Slide 1: Chris Lafond, Chief Financial Officer
Chris Lafond Chief Financial Officer
Slide 2: Our Business
Our Business RESEARCH EVENTS CONSULTING SALES PROPRIETARY ANALYTICS AND DATA ANALYSTS
Slide 3: Attractive Business Model: Gartner's Financial Strength
Attractive Business Model Gartner's Financial Strength Target double-digit revenue and EPS growth over the long-term Vast, untapped market opportunity High incremental gross contribution margins Recurring, predictable Research revenue with annual subscription model and high retention rates Strong ca
Slide 4: Business Model
Business Model Notes: * 2004 figures re-stated to reflect impact of Equity Compensation expense - impact as follows: Research 1 pt, Events 0 pt, Consulting 1 pt, Sales & Marketing 0 pt, G&A 1 pt, EBITDA 2 pt Gross Contribution Margin 65% 60% 70% Research 41% 52% 50% Events 39% 35% 40% Consulting 200
Slide 5: Strong Cash Flow Profile and Balance Sheet
Strong Cash Flow Profile and Balance Sheet Up-front billing for majority of research contracts Improved cash collection efficiency Non-capital intensive business Cash used for share repurchase and acquisitions Low debt level
Slide 6: Consistent Growth Strategy: The Goals We Set in 2005
Consistent Growth Strategy The Goals We Set in 2005 Focus on growing the Research business Effectively manage the Events portfolio Improve the productivity and profitability of the Consulting business while investing for future growth Leverage G&A infrastructure Drive shareholder value through the e
Slide 7: Consistent Growth Strategy
Consistent Growth Strategy Extraordinary Research Insight Strong Sales Capability High Value Differentiated Offerings Performance-driven Leadership Team Continuous Improvement and Innovation World-Class Service
Slide 8: Consistent Growth Strategy: The Goals We Set in 2005
Consistent Growth Strategy The Goals We Set in 2005 Focus on growing the Research business Effectively manage the Events portfolio Improve the productivity and profitability of the Consulting business while investing for future growth Leverage G&A infrastructure Drive shareholder value through the e
Slide 9: Proven Sales Strategy Delivering Results
Proven Sales Strategy Delivering Results 2004 2004 2004 2004 $509M 58K 8,720 Contract Value Quota Bearing Headcount Research Client Organizations Average Contract Value per Organization 443 $784M 75K 10,492 942 2009 2009 2009 2009 Note: 2009 data does not include AMR Research and Burton Group
Slide 10: The Results We Delivered: Revenue Growth
Consistent Growth Strategy The Results We Delivered: Revenue Growth (a) Restated to exclude results of Vision Events 2004 2005 2006 2007 2008 868.73 964.14 1037.299 1168.475 1279.065 Total Revenue (a) $ in millions CAGR = 10% (a) Restated to exclude results of Vision Events 2004 2005 2006 2007 2008
Slide 11: The Results We Delivered: Earnings Growth
Consistent Growth Strategy The Results We Delivered: Earnings Growth 2004 2005 2006 2007 2008 102.728 100.334 150.3464695 190.387 213.464 Normalized EBITDA (a) $ in millions CAGR = 20% 2004 2005 2006 2007 2008 0.09 -0.05 0.47 0.65 0.98 EPS from Continuing Operations (a) CAGR = 82% (a) Restated to ex
Slide 12: The Results We Delivered: Cash Flow Growth
Consistent Growth Strategy The Results We Delivered: Cash Flow Growth 2004 2005 2006 2007 2008 48.2007 27.122 106.264 148.335 184.35 2004 2005 2006 2007 2008 23.0967 4.766 85.151 124.163 160.018 2004 2005 2006 2007 2008 25.104 22.356 21.113 24.172 24.332 Cash From Operations $ in millions Free Cash
Slide 13: The Results We Delivered: Shares Reduced
Consistent Growth Strategy The Results We Delivered: Shares Reduced 2003 2004 2005 2006 2007 2008 129.9 111.2 113.8 102.6 98.8 93.7 Basic Shares Outstanding In millions - at Year End 2003 2004 2005 2006 2007 2008 31.7 25.9 18.3 16.2 14.1 11.2 Equity Plan Shares Outstanding In millions - at Year End
Slide 14: 2009: Successfully Managed Business Through Challenging Macro Environment
2009: Successfully Managed Business Through Challenging Macro Environment Quickly executed cost reduction actions Reduced costs and expenses by over $70 million (FX neutral) Discontinued 18 less profitable and non-strategic events Reduced capital spending Continued focused investment for long-term g
Slide 15: 2009: Business Trends Improved in Second Half
2009: Successfully Managed Business Through Challenging Macro Environment Business trends improved in second half Fourth quarter trends accelerated Research new business up 53% sequentially and 23% YoY New enterprises up 61% sequentially and 36% YoY Client and wallet retention improved significantly
Slide 16: Financial Results Demonstrate Success
2004 2005 2006 2007 2008 2009 0.09 -0.05 0.47 0.65 0.98 0.85 Financial Results Demonstrate Success Total Revenue (1) $ in millions 2005 - 2008 data is restated to exclude results of Vision Events See the attached Glossary for a discussion of Normalized EBITDA Contract Value $ in millions Normalized
