Total Contract Value $3.8 billion, +10.7%
YoY FX Neutral
SECOND QUARTER 2021 HIGHLIGHTS
- Revenues: $1.2 billion, +20.0% as reported; +15.9% FX
neutral.
- Net income: $271 million; adjusted EBITDA: $355 million, +84.9%
as reported, +75.4% FX neutral.
- Diluted EPS: $3.13, +413.1%; adjusted EPS: $2.24, +86.7%.
- Operating cash flow: $575 million; free cash flow: $563
million, +75.1%.
- Repurchased 3.1 million common shares for $685 million.
- Board of Directors increased the share repurchase authorization
by $800 million in July 2021.
Gartner, Inc. (NYSE: IT), the world’s leading research and
advisory company, today reported results for the second quarter of
2021 and updated its financial outlook for the full year 2021.
Additional information regarding the Company’s results as well as
an updated 2021 financial outlook is provided in an earnings
supplement available on the Company’s Investor Relations website at
https://investor.gartner.com.
Gene Hall, Gartner’s Chief Executive Officer, commented, “We
continued our outstanding financial performance in the second
quarter with strength in revenues, EBITDA, margins, and free cash
flow. We repurchased over $1 billion of stock year-to-date and
remain committed to returning excess capital to shareholders. We
are raising our guidance to reflect the momentum we saw in the
first half of 2021.”
CONFERENCE CALL INFORMATION
The Company will host a webcast call at 8:00 a.m. Eastern time
on Tuesday, August 3, 2021 to discuss the Company’s financial
results. The call will be available via the Company’s website at
https://investor.gartner.com or by dialing 844-413-7151 (conference
ID 6117156). A replay of the webcast will be available on the
Company’s website for approximately 30 days following the call.
CONSOLIDATED RESULTS HIGHLIGHTS
(Unaudited; $ in millions, except per
share amounts)
Three Months Ended
June 30,
Inc/(Dec)
2021
2020
Inc/(Dec)
FX Neutral
GAAP Metrics:
Revenues
$
1,167
$
973
20.0
%
15.9%
Net income
271
55
392.5
%
na
Diluted EPS
3.13
0.61
413.1
%
na
Operating cash flow
575
343
67.7
%
na
Non-GAAP Metrics:
Adjusted EBITDA
$
355
$
192
84.9
%
75.4%
Adjusted EPS
2.24
1.20
86.7
%
na
Free cash flow
563
322
75.1
%
na
na=not available.
SEGMENT RESULTS HIGHLIGHTS
- Global Technology Sales Contract Value (GTS CV): $3.1 billion,
+9.0% YOY FX Neutral
- Global Business Sales Contract Value (GBS CV): $0.8 billion,
+18.1% YOY FX Neutral
Our segment results for the three months ended June 30, 2021
were as follows:
(Unaudited; $ in millions)
Research
Conferences
Consulting
GAAP Metrics:
Revenues
$
1,003
$
58
$
106
Inc/(Dec)
14.6
%
nm
8.6
%
Inc/(Dec) - FX neutral
10.7
%
nm
4.5
%
Gross contribution
$
742
$
43
$
43
Inc/(Dec)
17.3
%
nm
27.5
%
Contribution margin
74.0
%
73.2%
40.4
%
nm = not meaningful.
Additional details regarding our segment results can be obtained
from the earnings supplement, our quarterly report on Form 10–Q
filed with the SEC on August 3, 2021 and our webcast.
Certain financial metrics contained in this Press Release are
considered non-GAAP financial measures. Definitions of these
non-GAAP financial measures are included in this Press Release
under “Non-GAAP Financial Measures” and the related reconciliations
are under “Supplemental Information — Non-GAAP Reconciliations.” In
this Press Release, some totals may not add due to rounding. The
percentage changes are based on the unrounded whole number and
recalculation based on millions may yield a different result.
ABOUT GARTNER
Gartner, Inc. (NYSE: IT) is the world’s leading research and
advisory company and a member of the S&P 500. We equip business
leaders with indispensable insights, advice and tools to achieve
their mission–critical priorities today and build the successful
organizations of tomorrow. Our unmatched combination of expert-led,
practitioner-sourced and data-driven research steers clients toward
the right decisions on the issues that matter most. We are a
trusted advisor and an objective resource for more than 14,000
enterprises in more than 100 countries — across all major
functions, in every industry and enterprise size. To learn more
about how we help decision makers fuel the future of business,
visit gartner.com.
FORWARD LOOKING STATEMENTS
Statements contained in this press release regarding the
Company’s growth and prospects, projected financial results,
long-term objectives, and all other statements in this release
other than recitation of historical facts are forward-looking
statements within the meaning of Section 27A of the Securities
Exchange Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements
involve known and unknown risks, estimates, uncertainties and other
factors that may cause actual results to be materially different,
and are currently, or in the future could be, amplified by the
COVID-19 pandemic. Such factors include, but are not limited to,
the following: uncertainty of the magnitude, duration, geographic
reach and impact on the global economy of the COVID-19 pandemic;
the current, and uncertain future, impact of the COVID-19 pandemic
and governments’ responses to it on our business, growth,
reputation, projections, prospects, financial condition,
operations, cash flows, and liquidity; the adequacy or
effectiveness of steps we take to respond to the crisis, including
cost reduction or other mitigation programs; our ability to recover
potential claims under our event cancellation insurance; the timing
of conferences and meetings, in particular our Gartner
Symposium/Xpo series that normally occurs during the fourth
quarter, as well as the timing of our return to in-person
conferences and meetings and willingness of participants to attend;
our ability to achieve and effectively manage growth, including our
ability to integrate our acquisitions and consummate and integrate
future acquisitions; our ability to pay our debt obligations; 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 as well as experienced sales personnel upon whom we are
dependent; 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 and protect our intellectual
property rights; additional risks associated with international
operations, including foreign currency fluctuations; the U.K.’s
exit from the European Union and its impact on our results; the
impact of restructuring and other charges on our businesses and
operations; cybersecurity incidents; general economic conditions;
changes in macroeconomic and market conditions and market
volatility (including developments and volatility arising from the
COVID-19 pandemic), including interest rates and the effect on the
credit markets and access to capital; risks associated with the
creditworthiness, budget cuts, and shutdown of governments and
agencies; the impact of changes in tax policy and heightened
scrutiny from various taxing authorities globally; uncertainty from
the expected discontinuance of LIBOR and transition to any other
interest rate benchmark; changes to laws and regulations; and other
factors described under “Risk Factors” in our most recent Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, which can be found on Gartner’s website at
https://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, except as required by applicable law.
NON-GAAP FINANCIAL MEASURES
Certain financial measures used in this Press Release are not
defined by U.S. generally accepted accounting principles (“GAAP”)
and as such are considered non-GAAP financial measures. We provide
these measures to enhance the user’s overall understanding of the
Company’s current financial performance and the Company’s prospects
for the future. Investors are cautioned that these non-GAAP
financial measures may not be defined in the same manner by other
companies and, as a result, may not be comparable to other
similarly titled measures used by other companies. Also, these
non-GAAP financial measures should not be construed as
alternatives, or superior, to other measures determined in
accordance with GAAP. The non-GAAP financial measures used in this
Press Release are defined below.
Adjusted EBITDA and Adjusted EBITDA Margin: Represents
GAAP net income (loss) adjusted for: (i) interest expense, net;
(ii) tax provision (benefit); (iii) loss on extinguishment of debt,
as applicable; (iv) gain on event cancellation insurance claims, as
applicable; (v) other expense/income, net; (vi) stock-based
compensation expense; (vii) depreciation, amortization, and
accretion; (viii) the amortization of non-cash fair value
adjustments on pre-acquisition deferred revenues, as applicable;
(ix) acquisition and integration charges and certain other
non-recurring items; and (x) gain/loss on divestitures and other
similar items, as applicable. Adjusted EBITDA Margin represents
Adjusted EBITDA divided by GAAP Revenue. We believe Adjusted EBITDA
and Adjusted EBITDA Margin are important measures of our recurring
operations as they exclude items not representative of our core
operating results.
Adjusted Net Income: Represents GAAP net income (loss)
adjusted for the impact of certain items directly related to
acquisitions and other non-recurring items. These adjustments
include: (i) the amortization of acquired intangibles; (ii)
acquisition and integration charges and other non-recurring items;
(iii) loss on extinguishment of debt, as applicable; (iv) the
amortization of non-cash fair value adjustments on pre-acquisition
deferred revenues, as applicable; (v) gain/loss on divestitures and
other similar items, as applicable; (vi) gain on event cancellation
insurance claims, as applicable; (vii) the non-cash gain/loss on
de-designated interest rate swaps, as applicable; and (viii) the
related tax effect. We believe Adjusted Net Income is an important
measure of our recurring operations as it excludes items that may
not be indicative of our core operating results.
Adjusted EPS: Represents GAAP diluted EPS adjusted for
the impact of certain items directly related to acquisitions and
other non-recurring items. These adjustments include on a per share
basis: (i) the amortization of acquired intangibles; (ii)
acquisition and integration charges and other non-recurring items;
(iii) loss on extinguishment of debt, as applicable; (iv) the
amortization of non-cash fair value adjustments on pre-acquisition
deferred revenues, as applicable; (v) the gain/loss on divestitures
and other similar items, as applicable; (vi) gain on event
cancellation insurance claims, as applicable; (vii) the non-cash
gain/loss on de-designated interest rate swaps, as applicable; and
(viii) the related tax effect, as applicable. We believe Adjusted
EPS is an important measure of our recurring operations as it
excludes items that may not be indicative of our core operating
results.
Free Cash Flow: Represents cash provided by operating
activities determined in accordance with GAAP less payments for
capital expenditures. We believe Free Cash Flow is an important
measure of the recurring cash generated by the Company’s core
operations that may be available to be used to repay debt
obligations, repurchase our stock, invest in future growth through
new business development activities, or make acquisitions.
Foreign Currency Neutral (FX Neutral): We provide foreign
currency neutral dollar amounts and percentages for our contract
values, revenues, certain expenses, and other metrics. These
foreign currency neutral dollar amounts and percentages eliminate
the effects of exchange rate fluctuations and thus provide a more
accurate and meaningful trend in the underlying data being
measured. We calculate foreign currency neutral dollar amounts by
converting the underlying amounts in local currency for different
periods into U.S. dollars by applying the same foreign exchange
rates to all periods presented.
SUPPLEMENTAL INFORMATION - NON-GAAP RECONCILIATIONS
The tables below provide reconciliations of certain Non-GAAP
financial measures used in this Press Release with the most
directly comparable GAAP measure. See “Non-GAAP Financial Measures”
above for definitions of these measures.
Reconciliation - GAAP Net Income to
Adjusted EBITDA (Unaudited; $ in millions)
Three Months Ended June 30,
2021
2020
GAAP net income
$
271
$
55
Interest expense, net
27
30
Gain on event cancellation insurance
claims (a)
(136)
—
Other expense, net (b)
4
10
Tax provision
108
4
Operating income
275
99
Adjustments:
Stock-based compensation expense (c)
26
16
Depreciation, amortization and accretion
(d)
52
54
Acquisition and integration charges and
other non-recurring items (e)
2
23
Adjusted EBITDA
$
355
$
192
(a)
Consists of the gain on event cancellation
insurance claims for events cancelled in 2020.
(b)
For the three months ended June 30, 2021,
primarily represents the fair value adjustment for interest rate
swaps after de-designation. For the three months ended June 30,
2020, primarily consists of the non-cash loss on de-designated
interest rate swaps as a result of the payment under the then
outstanding 2016 Credit Agreement term loan and revolving credit
facility on June 30, 2020.
