Contract Value $4.8 billion, +8% YoY FX
Neutral
FOURTH QUARTER 2023 HIGHLIGHTS
- Revenues: $1.6 billion, +5% as reported, +4% FX neutral.
- Net income: $209 million, -19%; adjusted EBITDA: $386 million,
-8% as reported, -9% FX neutral.
- Diluted EPS: $2.64, -18%; adjusted EPS: $3.04, -18%.
- Operating cash flow: $224 million, +10%; free cash flow: $196
million, +19%.
FULL YEAR 2023 HIGHLIGHTS
- Revenues: $5.9 billion, +8% as reported and FX neutral.
- Net income: $882 million, +9%; adjusted EBITDA: $1.5 billion,
+1% as reported, +2% FX neutral.
- Diluted EPS: $11.08, +11%; adjusted EPS: $11.33, +1%.
- Operating cash flow: $1.2 billion, +5%; free cash flow: $1.1
billion, +6%.
- Repurchased 1.8 million common shares for $0.6 billion; 1%
reduction in outstanding share count YoY.
Gartner, Inc. (NYSE: IT), today reported results for the fourth
quarter of 2023 and provided its financial outlook for the full
year 2024. Additional information regarding the Company’s results
and 2024 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 delivered another strong year, providing exceptional value
for our clients, driving high single digit growth in contract value
and generating more than $1 billion of free cash flow. Entering
2024, our associate team is the best we’ve ever had, positioning us
for long-term, sustained, double-digit growth. We are introducing
guidance which is achievable across a wide range of economic
scenarios, with the opportunity for upside.”
CONFERENCE CALL INFORMATION
The Company will host a webcast call at 8:00 a.m. Eastern time
on Tuesday, February 6, 2024 to discuss the Company’s financial
results. Listeners can access the webcast live at
https://edge.media-server.com/mmc/p/8au4rmz5. To participate
actively in the live call via dial-in, please register at
https://register.vevent.com/register/BIe86287ab7c5c4158baacfa155679d9d9.
Once registered, participants will receive a dial-in number and a
unique PIN to access the call. 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)
2023
2022
Inc/(Dec)
FX Neutral
GAAP Metrics:
Revenues
$
1,586
$
1,505
5
%
4
%
Net income
209
257
(19
)%
na
Diluted EPS
2.64
3.21
(18
)%
na
Operating cash flow
224
203
10
%
na
Non-GAAP Metrics:
Adjusted EBITDA
$
386
$
421
(8
)%
(9
)%
Adjusted EPS
3.04
3.70
(18
)%
na
Free cash flow
196
166
19
%
na
na=not available
CONTRACT VALUE HIGHLIGHTS
- Global Technology Sales Contract Value (GTS CV): $3.7 billion,
+6% YoY FX Neutral
- Global Business Sales Contract Value (GBS CV): $1.1 billion,
+13% YoY FX Neutral
SEGMENT RESULTS HIGHLIGHTS
Our segment results for the three months ended December 31, 2023
were as follows:
(Unaudited; $ in millions)
Research
Conferences
Consulting
Revenues
$
1,243
$
214
$
128
Inc/(Dec)
6
%
14
%
(7
)%
Inc/(Dec) - FX neutral
5
%
12
%
(7
)%
Gross contribution
$
921
$
108
$
35
Inc/(Dec)
6
%
8
%
(32
)%
Contribution margin
74
%
50
%
27
%
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.
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.
