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EXHIBIT 99.1

 

 

 

(GARTNER LOGO)

 

(PRESS RELEASE LOGO)

 

 

 

CONTACT:

Brian Shipman

Group Vice President, Investor Relations

+1 203 316 3659

brian.shipman@gartner.com

Gartner Reports Financial Results for Second Quarter 2011

Research Contract Value Reaches $1.0 Billion Dollars for First Time, Up 15% YoY

Total Revenue Increased 16% YoY to $365.5 million

Diluted Earnings per Share Increased 60% YoY

STAMFORD, Conn., August 2, 2011 — Gartner, Inc. (NYSE: IT), the leading provider of research and analysis on the global information technology industry, today reported results for second quarter 2011. The Company also revised upward its revenue outlook for full year 2011.

For second quarter 2011, total revenue was $365.5 million, up 16% compared to second quarter 2010 as reported and 11% excluding the impact of foreign exchange. Second quarter 2011 net income was $32.2 million, an increase of 60%, and Normalized EBITDA was $68.3 million, an increase of 27%. (See “Non-GAAP Financial Measures” for a discussion of Normalized EBITDA). Diluted earnings per share was $0.32 in the second quarter of 2011 compared to $0.20 per share in the prior year quarter. In second quarter 2011, the Company incurred acquisition related charges, net of tax, of $0.02 per share, as compared to $0.04 per share in the prior year quarter.

Gene Hall, Gartner’s chief executive officer, commented, “Revenue, contract value, Normalized EBITDA and EPS increased at double-digit rates again in the second quarter, and the growth rate in contract value was the fastest since early 2007. The increases in our revenue and contract value as well as the expansion of key operating metrics such as wallet retention illustrate the value we provide to our clients and the market opportunity for our services. This performance continues our trend of consistent double digit growth to both revenue and earnings.”

Business Segment Highlights

 

Research

Revenue for second quarter of 2011 was $250.0 million, an increase of 20% compared to the second quarter of 2010 or 14% excluding the impact of foreign exchange. The gross contribution margin was 67%, an increase of 2 points over second quarter 2010. Contract value was $1,006.9 million at June 30, 2011, up 15% from June 30, 2010 and the highest ever reported. Contract value increased 16% excluding the impact of foreign exchange. Client and wallet retention rates for second quarter 2011 were 82% and 100%, respectively, up from 81% and 93% in the prior year quarter.

 

Consulting

Revenue for second quarter of 2011 was $78.0 million, an increase of 3% as reported and a decrease of 2% excluding the impact of foreign exchange. The gross contribution margin was 37%. Second quarter 2011 utilization was 64% and billable headcount was 490. Backlog was $94.8 million at June 30, 2011.

-more-



 

Events

Revenue for second quarter of 2011 was $37.6 million, up 28% from the second quarter of 2010 and 24% excluding the impact of foreign exchange. The gross contribution margin was 46%. During the second quarter of 2011 the Company held 21 events with 11,295 attendees, compared to 21 events and 9,697 attendees in the second quarter of 2010.

Cash Flow and Balance Sheet Highlights

Cash provided by operating activities was $88.6 million during second quarter 2011 compared to $69.6 million in the second quarter 2010. Additions to property, equipment and leasehold improvements (“Capital Expenditures”) totaled $5.8 million in second quarter 2011 and $4.3 million in second quarter 2010. The Company had cash of $125.3 million at June 30, 2011. During second quarter 2011, $36.0 million in cash was used to repurchase 0.9 million common shares.

Financial Outlook for 2011

Overall, total projected 2011 revenue increased $10.0 million on the low end and $5.0 million on the high end. All other guidance remains the same. As revised, the Company's full year 2011 guidance is as follows:

 

 

 

 

 

 

 

 

Projected Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

2011 Projected

 

% Change

 






 

 

 

 

 

 

 

 

 

Research

 

$

995 – 1,015

 

 

15% – 17

%

Consulting

 

 

310 – 325

 

 

3% – 8

%

Events

 

 

135 – 145

 

 

11% – 20

%

 

 



 



 

Total Revenue

 

$

1,440 – 1,485

 

 

12% – 15

%

 

