Gartner, Inc. · NYSE:IT
Gartner — Q3 2017 Earnings Presentation
23 slides from Gartner's earnings presentation, Nov 2, 2017
Slide 1: Third Quarter 2017 Results
0 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Third Quarter 2017 Results November 2, 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 prese
Slide 3: Third Quarter 2017: Highlights
2 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Third Quarter 2017: Highlights Traditional Gartner Total FX Neutral CV Growth of 15% y/y improvements in both client and wallet retention metrics with strong productivity growth Adjusted EBITDA of $149M
Slide 4: Third Quarter 2017: Overview
3 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ millions (unless stated) Q3’17 Q3’16 (Combined) YOY Growth Total Adjusted Revenue (a) $891.7 $805.4 +11% Operating Income (Loss) $(24.3) $66.3 nm Adjusted EBITDA (a) $149.0 $150.7 -1% Diluted Earni
Slide 5: Third Quarter 2017: Research
4 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ millions (unless stated) Q3’17 Q3’16 YOY Change Combined Adjusted Research Revenue (a) $701.2 $619.1 +13% Combined Adjusted Gross Contribution (a) $483.9 $432.4 +12% Combined Adjusted Gross Contrib
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 18% year over year and increased 1% on a sequential basi
Slide 7: Third Quarter 2017: Events
6 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ millions (unless stated) Q3'17 Q3'16 (Combined) YOY Growth Adjusted Events Revenue (a) $45.1 $36.2 +25% Adjusted Gross Contribution (a) $16.2 $12.8 +27% Adjusted Contribution Margin (a) 36% 35% +40
Slide 8: Third Quarter 2017: Consulting
7 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ millions (unless stated) Q3'17 Q3'16 (Combined) YOY Change Adjusted Consulting Revenue (a) $72.1 $73.7 -2% Adjusted Gross Contribution (a) $16.2 $18.2 -11% Adjusted Contribution Margin (a) 22% 25%
Slide 9: Third Quarter 2017: Talent Assessment & Other
8 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ millions (unless stated) Q3'17 Q3'16 (Combined) YOY Growth Adjusted Talent Assessment & Other Revenue (a) $73.4 $76.4 -4% Adjusted Gross Contribution (a) $47.0 $45.0 +4% Adjusted Contribution Margi
Slide 10: Third Quarter 2017: Adjusted Earnings Per Share
9 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Third Quarter 2017: Adjusted Earnings Per Share(a) In $ thousands, except per share amounts Three Months Ended September 30, 2017 Net Income (Loss) $(48,180) Acquisition adjustments, net of tax effect:
Slide 11: Third Quarter 2017: Cash Flow Highlights
10 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. In $ millions Q3'17 Q3'16 (Combined) YOY Change Adjusted EBITDA $149.0 $150.7 -1% Operating Cash Flow $149.5 $129.1 +16% - Capital Expenditures $(34.0) $(16.0) + Cash Acquisition and Integration Paymen
Slide 12: Third Quarter 2017: Balance Sheet and Capital Structure
11 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. $745 $703 $1,658 $3,468 $3,388 $(466) $(474) $(1,228) $(589) $(630) 3Q16 4Q16 1Q17 2Q17 3Q17 Total Debt Cash Net Debt ($M) 0.7x 0.5x 0.9x 4.1x 4.0x 3Q16 4Q16 1Q17 2Q17 3Q17 Net Debt* / EBITDA Ratio Thi
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
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 $2,455 - $2,480 Consulting revenue $320 - $335 Events revenue $323 - $338 Talent Assessment &
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 $2,455 - $2,480 $145 - $
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 $1.49 Reconciliation of 2017 Adjusted to GAAP EPS Outlook ~$(1.29) ~$(1.38) ~$(1.53) $3.39 – $3.50 **Adjusting items calculated at the midpoint of guidance range Amortization of Pre
Slide 17: Appendix
16 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Appendix
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 $65 - $66 Depreciation $65 - $66 Amortization of intangible assets $183 Effective tax rate (GAAP) 33 - 34% Effective
Slide 19: Operating Income (Loss) to Adjusted EBITDA Reconciliation
18 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Operating Income (Loss) to Adjusted EBITDA(a) Reconciliation In $ thousands Q3’17 Q3’16 (Combined)(g) Operating income (Loss) $(24,349) $66,288 Normalizing adjustments: Stock-based compensation expense
Slide 20: Operating Cash Flow to Free Cash Flow Reconciliation
19 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Operating Cash Flow to Free Cash Flow(a) Reconciliation In $ thousands Q3’17 Q3’16 (Combined) Cash provided by operating activities $149,549 $129,063 Adjustments: Cash paid for acquisition and integrat
Slide 21: Adjusted Segments
20 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. Adjusted Segments Three Months Ended September 30, 2016 Combined(a) In $ thousands GAAP Revenue Deferred Revenue Fair Value Adjustment Adjusted Revenue Direct Expense Adjusted Gross Contribution Adjust
Slide 22: Definitions
21 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
Slide 23: AND PROPRIETARY I
22 CONFIDENTIAL AND PROPRIETARY I © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.