FORRESTER RESEARCH INC
For the period ended Jun 30, 2024. Filed Aug 5, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 5, 2024
FORR$8.83+1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-03.
0000950170-24-052499
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-05.
0000950170-24-090357
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 67 previous paragraphs and 70 current paragraphs.
38 unchanged; 25 reworded; 6 added; 3 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 9 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
Three and Six Months Ended June 30, 2024 and 2023
Current report
Events revenues decreased 25% and 28% during the three and six months ended June 30, 2024, respectively, compared to the prior year periods. The decrease in revenues during the three and six months ended June 30, 2024 was due primarily to a decrease in sponsorship revenues as well as a decrease in event ticket revenue.
Current report
Income Tax Expense
Current report
Research segment expenses decreased 2% and 4% during the three and six months ended June 30, 2024, respectively, compared to the prior year periods. The decrease in expenses during the three months ended June 30, 2024 was primarily due to a $1.0 million decrease in compensation and benefit costs primarily due to a decrease in headcount. The decrease in expenses during the six months ended June 30, 2024 was primarily due to a $2.8 million decrease in compensation and benefit costs primarily due to a decrease in headcount.
Current report
Event segment revenues decreased 25% and 28% during the three and six months ended June 30, 2024, respectively, compared to the prior year periods. The decrease in revenues was due primarily to a decrease in sponsorship revenues as well as a decrease in event ticket revenue.
Current report
Event segment expenses were consistent during the three and six months ended June 30, 2024, respectively, compared to the prior year periods.
Removed paragraphs (3)
Previous report
Events revenues were insignificant during the three months ended March 31, 2024 and 2023 as no events were held during either period.
Previous report
Income Tax Benefit
Previous report
Event segment revenues and expenses were insignificant during the three months ended March 31, 2024 and 2023 as no events were held during either period.
Reworded paragraphs (25)
Previous wording
We calculate CV at the foreign currency rates used for internal planning purposes each year. For comparative purposes, we have recast historical CV at the current year foreign currency rates and using the updated methodology as described on the investor relations section of our website. We have included the recast CV metric below for the three months ended March 31, 2023, and we have also provided recast CV amounts dating back to the first quarter of 2022, on the investor relations section of our website.
Current wording
We calculate CV at the foreign currency rates used for internal planning purposes each year. For comparative purposes, we have recast historical CV and wallet retention at the current year foreign currency rates and using the updated methodology as described on the investor relations section of our website. We have included the recast CV and wallet retention metric below for the six months ended June 30, 2023, and we have also provided recast CV and wallet retention amounts dating back to the second quarter of 2022, on the investor relations section of our website.
Previous wording
Contract value at March 31, 2024 decreased by 4% compared to the prior year period due to lower enrichment of retained customers and a decrease in the number of clients. Client retention and wallet retention decreased by 2 percentage points, respectively, at March 31, 2024 compared to the prior year period. However, wallet retention increased by 1 percentage point compared to the prior quarter and client retention was consistent compared to the prior quarter. The decrease in our retention rates and number of clients from the prior year period is primarily attributable to 1) macroeconomic conditions affecting our client base including a) funding and budget pressure on our smaller technology clients and the technology industry in general, and b) the uncertain economic conditions caused by inflation, increased interest rates, and geopolitical turbulence, and 2) the ongoing transition of our client base to our Forrester Decisions product platform that was launched in August 2021. As of March 31, 2024, approximately 70% of our overall CV was in our Forrester Decisions product platform. In the longer term, we anticipate that approximately 80% of our CV will be in our Forrester Decisions product platform. The remaining approximate 20% of CV represents non-Forrester Decisions CV products, primarily reprints. The ongoing macroeconomic conditions and product transition are anticipated to pressure our key metrics through 2024.