 

 

 

 

 

 

 

Projected EPS and Cash Flow

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions, except per share data)

 

2011 Projected

 

% Change

 






 

 

 

 

 

 

 

 

 

Diluted earnings per share (1)

 

$

1.29 – 1.41

 

 

34% – 47

%

Normalized EBITDA (2)

 

$

270 – 290

 

 

17% – 26

%

 

 

 

 

 

 

 

 

Operating cash flow (3)

 

$

250 – 270

 

 

22% – 31

%

Capital expenditures (3)

 

 

(39) – (41

)

 

 

 

 

 



 

 

 

 

Free cash flow (2)

 

$

211 – 229

 

 

10% – 19

%


 

 

 

 

(1)

Includes a projected $(0.04) per share impact from acquisition related charges. In 2010, these charges were $(0.14) per share.

 

(2)

See “Non-GAAP Financial Measures” below for a discussion of Normalized EBITDA and Free Cash Flow.

 

(3)

Includes $15.0 million of estimated payments for the renovation of our Stamford headquarters facility. The accounting impact of these renovation payments increases both cash flow from operations and capital expenditures (investing activities) by the same amount and as a result has no net impact on Free Cash Flow. These expenditures are contractually reimbursable by the landlord.

Conference Call Information

Gartner has scheduled a conference call at 8:30 a.m. eastern time on Tuesday, August 2, 2011, to discuss the Company’s financial results. The conference call will be available via the Internet by accessing the Company’s website at http://investor.gartner.com or by dial-in. The U.S. dial-in number is 888-713-4199 and the international dial-in number is 617-213-4861 and the participant passcode is 22980550. The question and answer session of the conference call will be open to investors and analysts only. A replay of the webcast will be available for approximately 90 days following the call.

 

 



Gartner, Inc.

Page 2



About Gartner

Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is a valuable partner to clients in over 11,600 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,700 associates, including over 1,250 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.

Non-GAAP Financial Measures

Normalized EBITDA: Represents operating income excluding depreciation, accretion on obligations related to excess facilities, amortization, stock-based compensation expense, acquisition related charges, and Other charges. We believe Normalized EBITDA is an important measure of our recurring operations as it excludes items that may not be indicative of our core operating results. Investors are cautioned that Normalized EBITDA is not a financial measure defined under generally accepted accounting principles and as a result is considered a non-GAAP financial measure. We provide this measure to enhance the user’s overall understanding of the Company’s current financial performance and the Company’s prospects for the future. It should not be construed as an alternative to any other measure of performance determined in accordance with generally accepted accounting principles.

Free Cash Flow: Represents cash provided by operating activities less additions to property, equipment and leasehold improvements (“Capital Expenditures”). We believe that Free Cash Flow is an important measure of the recurring cash generated by the Company’s core operations that is available to be used to repurchase stock, repay debt obligations and invest in future growth through new business development activities or acquisitions.

Safe Harbor Statement

Statements contained in this press release regarding the Company’s growth and prospects, projected 2011 financial results and all other statements in this release other than recitation of historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. Such factors include, but are not limited to, the following: our ability to maintain and expand our products and services; our ability to expand or retain our customer base; our ability to grow or sustain revenue from individual customers; our ability to attract and retain a professional staff of research analysts and consultants upon whom we are dependent; our ability to achieve and effectively manage growth, including our ability to integrate acquisitions and consummate future acquisitions; our ability to pay our debt; our ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of competitive pressures; our ability to carry out our strategic initiatives and manage associated costs; our ability to successfully compete with existing competitors and potential new competitors; our ability to enforce or protect our intellectual property rights; additional risks associated with international operations including foreign currency fluctuations; the impact of restructuring and other charges on our businesses and operations; general economic conditions; risks associated with the creditworthiness and budget cuts of governments and agencies; and other factors described under “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2010 which can be found on Gartner’s website at www.investor.gartner.com and the SEC’s website at www.sec.gov. Forward-looking statements included herein speak only as of the date hereof and Gartner disclaims any obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.

# # #

 

 



Gartner, Inc.

