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Gartner Reports Financial Results for Second Quarter 2011

^{Published on 2011-08-02 17:41:12 - Market Wire}
 

STAMFORD, Conn.--([ BUSINESS WIRE ])--Gartner, Inc. (NYSE: IT), the leading provider of research and analysis on the global information technology industry, today reported results for second quarter 2011. The Company also revised upward its revenue outlook for full year 2011.

For second quarter 2011, total revenue was $365.5 million, up 16% compared to second quarter 2010 as reported and 11% excluding the impact of foreign exchange. Second quarter 2011 net income was $32.2 million, an increase of 60%, and Normalized EBITDA was $68.3 million, an increase of 27%. (See "Non-GAAP Financial Measures" for a discussion of Normalized EBITDA). Diluted earnings per share was $0.32 in the second quarter of 2011 compared to $0.20 per share in the prior year quarter. In second quarter 2011, the Company incurred acquisition related charges, net of tax, of $0.02 per share, as compared to $0.04 per share in the prior year quarter.

Gene Hall, Gartnera™s chief executive officer, commented, aRevenue, contract value, Normalized EBITDA and EPS increased at double-digit rates again in the second quarter, and the growth rate in contract value was the fastest since early 2007. The increases in our revenue and contract value as well as the expansion of key operating metrics such as wallet retention illustrate the value we provide to our clients and the market opportunity for our services.This performance continues our trend of consistent double digit growth to both revenue and earnings.a

Business Segment Highlights

Research

Revenue for second quarter of 2011 was $250.0 million, an increase of 20% compared to the second quarter of 2010 or 14% excluding the impact of foreign exchange. The gross contribution margin was 67%, an increase of 2 points over second quarter 2010. Contract value was $1,006.9 million at June 30, 2011, up 15% from June 30, 2010 and the highest ever reported. Contract value increased 16% excluding the impact of foreign exchange. Client and wallet retention rates for second quarter 2011 were 82% and 100%, respectively, up from 81% and 93% in the prior year quarter.

Consulting

Revenue for second quarter of 2011 was $78.0 million, an increase of 3% as reported and a decrease of 2% excluding the impact of foreign exchange. The gross contribution margin was 37%. Second quarter 2011 utilization was 64% and billable headcount was 490. Backlog was $94.8 million at June 30, 2011.

Events

Revenue for second quarter of 2011 was $37.6 million, up 28% from the second quarter of 2010 and 24% excluding the impact of foreign exchange. The gross contribution margin was 46%. During the second quarter of 2011 the Company held 21 events with 11,295 attendees, compared to 21 events and 9,697 attendees in the second quarter of 2010.

Cash Flow and Balance Sheet Highlights

Cash provided by operating activities was $88.6 million during second quarter 2011 compared to $69.6 million in the second quarter 2010. Additions to property, equipment and leasehold improvements (aCapital Expendituresa) totaled $5.8 million in second quarter 2011 and $4.3 million in second quarter 2010. The Company had cash of $125.3 million at June 30, 2011. During second quarter 2011, $36.0 million in cash was used to repurchase 0.9 million common shares.

Financial Outlook for 2011

Overall, total projected 2011 revenue increased $10.0 million on the low end and $5.0 million on the high end. All other guidance remains the same. As revised, the Companya™s full year 2011 guidance is as follows:

(1) Includes a projected $(0.04) per share impact from acquisition related charges. In 2010, these charges were $(0.14) per share.

(2) See aNon-GAAP Financial Measuresa below for a discussion of Normalized EBITDA and Free Cash Flow.

(3) Includes $15.0 million of estimated payments for the renovation of our Stamford headquarters facility. The accounting impact of these renovation payments increases both cash flow from operations and capital expenditures (investing activities) by the same amount and as a result has no net impact on Free Cash Flow. These expenditures are contractually reimbursable by the landlord.

Conference Call Information

Gartner has scheduled a conference call at 8:30 a.m. eastern time on Tuesday, August 2, 2011, to discuss the Company's financial results. The conference call will be available via the Internet by accessing the Company's website at [ http://investor.gartner.com ] or by dial-in. The U.S. dial-in number is 888-713-4199 and the international dial-in number is 617-213-4861 and the participant passcode is 22980550. The question and answer session of the conference call will be open to investors and analysts only. A replay of the webcast will be available for approximately 90 days following the call.

About Gartner

Gartner, Inc. (NYSE: IT) is the worlda™s leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is a valuable partner to clients in over 11,600 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,700 associates, including over 1,250 research analysts and consultants, and clients in 85 countries. For more information, visit [ www.gartner.com ].

Non-GAAP Financial Measures

Normalized EBITDA: Represents operating income excluding depreciation, accretion on obligations related to excess facilities, amortization, stock-based compensation expense, acquisition related charges, and Other charges. We believe Normalized EBITDA is an important measure of our recurring operations as it excludes items that may not be indicative of our core operating results. Investors are cautioned that Normalized EBITDA is not a financial measure defined under generally accepted accounting principles and as a result is considered a non-GAAP financial measure. We provide this measure to enhance the user's overall understanding of the Company's current financial performance and the Company's prospects for the future. It should not be construed as an alternative to any other measure of performance determined in accordance with generally accepted accounting principles.

Free Cash Flow: Represents cash provided by operating activities less additions to property, equipment and leasehold improvements (aCapital Expendituresa). We believe that Free Cash Flow is an important measure of the recurring cash generated by the Companya™s core operations that is available to be used to repurchase stock, repay debt obligations and invest in future growth through new business development activities or acquisitions.

Safe Harbor Statement

Statements contained in this press release regarding the Companya™s growth and prospects, projected 2011 financial results and all other statements in this release other than recitation of historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. Such factors include, but are not limited to, the following: 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 upon whom we are dependent; our ability to achieve and effectively manage growth, including our ability to integrate acquisitions and consummate future acquisitions; our ability to pay our debt; 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 carry out our strategic initiatives and manage associated costs; our ability to successfully compete with existing competitors and potential new competitors; our ability to enforce or protect our intellectual property rights; additional risks associated with international operations including foreign currency fluctuations; the impact of restructuring and other charges on our businesses and operations; general economic conditions; risks associated with the creditworthiness and budget cuts of governments and agencies; and other factors described under aRisk Factorsa contained in our Annual Report on Form10-K for the year ended December31, 2010 which can be found on Gartner's website at [ www.investor.gartner.com ] and the SEC's website at [ www.sec.gov ]. Forward-looking statements included herein speak only as of the date hereof and Gartner disclaims any obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.