Gartner, Inc. · NYSE:IT

Gartner — Q2 2017 Earnings Presentation

26 slides from Gartner's earnings presentation, Aug 8, 2017

  1. Slide 1: Second Quarter 2017 Results

    0 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Second Quarter 2017 Results August 8, 2017

  2. Slide 2: Forward-looking statements

    1 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Statements contained in this presentation regarding the growth and prospects of the business, the Company’s projected 2017 financial results, long- term objectives and all other statements in this prese

  3. Slide 3: Second Quarter 2017: Highlights

    2 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Second Quarter 2017: Highlights Traditional Gartner Total CV Growth of 15% y/y improvements in both client and wallet retention metrics with strong productivity growth Adjusted EBITDA of $185M Free Cash

  4. Slide 4: Second Quarter 2017: Overview

    3 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions (unless stated) Q2’17 Q2’16 (Combined) YOY Growth Total Adjusted Revenue (a) $935.3 $861.1 +9% Operating Income $(98.4) $97.9 nm Adjusted EBITDA (a) $185.0 $182.2 +2% Diluted Earnings Per

  5. Slide 5: Second Quarter 2017: Research

    4 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions (unless stated) Q2’17 Q2’16 (Combined) YOY Change Adjusted Research Revenue (a) $674.6 $608.9 +11% Adjusted Gross Contribution (a) $461.4 $424.1 +9% Adjusted Gross Contribution Margin (a)

  6. Slide 6: Traditional Gartner Research Highlights

    5 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Traditional Gartner Research Highlights Direct Quota Bearing Headcount FX Neutral Sales Productivity* *Excluding L2, sales productivity increased 11% year over year and increased 5% on a sequential basi

  7. Slide 7: Second Quarter 2017: Events

    6 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions (unless stated) Q2'17 Q2'16 (Combined) YOY Growth Adjusted Events Revenue (a) $95.2 $86.7 +10% Adjusted Gross Contribution (a) $53.7 $50.8 +6% Adjusted Contribution Margin (a) 56.4% 58.6%

  8. Slide 8: Second Quarter 2017: Consulting

    7 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions (unless stated) Q2'17 Q2'16 (Combined) YOY Change Adjusted Consulting Revenue (a) $91.7 $86.5 +6% Adjusted Gross Contribution (a) $31.4 $28.3 +11% Adjusted Contribution Margin (a) 34.3% 32

  9. Slide 9: Second Quarter 2017: Talent Assessment & Other

    8 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions (unless stated) Q2'17 Q2'16 (Combined) YOY Growth (Reported) Adjusted Talent Assessment & Other Revenue (a) $73.9 $79.0 -6% Adjusted Gross Contribution (a) $44.1 $43.9 0% Adjusted Contribu

  10. Slide 10: Second Quarter 2017: Adjusted Earnings Per Share

    9 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Second Quarter 2017: Adjusted Earnings Per Share(a) In $ thousands, except per share amounts Three Months Ended June 30, 2017 Net Income $(92,281) Acquisition adjustments, net of tax effect: Amortizatio

  11. Slide 11: Second Quarter 2017: Cash Flow Highlights

    10 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions Q2'17 Q2'16 (Combined) YOY Change (Reported) Adjusted EBITDA $185.0 $182.2 +2% Operating Cash Flow $112.3 $110.8 +1% - Capital Expenditures $(30.9) $(25.8) + Cash Acquisition and Integrat

  12. Slide 12: Second Quarter 2017: Balance Sheet and Capital Structure

    11 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. $835 $745 $703 $1,658 $3,468 $(445) $(466) $(474) $(1,228) $(589) 2Q16 3Q16 4Q16 1Q17 2Q17 Total Debt Cash Net Debt ($M) 0.9x 0.7x 0.5x 0.9x 4.1x 2Q16 3Q16 4Q16 1Q17 2Q17 Net Debt* / EBITDA Ratio Secon

  13. Slide 13: Fiscal Year 2017 Outlook

    12 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Fiscal Year 2017 Outlook

  14. Slide 14: Updated 2017 Guidance

    13 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Updated 2017 Guidance $ In millions, except per share amounts Updated 2017 Guidance Range* Research revenue $2,421 - $2,470 Consulting revenue $319 - $334 Events revenue $321 - $340 Talent Assessment &

  15. Slide 15: GAAP to Adjusted Revenue Guidance Reconciliation

    14 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. GAAP to Adjusted Revenue Guidance Reconciliation $ In millions 2017 GAAP Revenue Guidance Deferred Revenue Fair Value Adjustment 2017 Adjusted Revenue Guidance Research revenue $2,421 - $2,470 $145 - $

  16. Slide 16: Reconciliation of 2017 Adjusted to GAAP EPS Outlook

    15 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. $0.31 $(1.59) $0.94 $1.49 Reconciliation of 2017 Adjusted to GAAP EPS Outlook ~$(1.26) ~$(1.47) ~$(1.53) $3.32 – $3.49 **Adjusting items calculated at the midpoint of guidance range Amortization of Pre

  17. Slide 17: Appendix

    16 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Appendix

  18. Slide 18: Additional 2017 Guidance Items

    17 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Additional 2017 Guidance Items $ In millions, unless stated Stock-based compensation $67 - $68 Depreciation $69 - $70 Amortization of intangible assets $202 Effective tax rate (GAAP) 33 - 34% Effective

  19. Slide 19: Operating Income to Adjusted EBITDA Reconciliation

    18 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Operating Income to Adjusted EBITDA(a) Reconciliation In $ thousands Q2’17 Q2’16 (Combined) Operating income ($98,388) $97,877 Normalizing adjustments: Stock-based compensation expense (b) $16,557 $16,

  20. Slide 20: Recast CEB Contract Value & Wallet Retention

    19 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Recast CEB Contract Value* & Wallet Retention Wallet Retention Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 94% 93% 93% 90% 92% 94% $573 $578$574 $549 $578$569 Contract Value ($ in Millions) * CEB total contrac

  21. Slide 21: Adjusted Segments

    20 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Adjusted Segments Three Months Ended June 30, 2016 Combined In $ thousands Adjusted Revenue Direct Expense Adjusted Gross Contribution Adjusted Contribution Margin Adjusted EBITDA Research $608,911 $18

  22. Slide 22: Reconciliation Tables

    21 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Reconciliation Tables

  23. Slide 23: Reconciliation Tables

    22 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Reconciliation Tables

  24. Slide 24: Reconciliation of GAAP Operating Income to Adjusted EBITDA

    23 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Reconciliation of GAAP Operating Income to Adjusted EBITDA(a)

  25. Slide 25: Definitions

    24 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Definitions Adjusted Revenue: Represents GAAP revenue plus non-cash fair value adjustments on pre-acquisition deferred revenues. The majority of the pre-acquisition deferred revenue is recognized ratab

  26. Slide 26: AND PROPRIETARY I

    25 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.

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