Page 3



GARTNER, INC.
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
June 30,

 

 

 

 

Six Months Ended
June 30,

 

 

 

 

 

 

2011

 

2010

 

 

 

 

2011

 

2010

 

 

 

 

 

 


 


 

 

 

 


 


 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research

 

$

250,015

 

$

209,095

 

 

20

%

$

493,450

 

$

419,768

 

 

18

%

Consulting

 

 

77,962

 

 

75,760

 

 

3

%

 

148,592

 

 

147,399

 

 

1

%

Events

 

 

37,566

 

 

29,340

 

 

28

%

 

53,068

 

 

42,861

 

 

24

%

 

 



 



 

 

 

 



 



 

 

 

 

Total revenues

 

 

365,543

 

 

314,195

 

 

16

%

 

695,110

 

 

610,028

 

 

14

%

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services and product development

 

 

152,461

 

 

138,336

 

 

10

%

 

285,777

 

 

261,382

 

 

9

%

Selling, general and administrative

 

 

152,758

 

 

130,322

 

 

17

%

 

294,430

 

 

260,890

 

 

13

%

Depreciation

 

 

6,234

 

 

6,440

 

 

-3

%

 

12,505

 

 

13,024

 

 

-4

%

Amortization of intangibles

 

 

2,522

 

 

2,537

 

 

-1

%

 

5,049

 

 

5,463

 

 

-8

%

Acquisition and integration charges

 

 

 

 

2,330

 

 

-100

%

 

 

 

5,841

 

 

-100

%

 

 



 



 

 

 

 



 



 

 

 

 

Total costs and expenses

 

 

313,975

 

 

279,965

 

 

12

%

 

597,761

 

 

546,600

 

 

9

%

 

 



 



 

 

 

 



 



 

 

 

 

Operating income

 

 

51,568

 

 

34,230

 

 

51

%

 

97,349

 

 

63,428

 

 

53

%

Interest expense, net

 

 

(2,797

)

 

(3,180

)

 

-12

%

 

(5,581

)

 

(6,564

)

 

-15

%

Other (expense) income, net

 

 

(571

)

 

(643

)

 

-11

%

 

(953

)

 

1,109

 

 

>-100

%

 

 



 



 

 

 

 



 



 

 

 

 

Income before income taxes

 

 

48,200

 

 

30,407

 

 

59

%

 

90,815

 

 

57,973

 

 

57

%

Provision for income taxes

 

 

15,977

 

 

10,294

 

 

55

%

 

29,401

 

 

18,457

 

 

59

%

 

 



 



 

 

 

 



 



 

 

 

 

Net income

 

$

32,223

 

$

20,113

 

 

60

%

$

61,414

 

$

39,516

 

 

55

%

 

 



 



 

 

 

 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

$

0.33

 

$

0.21

 

 

57

%

$

0.64

 

$

0.41

 

 

56

%

Diluted:

 

$

0.32

 

$

0.20

 

 

60

%

$

0.62

 

$

0.40

 

 

55

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

96,886

 

 

95,657

 

 

1

%

 

96,664

 

 

95,810

 

 

1

%

Diluted

 

 

99,340

 

 

98,855

 

 

0

%

 

99,642

 

 

99,689

 

 

0

%



BUSINESS SEGMENT DATA
(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

Direct
Expense

 

Gross
Contribution

 

Contribution
Margin

 

 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 6/30/11

 

 

 

 

 

 

 

 

 

 

 

 

 

Research

 

$

250,015

 

$

81,711

 

$

168,304

 

 

67

%

Consulting

 

 

77,963

 

 

49,089

 

 

28,874

 

 

37

%

Events

 

 

37,565

 

 

20,251

 

 

17,314

 

 

46

%

 

 



 



 



 

 

 

 

TOTAL

 

$

365,543

 

$

151,051

 

$

214,492

 

 

59

%

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 6/30/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Research

 

$

209,095

 

$

73,125

 

$

135,970

 

 

65

%

Consulting

 

 

75,760

 

 

43,941

 

 

31,819

 

 

42

%

Events

 

 

29,340

 

 

17,841

 

 

11,499

 

 

39

%

 

 



 



 



 

 

 

 

TOTAL

 

$

314,195

 

