Contract Value
FIRST QUARTER 2024 HIGHLIGHTS
-
Revenues:
$1.5 billion , +4.5% as reported; +4.6% FX neutral. -
Net income:
$211 million , -28.8% as reported; adjusted EBITDA:$382 million , +0.8% as reported, +1.7% FX neutral. -
Diluted EPS:
$2.67 , -27.4%; adjusted EPS:$2.93 , +1.7%. -
Operating cash flow:
$189 million , +14.7%; free cash flow:$166 million , +15.8%. -
Repurchased 0.5 million common shares for
$225 million .
CONFERENCE CALL INFORMATION
The Company will host a webcast call at
CONSOLIDATED RESULTS HIGHLIGHTS |
||||||||||||
(Unaudited; $ in millions, except per share amounts) |
|
Three Months Ended |
|
|
|
|
||||||
|
|
|
|
|
|
Inc/(Dec) |
||||||
|
|
2024 |
|
2023 |
|
Inc/(Dec) |
|
FX Neutral |
||||
GAAP Metrics: |
|
|
|
|
|
|
|
|
||||
Revenues |
|
$ |
1,473 |
|
$ |
1,409 |
|
4.5 |
% |
|
4.6 |
% |
Net income |
|
|
211 |
|
|
296 |
|
(28.8 |
)% |
|
na |
|
Diluted EPS |
|
|
2.67 |
|
|
3.68 |
|
(27.4 |
)% |
|
na |
|
Operating cash flow |
|
|
189 |
|
|
165 |
|
14.7 |
% |
|
na |
|
|
|
|
|
|
|
|
|
||||
Non-GAAP Metrics: |
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
382 |
|
$ |
379 |
|
0.8 |
% |
|
1.7 |
% |
Adjusted EPS |
|
|
2.93 |
|
|
2.88 |
|
1.7 |
% |
|
na |
|
Free cash flow |
|
|
166 |
|
|
144 |
|
15.8 |
% |
|
na |
|
na=not available. |
CONTRACT VALUE HIGHLIGHTS
-
Global Technology Sales Contract Value (GTS CV):
$3.8 billion , +5.4% YoY FX Neutral -
Global Business Sales Contract Value (GBS CV):
$1.1 billion , +12.3% YoY FX Neutral
SEGMENT RESULTS HIGHLIGHTS
Our segment results for the three months ended
(Unaudited; $ in millions) |
|
|
|
|
|
|
||||||
|
|
Research |
|
Conferences |
|
Consulting |
||||||
Revenues |
|
$ |
1,268 |
|
|
$ |
70 |
|
|
$ |
135 |
|
Inc/(Dec) |
|
|
4.2 |
% |
|
|
8.4 |
% |
|
|
6.0 |
% |
Inc/(Dec) - FX neutral |
|
|
4.1 |
% |
|
|
8.5 |
% |
|
|
6.9 |
% |
Gross contribution |
|
$ |
945 |
|
|
$ |
23 |
|
|
$ |
54 |
|
Inc/(Dec) |
|
|
5.0 |
% |
|
|
(13.2 |
)% |
|
|
6.8 |
% |
Contribution margin |
|
|
74.5 |
% |
|
|
33.2 |
% |
|
|
40.3 |
% |
nm=not meaningful. |
Additional details regarding our segment results can be obtained from the earnings supplement, our quarterly report on Form 10–Q filed with the
Certain financial metrics contained in this Press Release are considered non-GAAP financial measures. Definitions of these non-GAAP financial measures are included in this Press Release under “Non-GAAP Financial Measures” and the related reconciliations are under “Supplemental Information — Non-GAAP Reconciliations.” In this Press Release, some totals may not add due to rounding. The percentage changes are based on the unrounded whole number and recalculation based on millions may yield a different result.
