Total Contract Value $4.2 billion, +16.3%
YoY FX Neutral
FIRST QUARTER 2022 HIGHLIGHTS
- Revenues: $1.3 billion, +14.4% as reported; +16.4% FX
neutral.
- Net income: $173 million; adjusted EBITDA: $329 million, +2.6%
as reported, +4.7% FX neutral.
- Diluted EPS: $2.08, +13.0%; adjusted EPS: $2.33, +16.5%.
- Operating cash flow: $168 million; free cash flow: $150
million, +3.9%.
- Repurchased 1.6 million common shares for $451 million; 6.7%
reduction in outstanding share count YOY.
- Board of Directors increased the share repurchase authorization
by $500 million in April 2022.
Gartner, Inc. (NYSE: IT) today reported results for the first
quarter of 2022 and updated its financial outlook for the full year
2022. Additional information regarding the Company’s results as
well as an updated 2022 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,
“Gartner had a strong start to the year, led by contract value
growth of 16%, and we are raising our 2022 outlook for Revenue,
EBITDA and Free Cash Flow. We bought back more than $630 million of
stock through April, which will serve to increase our per share
results this year and beyond.”
CONFERENCE CALL INFORMATION
The Company will host a webcast call at 8:00 a.m. Eastern time
on Tuesday, May 3, 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 8584527). 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 March 31,
Inc/(Dec)
2022
2021
Inc/(Dec)
FX Neutral
GAAP Metrics:
Revenues
$
1,263
$
1,104
14.4
%
16.4
%
Net income
173
164
5.1
%
na
Diluted EPS
2.08
1.84
13.0
%
na
Operating cash flow
168
157
6.7
%
na
Non-GAAP Metrics:
Adjusted EBITDA
$
329
$
320
2.6
%
4.7
%
Adjusted EPS
2.33
2.00
16.5
%
na
Free cash flow
150
145
3.9
%
na
na=not available.
SEGMENT RESULTS HIGHLIGHTS
- Global Technology Sales Contract Value (GTS CV): $3.3 billion,
+14.3% YOY FX Neutral
- Global Business Sales Contract Value (GBS CV): $0.9 billion,
+24.4% YOY FX Neutral
Our segment results for the three months ended March 31, 2022
were as follows:
(Unaudited; $ in millions)
Research
Conferences
Consulting
Revenues
$
1,136
$
10
$
116
Inc/(Dec)
16.0
%
(58.3
) %
16.6
%
Inc/(Dec) - FX neutral
17.9
%
(57.3
) %
19.9
%
Gross contribution
$
849
$
(3
)
$
51
Inc/(Dec)
17.3
%
(120.7
) %
30.5
%
Contribution margin
74.7
%
(27.8
) %
44.0
%
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 May 3, 2022 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 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 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. Such factors
include, but are not limited to, the following: the impact of the
COVID-19 pandemic and related disruptions on our business and on
the global economy; the adequacy or effectiveness of steps we take
to respond to the pandemic; 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 impact on
our business of the war in Ukraine and current and future sanctions
imposed by governments or other authorities; 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 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,
if applicable; (iv) gain on event cancellation insurance claims, if
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,
if 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, if applicable; (iv) gain on
event cancellation insurance claims, if applicable; (v) loss on
impairment of lease related assets, net if applicable; (vi) the
non-cash (gain) loss on de-designated interest rate swaps, if
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 net income (loss) per
diluted share 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, if
applicable; (iv) gain on event cancellation insurance claims, if
applicable; (v) loss on impairment of lease related assets, net if
applicable; (vi) the non-cash (gain) loss on de-designated interest
rate swaps, if 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 March 31,
2022
2021
GAAP net income
$
173
$
164
Interest expense, net
31
26
Other income, net
(29
)
(15
)
Tax provision
43
51
Operating income
217
225
Adjustments:
Stock-based compensation expense (a)
32
36
Depreciation, amortization and accretion
(b)
49
56
Loss on impairment of lease related
assets, net (c)
24
—
Acquisition and integration charges and
other non-recurring items (d)
7
2
Adjusted EBITDA
$
329
$
320
(a) Consists of charges for stock-based compensation awards. (b)
Includes depreciation expense, amortization of intangibles and
accretion on asset retirement obligations. (c) Includes impairment
loss for lease related assets. (d) 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 Net Income per diluted share to Adjusted Net Income and
Adjusted EPS
(Unaudited; $ in millions, except per
share amounts)
Three Months Ended March 31,
2022
2021
Amount
Per Share
Amount
Per Share
GAAP net income and GAAP net income per
diluted share
$
173
$
2.08
$
164
$
1.84
Acquisition and other adjustments:
Amortization of acquired intangibles
(a)
25
0.30
31
0.34
Acquisition and integration charges and
other non-recurring items (b), (c)
8
0.10
3
0.04
Loss on impairment of lease related
assets, net (d)
24
0.29
—
—
Gain on de-designated interest rate swaps
(e)
(30
)
(0.36
)
(16
)
(0.18
)
Tax impact of adjustments (f)
(7
)
(0.08
)
(4
)
(0.05
)
Adjusted net income and Adjusted EPS
(g)
$
193
$
2.33
$
178
$
2.00
(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) Includes impairment loss for lease related
assets, net of a reduction in lease liabilities. (e) Represents the
fair value adjustment for interest rate swaps after de-designation.
(f) The blended effective tax rates on the adjustments were
approximately 24.0% and 22.4% for the three months ended March 31,
2022 and 2021, respectively. (g) Adjusted EPS was calculated based
on 83.0 million and 89.1 million diluted shares for the three
months ended March 31, 2022 and 2021, respectively.
Reconciliation - GAAP Cash Provided by
Operating Activities to Free Cash Flow (Unaudited; $ in
millions)
Three Months Ended March 31,
2022
2021
GAAP cash provided by operating
activities
$
168
$
157
Cash paid for capital expenditures
(17
)
(13
)
Free Cash Flow
$
150
$
145
GARTNER, INC.
Condensed Consolidated Statements
of Operations (Unaudited; in millions, except per share data)
Three Months Ended March 31,
2022
2021
Revenues:
Research
$
1,136.3
$
979.7
Conferences
10.4
24.8
Consulting
116.0
99.5
Total revenues
1,262.7
1,104.0
Costs and expenses:
Cost of services and product
development
377.0
334.4
Selling, general and administrative
618.0
487.3
Depreciation
23.2
25.8
Amortization of intangibles
25.1
30.5
Acquisition and integration charges
2.2
0.6
Total costs and expenses
1,045.5
878.6
Operating income
217.2
225.4
Interest expense, net
(31.4
)
(26.1
)
Other income, net
29.2
15.5
Income before income taxes
215.0
214.8
Provision for income taxes
42.5
50.7
Net income
$
172.5
$
164.1
Net income per share:
Basic
$
2.10
$
1.86
Diluted
$
2.08
$
1.84
Weighted average shares outstanding:
Basic
82.0
88.4
Diluted
83.0
89.1
Source: Gartner, Inc.
Gartner-IR
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220503005413/en/
David Cohen SVP, 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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