$

134,907

 

$

179,288

 

 

57

%

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended 6/30/11

 

 

 

 

 

 

 

 

 

 

 

 

 

Research

 

$

493,450

 

$

160,645

 

$

332,805

 

 

67

%

Consulting

 

 

148,592

 

 

94,230

 

 

54,362

 

 

37

%

Events

 

 

53,068

 

 

30,088

 

 

22,980

 

 

43

%

 

 



 



 



 

 

 

 

TOTAL

 

$

695,110

 

$

284,963

 

$

410,147

 

 

59

%

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended 6/30/10

 

 

 

 

 

 

 

 

 

 

 

 

 

Research

 

$

419,768

 

$

145,062

 

$

274,706

 

 

65

%

Consulting

 

 

147,399

 

 

87,158

 

 

60,241

 

 

41

%

Events

 

 

42,861

 

 

26,147

 

 

16,714

 

 

39

%

 

 



 



 



 

 

 

 

TOTAL

 

$

610,028

 

$

258,367

 

$

351,661

 

 

58

%

 

 



 



 



 

 

 

 



SELECTED STATISTICAL DATA

 

 

 

 

 

 

 

 

 

 

June 30,
2011

 

June 30,
2010

 

 

 


 


 

Research contract value

 

$

1,006,923

(a)

$

872,192

(a)

Research client retention

 

 

82

%

 

81

%

Research wallet retention

 

 

100

%

 

93

%

Research client organizations

 

 

11,607

 

 

10,888

 

Consulting backlog

 

$

94,845

(a)

$

93,600

(a)

Consulting--quarterly utilization

 

 

64

%

 

71

%

Consulting billable headcount

 

 

490

 

 

440

 

Consulting--average annualized revenue per billable headcount

 

$

414

(a)

$

430

(a)

Events--number of events for the quarter

 

 

21

 

 

21

 

Events--attendees for the quarter

 

 

11,295

 

 

9,697

 


 


(a) Dollars in thousands.



SUPPLEMENTAL INFORMATION (in thousands, except per share amounts)

Reconciliation - Operating income to Normalized EBITDA (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 


 


 


 


 

 

 

2011

 

2010

 

2011

 

2010

 

 

 


 


 


 


 

Net income

 

$

32,223

 

$

20,113

 

$

61,414

 

$

39,516

 

Interest expense, net

 

 

2,797

 

 

3,180

 

 

5,581

 

 

6,564

 

Other expense (income), net

 

 

572

 

 

643

 

 

953

 

 

(1,109

)

Tax provision

 

 

15,976

 

 

10,294

 

 

29,401

 

 

18,457

 

 

 



 



 



 



 

Operating income

 

$

51,568

 

$

34,230

 

$

97,349

 

$

63,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalizing adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense (b)

 

 

7,831

 

 

9,156

 

 

16,993

 

 

18,828

 

Depreciation, accretion, and amortization (c)

 

 

8,823

 

 

6,875

 

 

17,711

 

 

16,034

 

Pre-acquisition deferred revenue (d)

 

 

70

 

 

1,146

 

 

134

 

 

2,626

 

Acquisition and integration charges (e)

 

 

 

 

2,330

 

 

 

 

5,841

 

 

 



 



 



 



 

Normalized EBITDA

 

$

68,292

 

$

53,737

 

$

132,187

 

$

106,757

 

 

 



 



 



 



 


 

 

(a)

Normalized EBITDA is based on GAAP operating income adjusted for certain normalizing adjustments.

 

 

(b)

Consists of charges for stock-based compensation awards.

 

 

(c)

Includes acquisition related amortization of intangibles related to AMR Research and Burton Group of $2.5 million for both the three months ended June 30, 2011 and 2010, and $5.0 million for both the six months ended June 30, 2011 and 2010.

 

 

(d)

Consists of non-cash fair value adjustments on pre-acquisition AMR Research and Burton Group deferred revenue. These amounts were amortized ratably over the life of the underlying contract.

 

 

(e)

Included non-recurring cash charges incurred to acquire and integrate the acquisitions of AMR Research and Burton Group, such as legal, consulting, severance, and other costs.