Gartner, Inc. · NYSE:IT
Gartner — Q1 2017 Earnings Presentation
25 slides from Gartner's earnings presentation, May 4, 2017
Slide 1: First Quarter 2017 Results
0 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. First Quarter 2017 Results May 4th, 2017
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 presen
Slide 3: First Quarter 2017: Highlights
2 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. First Quarter 2017: Highlights Total FX Neutral Contract Value Growth of 15% Double digit growth in every region, client size and virtually every industry segment Total FX Neutral Revenue Growth of 13%
Slide 4: First Quarter 2017: Overview
3 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions (unless stated) 1Q17 1Q16 YOY Growth (Reported) YOY Growth (FX Neutral) Total Revenue $625.2 $557.3 +12% +13% Operating Income $53.5 $64.4 -17% -19% Adjusted EBITDA (1) $106.1 $103.3 +3% +
Slide 5: First Quarter 2017: Research
4 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions (unless stated) 1Q17 1Q16 Y/Y Growth (Reported) Y/Y Growth (FX Neutral) Research Revenue $504.7 $440.3 +15% +15% Total Contract Value $1,953 $1,721 +14% +15% Gross Contribution $346.7 $308
Slide 6: First Quarter 2017: Events
5 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions (unless stated) 1Q17 1Q16 YOY Growth (Reported) YOY Growth (FX Neutral) Events Revenue $35.3 $32.1 +10% +11% Gross Contribution $13.6 $13.0 +4% Contribution Margin 38.5% 40.5% -200 bps Num
Slide 7: First Quarter 2017: Consulting
6 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions (unless stated) 1Q17 1Q16 YOY Growth (Reported) YOY Growth (FX Neutral) Consulting Revenue $85.2 $84.9 - +2% Gross Contribution $28.3 $29.4 -4% Contribution Margin 33.2% 34.6% -140 bps Qua
Slide 8: First Quarter 2017: Consolidated Income Statement
7 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. First Quarter 2017: Consolidated Income Statement In $ thousands, except per share amounts March 31, 2017 March 31, 2016 Year-on-Year % Change TOTAL REVENUES $625,169 $557,266 12% Cost of services and p
Slide 9: First Quarter 2017: Adjusted Earnings Per Share
8 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. First Quarter 2017: Adjusted Earnings Per Share(a) In $ thousands, except per share amounts March 31, 2017 March 31, 2016 Year-on-Year % Change Net Income $36,433 $44,987 -19% Acquisition and other adju
Slide 10: First Quarter 2017: Cash Flow Highlights
9 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ Millions 1Q17 1Q16 YOY Growth (Reported) YOY Growth (FX Neutral) Adjusted EBITDA $106 $103 +3% +1% Operating Cash Flow $(29.6) $13.3 - Capital Expenditures $(10.7) $(6.6) + Cash Acquisition and Int
Slide 11: First Quarter 2017: Balance Sheet and Capital Structure
10 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. 1.1x 0.9x 0.7x 0.5x 0.9x 4.3x 1Q16 2Q16 3Q16 4Q16 1Q17 4/5/17 April 5, 2017 post-close CEB transaction snapshot; represents Gartner and CEB cash as of 3/31/2017 Net Debt / (Cash) Position ($M) Net De
Slide 12: Debt Balances and Interest Rates
11 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ millions (unless stated) As of 4/5/2017 Interest Rate Maturity Senior Secured Revolving Credit Facility (a) $545 LIBOR + 2.50% 1Q22 Term Loan A Credit Facility $1,485 LIBOR + 2.00% 1Q22 Term Loan
Slide 13: First Quarter 2017 Financial Highlights
12 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. First Quarter 2017 Financial Highlights
Slide 14: CEB First Quarter 2017: Highlights
13 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. CEB First Quarter 2017: Highlights(1) Total Adjusted Revenue of $214M(2) Adjusted EBITDA of $36M(2) CEB Segment Contract Value declined by approximately 1%* Core CEB Wallet Retention of 89%* Increased
Slide 15: Fiscal Year 2017 Outlook
14 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Fiscal Year 2017 Outlook
Slide 16: Updated 2017 Guidance
15 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Updated 2017 Guidance $ In millions, except per share amounts Gartner (12 months) CEB (9 months) Combined (12 months of Gartner & 9 months of CEB) Research revenue $2,070 - $2,105 $2,070 - $2,105 Consu
Slide 17: Reconciliation of 2017 Adjusted to GAAP EPS Outlook
16 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. $0.31 $(1.59) Amortization of acquired intangibles Deferred Revenue Fair Value Adjustment GAAP EPS Guidance Range Adjusted EPS Guidance Range Acquisition and Integration Charges Real Estate Related & O
Slide 18: Appendix
17 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Appendix
Slide 19: Gartner Reconciliation Tables: Operating Income to Adjusted EBITDA
18 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner Reconciliation Tables In $ thousands Reconciliation - Operating income to Adjusted EBITDA (a): 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017 Net income (GAAP) $44,987 $51,626 $30,484 $66,4
Slide 20: Gartner Reconciliation Tables: GAAP EPS to Adjusted EPS
19 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner Reconciliation Tables a) Adjusted earnings per share represents GAAP diluted earnings per share adjusted for the impact of certain items directly related to acquisitions and other items. b) Con
Slide 21: Gartner Reconciliation Tables: Operating Cash Flow to Free Cash Flow
20 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner Reconciliation Tables In $ thousands Cash Provided by Operating Activities to Free Cash Flow (a) 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017 Cash (used) provided by Operating Activities
Slide 22: CEB Reconciliation Table
21 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. CEB Reconciliation Table In $ thousands Reconciliation – Operating income to Adjusted EBITDA 3/31/2017 Operating Profit (Loss) ($11,314) Normalizing adjustments: Other (Expense) Income, Net ($1,458) Ne
Slide 23: Additional 2017 Guidance Items
22 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 $196 Effective tax rate (GAAP) 33 – 34% Effective
Slide 24: Definitions
23 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Definitions Adjusted Revenue: Represents revenue calculated in accordance with GAAP plus non-cash fair value adjustments on pre acquisition deferred revenues. The majority of the pre-acquisition deferr
Slide 25: AND PROPRIETARY I
24 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.