Current wording
Contract value at June 30, 2024 decreased by 3% compared to the prior year period due to wallet retention being at 89% for the period (representing retention and enrichment of the prior year CV base) and new client acquisition not offsetting client retention of 73% (as shown by the decrease in the number of clients). Client retention decreased by 1 percentage point, and wallet retention was flat, at June 30, 2024 compared to the prior year period. However, both wallet retention and client retention increased by 1 percentage point compared to the prior quarter. The decrease in the number of clients from the prior year period is primarily attributable to 1) macroeconomic conditions affecting our client base including a) funding and budget pressure on our smaller technology clients and the technology industry in general, and b) the uncertain economic conditions during the past year caused by inflation, high interest rates, and geopolitical turbulence, and 2) the ongoing transition of our client base to our Forrester Decisions product platform that was launched in August 2021. As of June 30, 2024, approximately 73% of our overall CV was in our Forrester Decisions product platform. By the end of 2024, we anticipate that approximately 80% of our CV will be in our Forrester Decisions product platform. The remaining approximate 20% of CV will represent non-Forrester Decisions CV products, primarily reprints. The ongoing macroeconomic conditions and product transition are anticipated to continue to pressure our key metrics through 2024.
Previous wording
Research revenues are recognized as revenue primarily on a ratable basis over the term of the contracts, which are generally 12 or 24-month periods. Research revenues decreased 5% during the three months ended March 31, 2024 compared to the prior year period primarily due to the decrease in CV, as discussed above. From a product perspective, the decrease in revenues was primarily due to a decline in revenue from our reprint product and our other smaller and discontinued products. In addition, revenue from our subscription research products declined 3%.
Current wording
Research revenues are recognized as revenue primarily on a ratable basis over the term of the contracts, which are generally 12 or 24-month periods. Research revenues decreased 5% during both the three and six months ended June 30, 2024 compared to the prior year periods primarily due to the decrease in CV, as discussed above. From a product perspective, the decrease in revenues was primarily due to a decline in revenue from our reprint product and our other smaller and discontinued products. In addition, revenue from our subscription research products declined 1% and 2% during the three and six months ended June 30, 2024, respectively.
Previous wording
Consulting revenues decreased 27% during the three months ended March 31, 2024 compared to the prior year period. The decrease in revenues was due to a decrease in delivery of both advisory and consulting services due to lower client bookings.
Current wording
Consulting revenues decreased 17% and 22% during the three and six months ended June 30, 2024, respectively, compared to the prior year periods. The decrease in revenues during the three and six months ended June 30, 2024 was due to a decrease in delivery of both advisory and consulting services due to lower client bookings.
Previous wording
Three Months Ended March 31, 2024 and 2023
Current wording
Cost of services and fulfillment expenses decreased 6% during the three months ended June 30, 2024 compared to the prior year period. The decrease was primarily due to a $3.3 million decrease in compensation and benefit costs due to a decrease in headcount and incentive bonus costs.
Previous wording
Cost of services and fulfillment expenses decreased 9% during the three months ended March 31, 2024 compared to the prior year period. The decrease was primarily due to (1) a $4.1 million decrease in compensation and benefit costs due to a decrease in headcount and incentive bonus costs, partially offset by an increase in benefit costs (due to a benefit during 2023 resulting from the introduction of the flexible vacation and personal paid time off policy in the United States) and (2) a $0.6 million decrease in professional services costs primarily due to a decrease in contractor costs.
Current wording
Cost of services and fulfillment expenses decreased 8% during the six months ended June 30, 2024 compared to the prior year period. The decrease was primarily due to (1) a $7.4 million decrease in compensation and benefit costs due to a decrease in headcount and incentive bonus costs, partially offset by an increase in benefit costs (mainly due to a benefit during 2023 resulting from the introduction of the flexible vacation and personal paid time off policy in the United States) and (2) a $0.9 million decrease in professional services costs primarily due to a decrease in contractor costs. These decreases were partially offset by a $0.6 million increase in stock compensation expense.
Previous wording
Selling and marketing expenses decreased 5% during the three months ended March 31, 2024 compared to the prior year period. The decrease was primarily due to a $2.4 million decrease in compensation and benefit costs due to a decrease in headcount, commissions expense, and incentive bonus costs, partially offset by an increase in benefit costs (due to a benefit during 2023 resulting from the introduction of the flexible vacation and personal paid time off policy in the United States). This decrease was partially offset by a $0.5 million increase in professional services costs primarily due to an increase in consulting fees.
Current wording
Selling and marketing expenses decreased 4% during the six months ended June 30, 2024 compared to the prior year period. The decrease was primarily due to a $4.1 million decrease in compensation and benefit costs due to a decrease in headcount, commissions expense, and incentive bonus costs, partially offset by an increase in benefit costs (mainly due to a benefit during 2023 resulting from the introduction of the flexible vacation and personal paid time off policy in the United States). This decrease was partially offset by a $0.8 million increase in professional services costs primarily due to an increase in consulting fees.
Previous wording
Research segment expenses decreased 6% during the three months ended March 31, 2024 compared to the prior year period. The decrease in expenses during the three months ended March 31, 2024 was primarily due to a $1.8 million decrease in compensation and benefit costs primarily due to a decrease in headcount.
Current wording
General and administrative expenses decreased 6% during the three months ended June 30, 2024 compared to the prior year period. The decrease was primarily due to a $1.1 million decrease in compensation and benefit costs due to a decrease in headcount and incentive bonus costs.
Previous wording
General and administrative expenses decreased 34% during the three months ended March 31, 2024 compared to the prior year period. The decrease was primarily due to (1) a $5.5 million decrease in legal costs, due primarily to a $4.8 million provision for a legal settlement recorded in 2023 for a wage-related matter and related legal services and (2) a $1.6 million decrease in compensation and benefit costs due to a decrease in headcount and incentive bonus costs, partially offset by an increase in benefit costs (due to a benefit during 2023 resulting from the introduction of the flexible vacation and personal paid time off policy in the United States).
Current wording
General and administrative expenses decreased 22% during the six months ended June 30, 2024 compared to the prior year period. The decrease was primarily due to (1) a $5.8 million decrease in legal costs, due primarily to a $4.8 million provision for a legal settlement recorded in 2023 for a wage-related matter and related legal services and (2) a $2.8 million decrease in compensation and benefit costs due to a decrease in headcount and incentive bonus costs, partially offset by an increase in benefit costs (mainly due to a benefit during 2023 resulting from the introduction of the flexible vacation and personal paid time off policy in the United States). These decreases were partially offset by a $0.4 million increase in software costs.
Previous wording
The fluctuation for depreciation expense was immaterial during the three months ended March 31, 2024 compared to the prior year period.
Current wording
The fluctuation for depreciation expense was immaterial during the three and six months ended June 30, 2024 compared to the prior year periods.
Previous wording
Amortization expense decreased by $0.6 million during the three months ended March 31, 2024 compared to the prior year period due to a decrease in the amortization of trademark and technology intangible assets.
Current wording
Amortization expense decreased by $0.6 million and $1.1 million during the three and six months ended June 30, 2024, respectively, compared to the prior year periods due to a decrease in the amortization of trademark and technology intangible assets.
Previous wording
In May 2023, we implemented a reduction in our workforce of approximately 8% across various geographies and functions to better align our cost structure with our revised revenue outlook for the year, and to streamline our sales and consulting organizations to more efficiently go to market in support of driving contract value growth in the future. We recorded $7.5 million of severance and related costs for this action during the second quarter of 2023. In addition, we closed certain of our smaller offices both inside and outside the U.S. in order to reduce facility costs and better match our facilities to our hybrid work strategy. As a result of closing the offices, we recorded restructuring costs of $2.3 million, which included $1.3 million related to right-of-use asset impairments and accelerated amortization and $0.6 million related to impairments of leasehold improvements. We also incurred $0.7 million in contract termination costs. The remaining $0.5 million of the severance and related costs for this plan, as of March 31, 2024, will be paid during 2024.
Current wording
In May 2023, we implemented a reduction in our workforce of approximately 8% across various geographies and functions to better align our cost structure with our revised revenue outlook for the year, and to streamline our sales and consulting organizations to more efficiently go to market in support of driving contract value growth in the future. We recorded $7.5 million of severance and related costs for this action during the second quarter of 2023. In addition, we closed certain of our smaller offices both inside and outside the U.S. in order to reduce facility costs and better match our facilities to our hybrid work strategy. As a result of closing the offices, we recorded restructuring costs of $2.3 million, which included $1.3 million related to right-of-use asset impairments and accelerated amortization and $0.6 million related to impairments of leasehold improvements. We also incurred $0.7 million in contract termination costs. We anticipate the remaining $0.4 million of the severance and related costs for this plan, as of June 30, 2024, will be paid during 2024.