ABOUT GARTNER
FORWARD-LOOKING STATEMENTS
Statements contained in this press release regarding the Company’s growth and prospects, projected financial results, long-term objectives, and all other statements in this release other than recitation of historical facts are forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, estimates, uncertainties and other factors that may cause actual results to be materially different. Such factors include, but are not limited to, the following: the impact of general economic conditions, including inflation (and related monetary policy by governments in response to inflation), recession, and national elections in a number of large countries on economic activity and our operations; changes in macroeconomic and market conditions and market volatility, including interest rates and the effect on the credit markets and access to capital; our ability to carry out our strategic initiatives and manage associated costs; our ability to recover potential claims under our event cancellation insurance; the timing of conferences and meetings, in particular our Gartner Symposium/Xpo series that normally occurs during the fourth quarter; our ability to achieve and effectively manage growth, including our ability to integrate our acquisitions and consummate and integrate future acquisitions; our ability to pay our debt obligations; our ability to maintain and expand our products and services; our ability to expand or retain our customer base; our ability to grow or sustain revenue from individual customers; our ability to attract and retain a professional staff of research analysts and consultants as well as experienced sales personnel upon whom we are dependent, especially in light of labor competition; our ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of competitive pressures; our ability to successfully compete with existing competitors and potential new competitors; our ability to enforce and protect our intellectual property rights; our ability to keep pace with technological developments in artificial intelligence; additional risks associated with international operations, including foreign currency fluctuations; the impact on our business resulting from changes in global geopolitical conditions, including those resulting from the conflict in the
NON-GAAP FINANCIAL MEASURES
Certain financial measures used in this Press Release are not defined by
Adjusted EBITDA and Adjusted EBITDA Margin: Represents GAAP net income (loss) adjusted for: (i) interest expense, net; (ii) tax provision (benefit); (iii) gain on event cancellation insurance claims, as applicable; (iv) gain/loss on divestitures, as applicable; (v) other (income) expense, net; (vi) stock-based compensation expense; (vii) depreciation, amortization, and accretion; (viii) loss on impairment of lease related assets, as applicable; and (ix) acquisition and integration charges and certain other non-recurring items. Adjusted EBITDA Margin represents Adjusted EBITDA divided by GAAP Revenue. We believe Adjusted EBITDA and Adjusted EBITDA Margin are important measures of our recurring operations as they exclude items not representative of our core operating results.
Adjusted Net Income: Represents GAAP net income (loss) adjusted for the impact of certain items directly related to acquisitions and other non-recurring items. These adjustments include: (i) the amortization of acquired intangibles; (ii) acquisition and integration charges and other non-recurring items; (iii) gain on event cancellation insurance claims, as applicable; (iv) gain/loss on divestitures, as applicable; (v) loss on impairment of lease related assets, as applicable; (vi) the non-cash (gain) loss on de-designated interest rate swaps, as applicable; and (vii) the related tax effect. We believe Adjusted Net Income is an important measure of our recurring operations as it excludes items that may not be indicative of our core operating results.
Adjusted EPS: Represents GAAP diluted EPS adjusted for the impact of certain items directly related to acquisitions and other non-recurring items. These adjustments include on a per share basis: (i) the amortization of acquired intangibles; (ii) acquisition and integration charges and other non-recurring items; (iii) gain on event cancellation insurance claims, as applicable; (iv) gain/loss on divestitures, as applicable; (v) loss on impairment of lease related assets, as applicable; (vi) the non-cash (gain) loss on de-designated interest rate swaps, as applicable; and (vii) the related tax effect. We believe Adjusted EPS is an important measure of our recurring operations as it excludes items that may not be indicative of our core operating results.
Free Cash Flow: Represents cash provided by operating activities determined in accordance with GAAP less payments for capital expenditures. We believe Free Cash Flow is an important measure of the recurring cash generated by the Company’s core operations that may be available to be used to repay debt obligations, repurchase our stock, invest in future growth through new business development activities, or make acquisitions.
