Gartner, Inc. · NYSE:IT
Gartner — Investor Presentation (March 2008)
28 slides from Gartner's investor presentation, Mar 6, 2008
Slide 1: Forward-Looking Statements
Forward-Looking Statements Statements contained in this presentation regarding the growth and prospects of the business, the Company's projected 2008 financial results, Roadmap Objectives and all other statements in this presentation other than recitation of historical facts are forward-looking stat
Slide 2: Gene Hall, Chief Executive Officer
Gene Hall Chief Executive Officer
Slide 3: Gartner: CIO, IT Functional Leaders, Technology Companies
Gartner CIO IT FUNCTIONAL LEADERS TECHNOLOGY COPMPANIES + RESEARCH ANALYSTS EVENTS CONSULTING SALES
Slide 4: Untapped Market Opportunity
Untapped Market Opportunity Non- Headquarter Locations Unassigned Prospects Insufficient Coverage New Buying Centers
Slide 5: Market Opportunity $21 Billion
Market Opportunity 3 7 $21 Billion Technology Companies + CIOs IT Functional Leaders 11
Slide 6: Strategy and Programs
Strategy and Programs Increase Sales Capability Innovative, Highly Differentiated Offerings World Class Service Extraordinary Research
Slide 7: Recent Performance Demonstrates Success
Recent Performance Demonstrates Success (1) See the attached Glossary for the definition of Normalized EBITDA, a reconciliation to Net Income and cautionary statement regarding this non-GAAP financial measure." GAAP EPS 36% $0.13 $0.50 $0.68 - -$0.02 - -$0.20 $0.00 $0.20 $0.40 $0.60 $0.80 2004 2005
Slide 8: Why Invest in Gartner?
Why Invest in Gartner? Strong value proposition Vast, untapped opportunity Attractive business model Strategy, programs and leadership team in place to deliver sustained profitable growth Track record of sustained growth
Slide 9: Chris Lafond, Chief Financial Officer
Chris Lafond Chief Financial Officer
Slide 10: Recent Performance Demonstrates Success
GAAP EPS 36% $0.13 $0.50 $0.68 - -$0.02 - -$0.20 $0.00 $0.20 $0.40 $0.60 $0.80 2004 2005 2006 2007 Normalized EBITDA (1) $ in Millions 25% 109 105 156 194 0 50 100 150 200 250 2004 2005 2006 2007 Operating Cash Flow $ in Millions 40% 48 27 106 148 0 50 100 150 200 2004 2005 2006 2007 Revenue 1189 $
Slide 11: Recent Performance - Key Metrics
Recent Performance - Key Metrics Research Contract Value $ in Millions 18% 509 593 640 753 0 200 400 600 800 2004 2005 2006 2007 Event Attendees 8% 31k 41k 44k 36k 0k 10k 20k 30k 40k 50k 2004 2005 2006 2007 Consulting Utilization 63% 62% 64% 69% 0% 20% 40% 60% 80% 2004 2005 2006 2007 Research Retent
Slide 12: Attractive Business Model
Attractive Business Model Three segments - Research, Consulting & Events High incremental margins in all three businesses Recurring, predictable Research revenue with annual subscription model Strong operating cash flow Diverse, global customer base
Slide 13: Contract Value to Revenue Conversion
Contract Value to Revenue Conversion On October 1, we sell a 2 year contract worth $240K On December 31, we would report the following: Contract Value $120K Revenue Recognized $30K Deferred Revenue $90K YR1 $120K Oct $10 Nov $10 Dec $10 YR2 $120K Oct Sep $240K $30K
Slide 14: Business Model
Business Model Notes: 2004 figures re-stated to reflect impact of Equity Compensation expense - impact as follows: Research 1 pt, Events 0 pt, Consulting 1 pt, Sales & Marketing 0 pt, G&A 1 pt Gross Contribution Margin 64% 60% 70% Research 49% 50% 50% Events 39% 35% 40% Consulting 2007 2004 Incremen
Slide 15: Salesforce Growth Drives CV Growth
Salesforce Growth Drives CV Growth Average Salesforce and Total Contract Value Salesforce Contract Value ($ in millions) 735 634 516 512 457 438 418 $753 $640 $593 $509 $482 $489 $534 2001 2002 2003 2004 2005 2006 2007
Slide 16: Sales Force Economics