Previous wording
In February 2024, we implemented a reduction in our workforce of approximately 3% across various geographies and functions to better align our cost structure with the revenue outlook for the year. We recorded $0.7 million of severance and related costs for this action during the fourth quarter of 2023, and $2.8 million during the first quarter of 2024. We recorded a restructuring charge of $3.8 million during the first quarter of 2024 related to closing one floor of our offices in California, of which $3.2 million related to an impairment of a right-of-use asset and $0.6 million related to an impairment of leasehold improvements. We expect all of the severance and related costs for this plan to be paid during 2024.
Current wording
In February 2024, we implemented a reduction in our workforce of approximately 3% across various geographies and functions to better align our cost structure with the revenue outlook for the year. We recorded $0.7 million of severance and related costs for this action during the fourth quarter of 2023, and $2.8 million during the first quarter of 2024. We recorded a restructuring charge of $3.8 million during the first quarter of 2024 related to closing one floor of our offices in California, of which $3.2 million related to an impairment of a right-of-use asset and $0.6 million related to an impairment of leasehold improvements. We anticipate all of the severance and related costs for this plan to be paid during 2024.
Previous wording
Interest expense consists of interest on our borrowings. The fluctuation for interest expense was immaterial during the three months ended March 31, 2024 compared to the prior year period.
Current wording
Interest expense consists of interest on our borrowings. The fluctuation for interest expense was immaterial during the three and six months ended June 30, 2024 compared to the prior year periods.
Previous wording
Other income, net primarily consists of interest income, gains and losses on foreign currency, and gains and losses on foreign currency forward contracts. Other income, net increased $0.7 million during the three months ended March 31, 2024 compared to the prior year period primarily due to an increase in interest income.
Current wording
Other income, net primarily consists of interest income, gains and losses on foreign currency, and gains and losses on foreign currency forward contracts. Other income, net increased $0.5 million and $1.2 million during the three and six months ended June 30, 2024, respectively, compared to the prior year periods primarily due to an increase in interest income.
Previous wording
Income tax benefit increased by $0.8 million during the three months ended March 31, 2024 compared to the prior year period primarily due to the increase in loss from operations. For the full year 2024, we anticipate that our effective tax rate will be approximately 50%.
Current wording
The increase in the effective tax rate during the six months ended June 30, 2024 to 114% compared to 46% in the prior year period is primarily due to the following discrete tax items during the six months ended June 30, 2024: 1) increased tax expense from the settlement of share-based awards, 2) foreign withholding taxes due to the dissolution of a foreign subsidiary, and 3) a valuation allowance recorded against non-realizable state NOL carryforwards due to the dissolution of a domestic subsidiary. However, for the full year 2024, we anticipate that our effective tax rate will be in the range of 65% to 80%.
Previous wording
The Consulting segment includes the revenues and the related costs of our project consulting organization. The project consulting organization delivers a majority of our project consulting revenue and certain advisory services.
Current wording
The Consulting segment includes the revenues and the related costs of our project consulting organization. The project consulting organization delivers a majority of our project consulting revenue.
Previous wording
Research segment revenues decreased 9% during the three months ended March 31, 2024 compared to the prior year period. Research product revenues within this segment decreased 5% primarily due to the decrease in CV, as discussed above. From a product perspective, the decrease in revenue was primarily due to a decline in revenue from our reprint product and our other smaller and discontinued products. In addition, revenue from our subscription research products declined 3%. Consulting product revenues within this segment decreased 41% primarily due to decreased delivery of consulting and advisory services by our research analysts due primarily to lower client bookings for these services.
Current wording
Research segment revenues decreased 6% and 7% during the three and six months ended June 30, 2024, respectively, compared to the prior year periods. For both the three and six months ended June 30, 2024, research product revenues within this segment decreased 5% primarily due to the decrease in CV, as discussed above. From a product perspective, the decrease in revenues was primarily due to a decline in revenue from our reprint product and our other smaller and discontinued products. In addition, revenue from our subscription research products declined 1% and 2% during the three and six months ended June 30, 2024, respectively. For the three and six months ended June 30, 2024, consulting product revenues within this segment decreased 21% and 32%, respectively, primarily due to decreased delivery of consulting and advisory services by our research analysts due primarily to lower client bookings for these services.
Previous wording
Consulting segment revenues decreased 22% during the three months ended March 31, 2024 compared to the prior year period. The decrease in revenues during the three months ended March 31, 2024 was primarily due to a decrease in delivery of consulting services due to lower client bookings.
Current wording
Consulting segment revenues decreased 16% and 19% during the three and six months ended June 30, 2024, respectively, compared to the prior year periods. The decrease in revenues during the three and six months ended June 30, 2024 was primarily due to a decrease in delivery of consulting services due to lower client bookings.
Previous wording
Consulting segment expenses decreased 18% during the three months ended March 31, 2024 compared to the prior year period. The decrease in expenses during the three months ended March 31, 2024 was primarily due to (1) a $1.8 million decrease in compensation and benefit costs primarily due to a decrease in headcount and (2) a $0.4 million decrease in professional services primarily due to a decrease in contractor costs.
Current wording
Consulting segment expenses decreased 17% and 18% during the three and six months ended June 30, 2024, respectively, compared to the prior year periods. The decrease in expenses during the three months ended June 30, 2024 was primarily due to a $1.6 million decrease in compensation and benefit costs primarily due to a decrease in headcount. The decrease in expenses during the six months ended June 30, 2024 was primarily due to (1) a $3.5 million decrease in compensation and benefit costs primarily due to a decrease in headcount and (2) a $0.8 million decrease in professional services primarily due to a decrease in contractor costs.
Previous wording
We have historically financed our operations primarily through funds generated from operations. Research revenues, which constituted approximately 77% of our revenues during the three months ended March 31, 2024, are generally renewable and are typically payable in advance. We generated cash from operating activities of $0.6 million and $12.3 million during the three months ended March 31, 2024 and 2023, respectively. The $11.7 million decrease in cash provided from operations for the three months ended March 31, 2024 compared to the prior year period was primarily due to a $9.8 million decrease in cash generated from accounts receivable and deferred revenue due to a decrease in contract bookings and a $5.8 million increase in prepaid expenses and other current assets, which was primarily due to the timing of payments in each period.
Current wording
We have historically financed our operations primarily through funds generated from operations. Research revenues, which constituted approximately 72% of our revenues during the six months ended June 30, 2024, are generally renewable and are typically payable in advance. We used cash in operating activities of $2.3 million during the six months ended June 30, 2024 and generated cash of $15.8 million during the six months ended June 30, 2023. The $18.1 million decrease in cash provided from operations for the six months ended June 30, 2024 compared to the prior year period was primarily due to a $9.1 million decrease in cash generated from accounts receivable and deferred revenue due to a decrease in contract bookings and a $6.3 million variance from the change in accrued expenses and other liabilities, which was primarily due to a decrease in incentive bonus accruals in 2024.
Previous wording
During the three months ended March 31, 2024, we used cash in investing activities of $7.2 million primarily from $5.8 million in net purchases of marketable investments and $1.4 million of purchases of property and equipment, primarily consisting of computer software. During the three months ended March 31, 2023, we generated cash from investing activities of $1.3 million primarily from $3.0 million in net maturities of marketable investments partially offset by $1.6 million of purchases of property and equipment, primarily consisting of computer software.
Current wording
During the six months ended June 30, 2024, we used cash in investing activities of $2.7 million primarily from $2.3 million of purchases of property and equipment, primarily consisting of computer software, and $0.4 million in net purchases of marketable investments. During the six months ended June 30, 2023, we generated cash from investing activities of $3.4 million primarily from $6.2 million in net maturities of marketable investments partially offset by $2.7 million of purchases of property and equipment, primarily consisting of computer software.
Previous wording
We used $4.3 million of cash from financing activities during the three months ended March 31, 2024 primarily due to $4.1 million for purchases of our common stock and $1.4 million in taxes paid related to net share settlements of restricted stock units, partially offset by $1.3 million of net proceeds from the issuance of common stock under our stock-based incentive plans. We used $14.2 million of cash in financing activities during the three months ended March 31, 2023 primarily due to $15.0 million of discretionary repayments of our revolving credit facility, as well as $1.1 million in taxes paid related to net share settlements of restricted stock units, partially offset by $1.8 million of net proceeds from the issuance of common stock under our stock-based incentive plans. As of March 31, 2024, our remaining stock repurchase authorization was approximately $66.8 million.