Foreign Currency Neutral (FX Neutral): We provide foreign currency neutral dollar amounts and percentages for our contract values, revenues, certain expenses, and other metrics. These foreign currency neutral dollar amounts and percentages eliminate the effects of exchange rate fluctuations and thus provide a more accurate and meaningful trend in the underlying data being measured. We calculate foreign currency neutral dollar amounts by converting the underlying amounts in local currency for different periods into
SUPPLEMENTAL INFORMATION - NON-GAAP RECONCILIATIONS
The tables below provide reconciliations of certain Non-GAAP financial measures used in this Press Release with the most directly comparable GAAP measure. See “Non-GAAP Financial Measures” above for definitions of these measures.
Reconciliation - GAAP Net Income to Adjusted EBITDA |
||||||||
(Unaudited; $ in millions) |
|
|
|
|||||
|
Three Months Ended |
|||||||
|
2024 |
|
2023 |
|||||
GAAP net income |
$ |
211 |
|
|
$ |
296 |
|
|
Interest expense, net |
|
19 |
|
|
|
27 |
|
|
Gain on event cancellation insurance claims (a) |
|
— |
|
|
|
(3 |
) |
|
Other (income) expense, net |
|
(5 |
) |
|
|
2 |
|
|
Tax provision |
|
49 |
|
|
|
85 |
|
|
Operating income |
|
274 |
|
|
|
408 |
|
|
Adjustments: |
|
|
|
|||||
Stock-based compensation expense (b) |
|
51 |
|
|
|
45 |
|
|
Depreciation, amortization and accretion (c) |
|
50 |
|
|
|
47 |
|
|
Loss on impairment of lease related assets (d) |
|
1 |
|
|
|
9 |
|
|
Acquisition and integration charges and other non-recurring items (e) |
|
8 |
|
|
|
10 |
|
|
Gain from sale of divested operation (f) |
|
— |
|
|
|
(139 |
) |
|
Adjusted EBITDA |
$ |
382 |
|
|
$ |
379 |
|
(a) |
Consists of the gain on event cancellation insurance claims for events cancelled in 2020. |
|
(b) |
Consists of costs for stock-based compensation awards. |
|
(c) |
Includes depreciation expense, amortization of intangibles and accretion on asset retirement obligations. |
|
(d) |
Includes impairment loss for lease related assets. |
|
(e) |
Consists of direct and incremental expenses related to acquisitions and divestitures, facility-related exit costs and other non-recurring items. |
|
(f) |
Consists of the gain on our |
Reconciliation - GAAP Net Income and GAAP Net Income per Diluted Share to Adjusted Net Income and Adjusted EPS |
||||||||||||||||
(Unaudited; $ in millions, except per share amounts) |
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
||||||||||||||
|
|
2024 |
|
2023 |
||||||||||||
|
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
||||||||
GAAP net income and GAAP net income per diluted share |
|
$ |
211 |
|
|
$ |
2.67 |
|
|
$ |
296 |
|
|
$ |
3.68 |
|
Acquisition and other adjustments: |
|
|
|
|
|
|
|
|
||||||||
Amortization of acquired intangibles (a) |
|
|
23 |
|
|
|
0.29 |
|
|
|
23 |
|
|
|
0.28 |
|
Acquisition and integration charges and other non-recurring items (b), (c) |
|
|
9 |
|
|
|
0.12 |
|
|
|
11 |
|
|
|
0.14 |
|
Gain on event cancellation insurance claims (d) |
|
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
(0.04 |
) |
Gain from sale of divested operation (e) |
|
|
— |
|
|
|
— |
|
|
|
(139 |
) |
|
|
(1.74 |
) |
Loss on impairment of lease related assets (f) |
|
|
1 |
|
|
|
0.01 |
|
|
|
9 |
|
|
