4. So we will be expanding quota carriers most likely high-single digits, because we also don't want to move away from the focus and traction that we're getting around driving productivity.

And want to make sure that we're balancing those two things as we move forward because that will also help us with improving margin as we go forward to not just go out and hire a bunch of heads, but also continue to drive the productivity of those that we have here with us.

Allen Klee -- Analyst

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

Mike Doyle -- Chief Financial Officer

We had -- we did talk about it. We had -- we talked about organic revenue growth rate of 8%, which is, if you look on a constant currency, I don't know, it was around 9%. I think for similar, I think what you have for SiriusDecisions is a low-single digit quarter from a revenue perspective. And I think that's a function of some of the attrition that we had earlier in the year and we're just feeling the effects of that.

And again, I think that's the -- it's a temporal effect that we'll work through, and then next year the numbers will be dramatically different. Overall, though, I think good organic quarter. And we're seeing, again, when this settles in we're going to see a lot of goodness. Sirius is the big growth story for us next year, so we're pretty excited about things.

Allen Klee -- Analyst

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

Mike Doyle -- Chief Financial Officer

Yeah. What is means is that right now we're expecting this year with guidance that we're growing at a 12 to 16% rate over a year ago. I'm saying it'll be a faster rate. So it's not going to be 12 to 16% next year.

It'll be something larger than that in terms of EPS growth. And again, it's driven in part by -- it's primarily driven by the full integration of SiriusDecisions. So you're adding revenue synergies, you're adding some cost synergies, and that should drive very healthy earnings-per-share growth year over year. So it's going to be better than the growth we're experiencing this year.

So that's what I was trying to get at. We're going to have obviously fully refined guidance in the February call, but I wanted to at least give a perspective on how we're seeing it right now. We're still in the midst of our budgeting process, so we'll fine tune that. And come February, early February, we'll have the final numbers out for folks.

Allen Klee -- Analyst

OK. Maybe one last question. Is there -- I know you took on debt related to the SiriusDecisions acquisition. You had been paying it down.

When do you think it might, that you might feel comfortable with using some free cash flow to buy back stock? I know that's a hard question to answer, but if you had any thoughts on that.

Mike Doyle -- Chief Financial Officer

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

Allen Klee -- Analyst

OK. Thank you so much.

Operator

I will now turn the call over to Mike Doyle, Forrester's chief financial officer, for closing comments.

Mike Doyle -- Chief Financial Officer

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

Operator

[Operator signoff]

Duration: 42 minutes

Call participants:

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

Kelley Hippler -- Chief Sales Officer

Mike Doyle -- Chief Financial Officer

Trevor Romeo -- Analyst

Vincent Colicchio -- Analyst

Allen Klee -- Analyst

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