Sales Force Economics Individual Territory Level Average Territory $900k $(162)k $288k $1,027k Average Territory Beginning CV 900 NCVI 127 Ending CV 1,027 Revenue 945 Sales Rep Cost 200 % Cost of Sale 21% 0 $0.2 $0.4 $0.6 $0.8 $1 $1.2 Base CV Loss New Business Ending CV
Slide 17: Sales Productivity - Drivers
Sales Productivity - Drivers Retention Retain existing client (client retention) Penetrate existing clients deeper (wallet retention) New Business Launch new products Further penetrate existing clients Obtain new clients Pricing Annual price increases Migrate to new products Reduce discounting
Slide 18: Sales Productivity Increasing
Sales Productivity Increasing ($20) $0 $150 2003 2004 2005 2006 2007 Average NCVI per Sales Executive $(K) $75 $50 $25 $125 $100 Notes: NCVI = Net Contract Value Increase, or ending CV minus beginning CV Average NCVI per Sales Person calculated as the NCVI divided by average number of sales reps for
Slide 19: 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 20: Updated 2008 Guidance
Updated 2008 Guidance Update for sale of Vision Events Reduce 2007 actuals by $21M in revenue, $4M in EBITDA and $0.02 EPS 2008 guidance excludes Vision Events Excludes impact of gain on sale and discontinued operations Research 770 - - 780 14% - - 16% Consulting 335 - - 345 3% - - 6% Events 168 - -
Slide 21: Quarterly Phasing-Revenue
Quarterly Phasing-Revenue Research revenue growth lags Contract Value growth due to annual subscription model Events revenue recognized when conferences delivered Symposia in Q2 and Q4 Consulting revenue is seasonal, with Q2 and Q4 higher volume quarters
Slide 22: Quarterly Phasing-Revenue
Quarterly Phasing-Revenue Approximate revenue phasing in 2008 is as follows: Above based on midpoint of revenue guidance Research Consulting Events Q1 Q2 Q3 Q4 24% 26% 25% 25% 23% 26% 24% 27% 12% 32% 11% 45%
Slide 23: Quarterly Phasing-Expense
Quarterly Phasing-Expense Quarterly fluctuations in cost of services driven by the conference schedule in our Events business Annual worldwide merit increase of 3% effective April 1 Higher Research and Sales expenses in Q4 related to Symposia and year-end sales support activities Growth in sales for
Slide 24: Quarterly Phasing-Earnings
Quarterly Phasing-Earnings Approximate EPS from continuing operations phasing in 2008 is as follows: Above based on the midpoint of guidance Based upon business conditions the Company may accelerate or postpone investments throughout the year which could shift earnings between quarters Q1 Q2 Q3 Q4 1
Slide 25: Capital Structure Initiatives Delivering Shareholder Value
Capital Structure Initiatives Delivering Shareholder Value Re-purchased 8.4M shares at a cost of $169M in 2007 Announced new $250 million share repurchase program Significantly reduced shares outstanding Significantly reduced equity compensation shares
Slide 26: Shares Outstanding and Share Repurchases
Shares Outstanding and Share Repurchases Total Shares Outstanding Share Repurchases Shares in millions 2002 2003 2004 2005 2006 104 114 112 130 131 0 20 40 60 80 100 120 140 0 50 100 150 200 250 300 350 400 2002 2003 2004 2005 2006 100 2007 2007 $ in millions 60 43 352 10 271 169
Slide 27: Gartner's Financial Strength
Gartner's Financial Strength Attractive business model Operational and cost focus Strong cash flow Solid balance sheet Annual double digit revenue and earnings growth Long-term value focus
Slide 28: Glossary
Glossary Non-GAAP Financial Measure Investors are cautioned that Normalized EBITDA contained in this presentation is not a financial measure under generally accepted accounting principles. In addition, it should not be construed as an alternative to any other measures of performance determined in ac