|
0.11 |
|
Gain on de-designated interest rate swaps (g) |
|
|
(4 |
) |
|
|
(0.06 |
) |
|
|
1 |
|
|
|
0.02 |
|
Tax impact of adjustments (h) |
|
|
(7 |
) |
|
|
(0.09 |
) |
|
|
34 |
|
|
|
0.43 |
|
Adjusted net income and Adjusted EPS (i) |
|
$ |
232 |
|
|
$ |
2.93 |
|
|
$ |
231 |
|
|
$ |
2.88 |
|
(a) |
Consists of non-cash amortization from acquired intangibles. |
|
(b) |
Consists of direct and incremental expenses related to acquisitions and divestitures, facility-related exit costs and other non-recurring items. |
|
(c) |
Includes the amortization and write-off of deferred financing fees, which are recorded in Interest expense, net in the Company’s accompanying Condensed Consolidated Statements of Operations. |
|
(d) |
Consists of the gain on event cancellation insurance claims for events cancelled in 2020. |
|
(e) |
Consists of the gain on our |
|
(f) |
Includes impairment loss for lease related assets. |
|
(g) |
Represents the fair value adjustment for interest rate swaps after de-designation. |
|
(h) |
The blended effective tax rates on the adjustments were approximately 25.3% and 34.8% for the three months ended |
|
(i) |
Adjusted EPS was calculated based on 79.0 million and 80.3 million diluted shares for the three months ended |
Reconciliation - GAAP Cash Provided by Operating Activities to Free Cash Flow |
||||||||
(Unaudited; $ in millions) |
|
|
|
|
||||
|
|
Three Months Ended |
||||||
|
|
2024 |
|
2023 |
||||
GAAP cash provided by operating activities |
|
$ |
189 |
|
|
$ |
165 |
|
Cash paid for capital expenditures |
|
|
(23 |
) |
|
|
(21 |
) |
Free Cash Flow |
|
$ |
166 |
|
|
$ |
144 |
|
|
|||||||
Condensed Consolidated Statements of Operations |
|||||||
(Unaudited; in millions, except per share data) |
|||||||
|
Three Months Ended |
||||||
|
|
||||||
|
2024 |
|
2023 |
||||
Revenues: |
|
|
|
||||
Research |
$ |
1,268.2 |
|
|
$ |
1,217.3 |
|
Conferences |
|
70.1 |
|
|
|
64.6 |
|
Consulting |
|
134.6 |
|
|
|
127.0 |
|
Total revenues |
|
1,472.9 |
|
|
|
1,408.9 |
|
Costs and expenses: |
|
|
|
||||
Cost of services and product development |
|
459.4 |
|
|
|
435.1 |
|
Selling, general and administrative |
|
689.8 |
|
|
|
657.1 |
|
Depreciation |
|
26.3 |
|
|
|
23.9 |
|
Amortization of intangibles |
|
23.0 |
|
|
|
22.7 |
|
Acquisition and integration charges |
|
0.5 |
|
|
|
1.4 |
|
Gain from sale of divested operation |
|
— |
|
|
|
(139.3 |
) |
Total costs and expenses |
|
1,199.0 |
|
|
|
1,000.9 |
|
Operating income |
|
273.9 |
|
|
|
408.0 |
|
Interest expense, net |
|
(19.2 |
) |
|
|
(27.4 |
) |
Gain on event cancellation insurance claims |
|
— |
|
|
|
3.1 |
|
Other income (expense), net |
|
4.8 |
|
|
|
(2.4 |
) |
Income before income taxes |
|
259.5 |
|
|
|
381.3 |
|
Provision for income taxes |
|
49.0 |
|
|
|
85.5 |
|
Net income |
$ |
210.5 |
|
|
$ |
295.8 |
|
|
|
|
|
||||
Net income per share: |
|
|
|
||||
Basic |
$ |
2.69 |
|
|
$ |
3.72 |
|
Diluted |
$ |
2.67 |
|
|
$ |
3.68 |
|
Weighted average shares outstanding: |
|
|
|
||||
Basic |
|
78.3 |
|
|
|
79.5 |
|
Diluted |
|
79.0 |
|
|
|
80.3 |
|
Source:
Gartner-IR
View source version on businesswire.com: https://www.businesswire.com/news/home/20240430448466/en/
SVP, Investor Relations, Gartner
+1 203.316.6631
investor.relations@gartner.com
Source: