Total Contract Value $4.0 billion, +13.8%
YoY FX Neutral
THIRD QUARTER 2021 HIGHLIGHTS
- Revenues: $1.2 billion, +16.3% as reported; +15.0% FX
neutral.
- Net income: $149 million; adjusted EBITDA: $305 million, +82.3%
as reported, +79.9% FX neutral.
- Diluted EPS: $1.76, +826.3%; adjusted EPS: $2.03, +123.1%.
- Operating cash flow: $345 million; free cash flow: $331
million, +44.5%.
- Repurchased 1.3 million common shares for $355 million.
Gartner, Inc. (NYSE: IT) today reported results for the third
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, “Our
strong growth in contract value, revenue, EBITDA, and free cash
flow continued in the third quarter. We repurchased more than $1.4
billion of stock year-to-date and remain committed to returning
excess capital to shareholders. We are again raising our guidance
to reflect the momentum we have seen through the first three
quarters of the year.”
CONFERENCE CALL INFORMATION
The Company will host a webcast call at 8:00 a.m. Eastern time
on Tuesday, November 2, 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 5964908). 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
September 30,
Inc/(Dec)
2021
2020
Inc/(Dec)
FX Neutral
GAAP Metrics:
Revenues
$
1,156
$
995
16.3
%
15.0
%
Net income
149
17
777.5
%
na
Diluted EPS
1.76
0.19
826.3
%
na
Operating cash flow
345
244
41.5
%
na
Non-GAAP Metrics:
Adjusted EBITDA
305
$
168
82.3
%
79.9
%
Adjusted EPS
2.03
0.91
123.1
%
na
Free cash flow
331
229
44.5
%
na
na=not available
SEGMENT RESULTS HIGHLIGHTS
- Global Technology Sales Contract Value (GTS CV): $3.2 billion,
+11.8% YOY FX Neutral
- Global Business Sales Contract Value (GBS CV): $0.8 billion,
+22.3% YOY FX Neutral
Our segment results for the three months ended September 30,
2021 were as follows:
(Unaudited; $ in millions)
Research
Conferences
Consulting
Revenues
$
1,037
$
24
$
95
Inc/(Dec)
16.2
%
91.7
%
6.3
%
Inc/(Dec) - FX neutral
14.8
%
93.2
%
5.7
%
Gross contribution
$
769
$
11
$
31
Inc/(Dec)
19.7
%
460.5
%
10.0
%
Contribution margin
74.2
%
46.9
%
32.7
%
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 November 2, 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) delivers actionable, objective insight
to executives and their teams. Our expert guidance and tools enable
faster, smarter decisions and stronger performance on an
organization’s most critical priorities.
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; 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
risks and uncertainties 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 September
30,
2021
2020
GAAP net income
$
149
$
17
Interest expense, net
32
31
Loss on extinguishment of debt (a)
—
45
Other income, net
—
(2)
Tax provision (benefit)
50
(3)
Operating income
230
88
Adjustments:
Stock-based compensation expense (b)
19
16
Depreciation, amortization and accretion
(c)
53
54
Acquisition and integration charges and
other non-recurring items (d)
3
10
Adjusted EBITDA
$
305
$
168
(a) Includes $30.8 million early redemption premium payment
and $14.0 million write-off ofunamortized deferred financing costs
related to the early repayment of the 2025 seniornote and the 2016
credit agreement. (b) Consists of charges for stock-based
compensation awards. (c) Includes depreciation expense,
amortization of intangibles and accretion on assetretirement
obligations. (d) Consists of incremental and directly-related
charges related to acquisitions, abandonedoffice space, workforce
reductions and other non-recurring items
Reconciliation - GAAP Net Income and GAAP income per share to
Adjusted Net Income and Adjusted EPS
(Unaudited; $ in millions, except per
share amounts)
Three Months Ended September
30,
2021
2020
Amount
Per Share
Amount
Per Share
GAAP net income and GAAP net income per
share
$
149
$
1.76
$
17
$
0.19
Acquisition and other adjustments:
Amortization of acquired intangibles
(a)
27
0.32
31
0.35
Acquisition and integration charges and
other non-recurring items (b), (c)
4
0.05
12
0.13
Loss on extinguishment of debt (d)
—
—
45
0.50
Tax impact of adjustments (e)
(8)
(0.09)
(23)
(0.26)
Adjusted net income and Adjusted EPS
(f)
$
172
$
2.03
$
82
$
0.91
(a) Consists of non-cash amortization charges from acquired
intangibles. (b) Consists of incremental and directly-related
charges related to acquisitions, abandoned office space,
workforcereductions and other non-recurring items. (c) Includes the
amortization and write-off of deferred financing fees, which are
recorded in Interest expense, net in theCompany's accompanying
Condensed Consolidated Statements of Operations and in the Adjusted
EBITDA tableabove. (d) Includes $30.8 million early redemption
premium payment and $14.0 million write-off of unamortized
deferredfinancing fees related to the early repayment of the 2025
senior notes and the 2016 credit agreement. (e) The blended
effective tax rates on the adjustments were approximately 25.4% and
26.4% for the three monthsended September 30, 2021 and 2020,
respectively. (f) Adjusted EPS was calculated based on 84.8
million and 90.0 million diluted shares fo the first three months
endedSeptember 30, 2021 and 2020, respectively.
Reconciliation - GAAP Cash Provided by Operating Activities
to Free Cash Flow
(Unaudited; $ in millions)
Three Months Ended September
30,
2021
2020
GAAP cash provided by operating
activities
$
345
$
244
Cash paid for capital expenditures
(14)
(15)
Free Cash Flow
$
331
$
229
Condensed Consolidated Statements
of Operations
(Unaudited; in millions, except
per share data)
Three Months Ended
September 30,
2021
2020
Revenues:
Research
$
1,037.2
$
892.7
Conferences
24.4
12.7
Consulting
94.7
89.2
Total revenues
1,156.3
994.6
Costs and expenses:
Cost of services and product
development
359.2
329.8
Selling, general and administrative
512.6
521.5
Depreciation
25.4
22.7
Amortization of intangibles
27.1
31.2
Acquisition and integration charges
1.8
1.7
Total costs and expenses
926.1
906.9
Operating income
230.2
87.7
Interest expense, net
(31.6)
(30.6)
Loss on extinguishment of debt
—
(44.8)
Other income, net
0.2
1.9
Income before income taxes
198.8
14.2
Provision (benefit) for income taxes
50.0
(2.8)
Net income
$
148.8
$
17.0
Net income per share:
Basic
$
1.78
$
0.19
Diluted
$
1.76
$
0.19
Weighted average shares outstanding:
Basic
83.6
89.4
Diluted
84.8
90.0
Source: Gartner, Inc.
Gartner-IR
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211102005494/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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