Current wording
We used $8.3 million of cash from financing activities during the six months ended June 30, 2024 primarily due to $8.0 million for purchases of our common stock and $1.5 million in taxes paid related to net share settlements of restricted stock units, partially offset by $1.3 million of net proceeds from the issuance of common stock under our stock-based incentive plans. We used $15.2 million of cash in financing activities during the six months ended June 30, 2023 primarily due to $15.0 million of discretionary repayments of our revolving credit facility, $1.3 million in taxes paid related to net share settlements of restricted stock units, and $0.8 million for purchases of our common stock, partially offset by $1.8 million of net proceeds from the issuance of common stock under our stock-based incentive plans. As of June 30, 2024, our remaining stock repurchase authorization was approximately $87.9 million.
Previous wording
Additional future contractual cash obligations extending over the next 12 months and beyond primarily consist of operating lease payments. We lease office space under non-cancelable operating lease agreements (refer to Note 5 –Leases in the Notes to Consolidated Financial Statements for additional information). The remaining duration of non-cancelable office space leases ranges from less than 1 year to 7 years. As of March 31, 2024, remaining non-cancelable lease payments are due as follows: $12.2 million in 2024, $26.3 million within 2025 and 2026, $8.6 million within 2027 and 2028, and $6.0 million beyond 2028.
Current wording
Additional future contractual cash obligations extending over the next 12 months and beyond primarily consist of operating lease payments. We lease office space under non-cancelable operating lease agreements (refer to Note 5 –Leases in the Notes to Consolidated Financial Statements for additional information). The remaining duration of non-cancelable office space leases ranges from less than 1 year to 7 years. As of June 30, 2024, remaining non-cancelable lease payments are due as follows: $8.1 million in 2024, $26.3 million within 2025 and 2026, $8.6 million within 2027 and 2028, and $6.0 million beyond 2028.
Previous wording
As of March 31, 2024, we had cash, cash equivalents, and marketable investments of $118.5 million. This balance includes $77.8 million held outside of the U.S. If the cash outside of the U.S. is needed for operations in the U.S., we would be required to accrue and pay U.S. state taxes and may be required to pay withholding taxes to foreign jurisdictions to repatriate these funds. However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate these funds for our U.S. operations. We believe that our current cash balance and cash flows from operations will satisfy working capital, financing activities, and capital expenditure requirements for the next twelve months and to meet our known long-term cash requirements.
Current wording
As of June 30, 2024, we had cash, cash equivalents, and marketable investments of $110.8 million. This balance includes $73.8 million held outside of the U.S. If the cash outside of the U.S. is needed for operations in the U.S., we would be required to accrue and pay U.S. state taxes and may be required to pay withholding taxes to foreign jurisdictions to repatriate these funds. However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate these funds for our U.S. operations. We believe that our current cash balance and cash flows from operations will satisfy working capital, financing activities, and capital expenditure requirements for the next twelve months and to meet our known long-term cash requirements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Selling and marketing expenses decreased 3% during the three months ended June 30, 2024 compared to the prior year period. The decrease was primarily due to a $1.7 million decrease in compensation and benefit costs due to a decrease in headcount, commissions expense, and incentive bonus costs.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
In January 2023, we implemented a reduction in our workforce of approximately 4% across various geographies and functions to streamline operations. We recorded $4.3 million of severance and related costs for this action during the fourth quarter of 2022, and $0.6 million during the first quarter of 2023. We recorded a restructuring charge of $5.0 million during the fourth quarter of 2022 related to closing one floor of our offices in California, of which $3.7 million related to an impairment of a right-of-use asset and $1.3 million related to an impairment of leasehold improvements. During the first quarter of 2023, we recorded an incremental $0.4 million impairment to our California office. We also recorded a $0.6 million charge during the first quarter of 2023 for the write-off of a previously capitalized software project. Essentially all of the severance and related costs for this plan were paid during 2023.