(c)
Consists of charges for stock-based
compensation awards.
(d)
Includes depreciation expense,
amortization of intangibles and accretion on asset retirement
obligations.
(e)
Consists of incremental and
directly-related charges related to acquisitions, abandoned office
space, workforce reductions and other non-recurring items.
Reconciliation - GAAP Net Income to
Adjusted Net Income and Adjusted EPS (Unaudited; $ in millions,
except per share amounts)
Three Months Ended June 30,
2021
2020
Amount
Per Share
Amount
Per Share
GAAP net income
$
271
$
3.13
$
55
$
0.61
Acquisition and other adjustments:
Amortization of acquired intangibles
(a)
26
0.30
31
0.35
Acquisition and integration charges and
other non-recurring items (b), (c)
3
0.04
26
0.29
Gain on event cancellation insurance
claims (d)
(136)
(1.57)
—
—
Loss on de-designated interest rate swaps
(e)
4
0.05
10
0.11
Tax impact of adjustments (f)
25
0.29
(16)
(0.17)
Adjusted net income and Adjusted EPS
(g)
$
194
$
2.24
$
107
$
1.20
(a)
Consists of non-cash amortization charges
from acquired intangibles.
(b)
Consists of incremental and
directly-related charges related to acquisitions, abandoned office
space, workforce reductions and other non-recurring items.
(c)
Includes the amortization and write-off of
deferred financing fees, which are recorded in Interest expense,
net in the Company’s accompanying Condensed Consolidated Statements
of Operations and in the Adjusted EBITDA table above.
(d)
Consists of the gain on event cancellation
insurance claims for events cancelled in 2020.
(e)
For the three months ended June 30, 2021,
represents the fair value adjustment for interest rate swaps after
de-designation. For the three months ended June 30, 2020, consists
of the non-cash loss on de-designated interest rate swaps as a
result of the payment under the then outstanding 2016 Credit
Agreement term loan and revolving credit facility on June 30,
2020.
(f)
The blended effective tax rates on the
adjustments were approximately 24.6% and 22.8% for the three months
ended June 30, 2021 and 2020, respectively.
(g)
Adjusted EPS was calculated based on 86.6
million and 89.8 million diluted shares for the three months ended
June 30, 2021 and 2020, respectively.
Reconciliation - GAAP Cash Provided by
Operating Activities to Free Cash Flow (Unaudited; $ in
millions)
Three Months Ended June 30,
2021
2020
GAAP cash provided by operating
activities
$
575
$
343
Cash paid for capital expenditures
(12)
(21)
Free Cash Flow
$
563
$
322
GARTNER, INC. Condensed
Consolidated Statements of Operations (Unaudited; in millions,
except per share data)
Three Months Ended
June 30,
2021
2020
Revenues:
Research
$
1,003.2
$
875.3
Conferences
58.2
0.3
Consulting
105.9
97.5
Total revenues
1,167.3
973.1
Costs and expenses:
Cost of services and product
development
350.7
322.5
Selling, general and administrative
488.5
494.8
Depreciation
25.9
22.7
Amortization of intangibles
26.2
31.2
Acquisition and integration charges
1.3
2.2
Total costs and expenses
892.6
873.4
Operating income
274.7
99.7
Interest expense, net
(27.4)
(30.3)
Gain on event cancellation insurance
claims
135.5
—
Other expense, net
(3.6)
(10.4)
Income before income taxes
379.2
59.0
Provision for income taxes
108.0
3.9
Net income
$
271.2
$
55.1
Net income per share:
Basic
$
3.16
$
0.62
Diluted
$
3.13
$
0.61
Weighted average shares outstanding:
Basic
85.7
89.3
Diluted
86.6
89.8
Source: Gartner, Inc.
Gartner-IR
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210803005406/en/
David Cohen GVP, Investor Relations, Gartner +1 203.316.6631
Kathleen Persaud Senior Director, Investor Relations, Gartner +1
203.316.1672 investor.relations@gartner.com
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