Total Contract Value $4.2 billion, +16% YoY
FX Neutral
FOURTH QUARTER 2021 HIGHLIGHTS
- Revenues: $1.3 billion, +17% as reported; +18% FX neutral.
- Net income: $209 million; adjusted EBITDA: $307 million, +25%
as reported, +26% FX neutral.
- Diluted EPS: $2.50, +88%; adjusted EPS: $2.99, +88%.
- Operating cash flow: $235 million; free cash flow: $214
million, -10%.
- Repurchased 0.6 million common shares for $217 million.
- Board of Directors increased the share repurchase authorization
by $500 million in February 2022.
FULL YEAR 2021 HIGHLIGHTS
- Revenues: $4.7 billion, +15% as reported, +14% FX neutral.
- Net income: $794 million; adjusted EBITDA: $1.3 billion, +57%
as reported, +54% FX neutral.
- Diluted EPS: $9.21, +211%; adjusted EPS: $9.22, +89%.
- Operating cash flow: $1.3 billion; free cash flow: $1.3
billion, +53%.
- Repurchased 7.3 million common shares for $1.7 billion.
Gartner, Inc. (NYSE: IT), today reported results for the fourth
quarter 2021 and provided its financial outlook for the full year
2022. Additional information regarding the Company’s results and
2022 financial outlook are 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,
“Gartner had a strong finish to an already good year, delivering
contract value at the high end of our medium-term guidance, revenue
growth across all three segments, and outstanding free cash flow
generation. We repurchased $1.7 billion of stock during the year
and remain committed to returning excess capital to shareholders.
Heading into 2022, we are well-positioned to drive long-term,
sustained, double-digit growth.”
CONFERENCE CALL INFORMATION
The Company will host a webcast call at 8:00 a.m. Eastern time
on Tuesday, February 8, 2022 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 2998443). 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
December 31,
Inc/(Dec)
2021
2020
Inc/(Dec)
FX Neutral
GAAP Metrics:
Revenues
$
1,306
$
1,113
17
%
18%
Net income
209
120
75
%
na
Diluted EPS
2.50
1.33
88
%
na
Operating cash flow
235
260
(10
)%
na
Non-GAAP Metrics:
Adjusted EBITDA
$
307
$
245
25
%
26%
Adjusted EPS
2.99
1.59
88
%
na
Free cash flow
214
237
(10
)%
na
na=not available
SEGMENT RESULTS HIGHLIGHTS
- Global Technology Sales Contract Value (GTS CV): $3.4 billion,
+14% YoY FX Neutral
- Global Business Sales Contract Value (GBS CV): $0.9 billion,
+24% YoY FX Neutral
Our segment results for the three months ended December 31, 2021
were as follows:
(Unaudited; $ in millions)
Research
Conferences
Consulting
Revenues
$
1,081
$
107
$
118
Inc/(Dec)
17
%
15
%
26
%
Inc/(Dec) - FX neutral
17
%
16
%
27
%
Gross contribution
$
801
$
66
$
46
Inc/(Dec)
20
%
(9
) %
87
%
Contribution margin
74
%
61
%
39
%
Additional details regarding our segment results can be obtained
in the earnings supplement and on our webcast call.
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.
ANNUAL MEETING OF STOCKHOLDERS
Gartner will hold its 2022 Annual Meeting of Stockholders
virtually at 10:00 a.m. Eastern time on Thursday, June 2, 2022.
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 mission 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,
including the impact of the Delta, Omicron and other new variants,
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, especially in light of recent labor shortages; 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 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 (income) expense, net; (vi) stock-based
compensation expense; (vii) depreciation, amortization, and
accretion; (viii) loss on impairment of lease related assets, net,
as applicable; and (ix) acquisition and integration charges and
certain other non-recurring items. 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) gain on
event cancellation insurance claims, as applicable; (v) loss on
impairment of lease related assets, net as applicable; (vi) the
non-cash (gain) loss on de-designated interest rate swaps, as
applicable; and (vii) 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) gain on
event cancellation insurance claims, as applicable; (v) loss on
impairment of lease related assets, net as applicable; (vi) the
non-cash (gain) loss on de-designated interest rate swaps, as
applicable; and (vii) the related tax effect. 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 December
31,
Year Ended December 31,
2021
2020
2021
2020
GAAP net income
$
209
$
120
$
794
$
267
Interest expense, net
31
26
117
114
Gain on event cancellation insurance
claims (a)
(17
)
—
(152
)
—
Loss on extinguishment of debt (b)
—
—
—
45
Other (income) expense, net
(6
)
(4
)
(18
)
6
Tax (benefit) provision
(32
)
37
176
59
Operating income
185
178
916
490
Adjustments:
Stock-based compensation expense (c)
17
6
99
63
Depreciation, amortization and accretion
(d)
52
57
213
220
Loss on impairment of lease related
assets,net (e)
50
—
50
—
Acquisition and integration charges and
other non-recurring items (f)
3
4
10
45
Adjusted EBITDA
$
307
$
245
$
1,288
$
818
(a)
Consists of the gain on event cancellation
insurance claims for events cancelled in 2020.
(b)
Includes $30.8 million early redemption
premium payment and $14.0 million write-off of unamortized deferred
financing fees related to the early repayment of the 2025 Senior
Notes and the 2016 Credit Agreement.
(c)
Consists of charges for stock-based
compensation awards.
(d)
Includes depreciation expense,
amortization of intangibles and accretion on asset retirement
obligations.
(e)
Includes impairment loss for lease related
assets, net of a reduction in lease liabilities.
(f)
Consists of incremental and
directly-related charges related to acquisitions, facility-related
exit costs, 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 December
31,
2021
2020
Amount
Per Share
Amount
Per Share
GAAP net income
$
209
$
2.50
$
120
$
1.33
Acquisition and other adjustments:
Amortization of acquired intangibles
(a)
26
0.31
30
0.34
Acquisition and integration charges and
other non-recurring items (b), (c)
4
0.05
5
0.05
Gain on event cancellation insurance
claims (d)
(17
)
(0.20
)
—
—
Loss on impairment of lease related
assets,net (e)
50
0.59
—
—
Gain on de-designated interest rate swaps
(h)
(8
)
(0.10
)
(3
)
(0.03
)
Tax impact of adjustments (i)
(13
)
(0.16
)
(9
)
(0.10
)
Adjusted net income and Adjusted EPS
(j)
$
251
$
2.99
$
143
$
1.59
Year Ended December 31,
2021
2020
Amount
Per Share
Amount
Per Share
GAAP net income
$
794
$
9.21
$
267
$
2.96
Acquisition and other adjustments:
Amortization of acquired intangibles
(a)
110
1.27
125
1.39
Acquisition and integration charges and
other non-recurring items (b), (c)
14
0.17
53
0.59
Gain on event cancellation insurance
claims (d)
(152
)
(1.77
)
—
—
Loss on impairment of lease related
assets,net (e)
50
0.57
—
—
Loss on extinguishment of debt (f)
—
—
45
0.50
Amortization of deferred swap losses from
de-designation (g)
—
—
10
0.11
Gain on de-designated interest rate swaps
(h)
(20
)
(0.23
)
(2
)
(0.02
)
Tax impact of adjustments (i)
—
—
(58
)
(0.64
)
Adjusted net income and Adjusted EPS
(j)
$
795
$
9.22
$
440
$
4.89
(a)
Consists of non-cash amortization charges
from acquired intangibles.
(b)
Consists of incremental and
directly-related charges related to acquisitions, facility-related
exit costs, 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)
Includes impairment loss for lease related
assets, net of a reduction in lease liabilities.
(f)
Includes $30.8 million early redemption
premium payment and $14.0 million write-off of unamortized deferred
financing fees related to the early repayment of the 2025 Senior
Notes and the 2016 Credit Agreement.
(g)
Consist 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.
(h)
Represents the fair value adjustment for
interest rate swaps after de-designation.
(i)
The blended effective tax rates on the
adjustments were approximately 24% and 28% for the three months
ended December 31, 2021 and 2020, respectively, and (8)% and 25%
for the years ended December 31, 2021 and 2020, respectively.
(j)
Adjusted EPS was calculated based on 83.8
million and 90.1 million diluted shares for the three months ended
December 31, 2021 and 2020, respectively, and 86.2 million and 90.0
million diluted shares for the years ended December 31, 2021 and
2020, respectively.
Reconciliation - GAAP Cash Provided by Operating Activities
to Free Cash Flow (Unaudited; $ in millions)
Three Months Ended December
31,
Year Ended December 31,
2021
2020
2021
2020
GAAP cash provided by operating
activities
$
235
$
260
$
1,312
$
903
Cash paid for capital expenditures
(21
)
(23
)
(60
)
(84
)
Free cash flow
$
214
$
237
$
1,253
$
819
GARTNER, INC.
Condensed Consolidated Statements
of Operations
(Unaudited; in millions, except
per share data)
Three Months Ended
December 31,
2021
2020
Revenues:
Research
$
1,081.3
$
925.6
Conferences
107.0
93.2
Consulting
118.0
94.0
Total revenues
1,306.3
1,112.8
Costs and expenses:
Cost of services and product
development
399.6
351.5
Selling, general and administrative
667.4
526.1
Depreciation
25.8
25.9
Amortization of intangibles
25.8
30.4
Acquisition and integration charges
2.3
0.8
Total costs and expenses
1,120.9
934.7
Operating income
185.4
178.1
Interest expense, net
(31.5
)
(26.4
)
Gain on event cancellation insurance
claims
16.8
—
Other income, net
6.4
4.4
Income before income taxes
177.1
156.1
(Benefit) provision for income taxes
(32.3
)
36.5
Net income
$
209.4
$
119.6
Net income per share:
Basic
$
2.54
$
1.34
Diluted
$
2.50
$
1.33
Weighted average shares outstanding:
Basic
82.5
89.3
Diluted
83.8
90.1
Gartner-IR
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220208005445/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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