Slide 17: Financial Results Demonstrate Success: Cash Flow Growth
Financial Results Demonstrate Success Cash Flow Growth Cash From Operations $ in millions Free Cash Flow $ in millions Note: See the attached Glossary for the definition of Free Cash Flow, and cautionary statement regarding this non-GAAP financial measure 48 27 106 148 184 162 0 50 100 150 200 2004
Slide 18: 2010: Return to Growth
(1) Includes $58 - 62 million in projected revenue from the acquisitions of AMR Research and Burton Group, net of fair value adjustments on pre-acquisition deferred revenue totaling $4 million. 2010: Return to Growth ($ in millions) Research $ 845 - - 865 12% - - 15% 10% - - 13% Consulting 300 - - 3
Slide 19: 2010: Return to Growth
Includes $0.00 - $0.02 per share in projected income from the acquisitions of AMR Research and Burton Group. Reflects year-over-year comparisons excluding the impact of the $0.05 per share non-recurring tax benefit recorded in 2009. See the attached Glossary for a discussion of Normalized EBITDA, Ac
Slide 20: AMR and Burton: Financial Impact
AMR and Burton: Financial Impact We expect the acquisitions of AMR and Burton to be highly accretive over time (1) 2011 projections are as of December 31, 2009. Note: See the attached Glossary for a discussion of Acquisition and Integration Charges and Income Per Share, Excluding Acquisition and Int
Slide 21: 2010 Quarterly Phasing - Revenue
2010 Quarterly Phasing - Revenue Research revenue driven by retention rates and timing of new business Balanced renewals with 26% in Q1 Fourth quarter is historically the largest for new business Events revenue recognized when conferences delivered Symposium Series in Q4 drives phasing 9 events in Q
Slide 22: 2010 Quarterly Phasing - Revenue
2010 Quarterly Phasing - Revenue Approximate revenue phasing in 2010: Research Consulting Events Q1 Q2 Q3 Q4 23% 27% 25% 25% 22% 25% 24% 29% 12% 24% 14% 50% Above based on midpoint of revenue guidance
Slide 23: 2010 Quarterly Phasing - Expense
2010 Quarterly Phasing - Expense Quarterly fluctuations in cost of services driven primarily by the conference schedule in our Events business Higher Research and Sales expenses in Q4 related to Symposia and year-end sales support activities G&A is less seasonal
Slide 24: Sales, G&A and Other Expenses
Sales, G&A and Other Expenses Depreciation driven by capital spending of $15 million in '09 and $24 million in '08 Interest expense reduced with lower debt levels Other income/expense is primarily transaction FX gains/losses Tax rates expected to remain between 32 and 33%
Slide 25: 2010 Quarterly Phasing - Earnings
2010 Quarterly Phasing - Earnings Approximate income per share excluding acquisition and integration charges: Q1 Q2 Q3 Q4 20% 40% 20% 20% Above based on the midpoint of guidance Based upon business conditions the Company may accelerate or postpone expenses throughout the year which could shift earni
Slide 26: 2010: Return to Growth
2010: Return to Growth CV at 1/1/10 Expect double-digit growth in 2010 AMR and Burton CV at 1/1/10 $855M 2010 FX Revaluation Reported CV at 12/31/09: $784M
Slide 27: Long-Term Financial Objectives
Long-Term Financial Objectives Note: See the attached Glossary for the definition of Normalized EBITDA, and cautionary statement regarding this non-GAAP financial measure Total Revenue Growth 11 - 16% Research 15 - 20% Consulting 3 - 8% Events 5 - 10% Normalized EBITDA* margin improvement 0 - 100 bp
Slide 28: Gartner's Financial Strength
Gartner's Financial Strength Vast, untapped market opportunity High incremental contribution margins Recurring, predictable Research revenue with annual subscription model and high retention rates Strong cash flow and balance sheet Diverse, global customer base with 47% of revenues outside of U.S. T
Slide 29: Q&A
Q&A
Slide 30: Why Invest in Gartner?
Why Invest in Gartner? Strong value proposition Vast, untapped opportunity Attractive business model Double-Digit Long Term Growth Strategy, programs and leadership team in place
Slide 31: Slide 31
Slide 32: Glossary
Glossary (1) Data reflects the reclassification of the Company's former Vision Events business as a discontinued operation. Non-GAAP Financial Measures Investors are cautioned that Income Per Share Excluding Acquisition and Integration Charges, Normalized EBITDA and Free Cash Flow are not financial
Slide 33: Glossary: Non-GAAP Financial Measures
Glossary Non-GAAP Financial Measures Free Cash Flow: Represents cash provided by operating activities excluding cash charges related to the acquisitions of AMR Research and Burton Group, which primarily consist of certain non-recurring costs such as severance and other exit costs ("Cash Acquisition