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 general economic
conditions, including inflation (and related monetary policy by
governments in response to inflation), on economic activity and our
operations; changes in macroeconomic and market conditions and
market volatility, including interest rates and the effect on the
credit markets and access to capital; the impact of global economic
and geopolitical conditions, including inflation, and recession;
our ability to carry out our strategic initiatives and manage
associated costs; 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; 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 labor competition; 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 successfully compete with existing competitors and
potential new competitors; our ability to enforce and protect our
intellectual property rights; our ability to keep pace with
technological developments in artificial intelligence; additional
risks associated with international operations, including foreign
currency fluctuations; the impact on our business resulting from
changes in international conditions, including those resulting from
the conflict in the Middle East, the war in Ukraine and current and
future sanctions imposed by governments or other authorities; the
impact of restructuring and other charges on our businesses and
operations; cybersecurity incidents; risks associated with the
creditworthiness, budget cuts, and shutdown of governments and
agencies; our ability to meet ESG commitments; the impact of
changes in tax policy (including global minimum tax legislation)
and heightened scrutiny from various taxing authorities globally;
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) gain on event cancellation
insurance claims, as applicable; (iv) gain/loss on divestitures, 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) gain on event cancellation insurance claims, as applicable;
(iv) gain/loss on divestitures, 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) gain on event cancellation insurance claims, as applicable;
(iv) gain/loss on divestitures, 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,
2023
2022
2023
2022
GAAP net income
$
209
$
257
$
882
$
808
Interest expense, net
20
30
94
121
Gain on event cancellation insurance
claims (a)
—
—
(3
)
—
Other expense (income), net
4
(2
)
(1
)
(48
)
Tax provision
69
47
265
219
Operating income
301
332
1,237
1,100
Adjustments:
Stock-based compensation expense (b)
26
13
130
91
Depreciation, amortization and accretion
(c)
50
49
192
193
Loss on impairment of lease related
assets, net (d)
1
16
20
54
Acquisition and integration charges and
other non-recurring items (e)
9
11
39
33
Gain from sale of divested operation
(f)
—
—
(135
)
—
Adjusted EBITDA
$
386
$
421
$
1,483
$
1,471
(a)
Consists of the gain on event
cancellation insurance claims for events cancelled in 2020.
(b)
Consists of charges for
stock-based compensation awards.
(c)
Includes depreciation expense,
amortization of intangibles and accretion on asset retirement
obligations.
(d)
Includes impairment loss for
lease related assets, net of a reduction in lease liabilities.
(e)
Consists of direct and
incremental expenses related to acquisitions and divestitures,
facility-related exit costs, and other non-recurring items.
(f)
Consists of the gain on our
February 2023 divestiture.
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,
2023
2022
Amount
Per Share
Amount
Per Share
GAAP net income
$
209
$
2.64
$
257
$
3.21
Acquisition and other adjustments:
Amortization of acquired intangibles
(a)
23
0.29
24
0.30
Acquisition and integration charges and
other non-recurring items (b), (c)
10
0.12
12
0.15
Loss on impairment of lease related
assets, net (f)
1
0.02
16
0.21
Loss (gain) on de-designated interest rate
swaps (g)
4
0.05
(1
)
(0.01
)
Tax impact of adjustments (h)
(6
)
(0.07
)
(12
)
(0.15
)
Adjusted net income and Adjusted EPS
(i)
$
241
$
3.04
$
297
$
3.70
Year Ended December 31,
2023
2022
Amount
Per Share
Amount
Per Share
GAAP net income
$
882
$
11.08
$
808
$
9.96
Acquisition and other adjustments:
Amortization of acquired intangibles
(a)
92
1.16
99
1.22
Acquisition and integration charges and
other non-recurring items (b), (c)
44
0.55
38
0.47
Gain on event cancellation insurance
claims (d)
(3
)
(0.04
)
—
—
Gain from sale of divested operation
(e)
(135
)
(1.70
)
—
—
Loss on impairment of lease related
assets, net (f)
20
0.26
54
0.67
Gain on de-designated interest rate swaps
(g)
(4
)
(0.05
)
(52
)
(0.65
)
Tax impact of adjustments (h)
6
0.07
(32
)
(0.40
)
Adjusted net income and Adjusted EPS
(i)
$
903
$
11.33
$
914
$
11.27
(a)
Consists of non-cash amortization
charges from acquired intangibles.
(b)
Consists of direct and
incremental expenses related to acquisitions and divestitures,
facility-related exit costs, 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)
Consists of the gain on our
February 2023 divestiture.
(f)
Includes impairment loss for
lease related assets, net of a reduction in lease liabilities.
(g)
Represents the fair value
adjustment for interest rate swaps after de-designation.
(h)
The blended effective tax rates
on the adjustments were approximately 15% and 23% for the three
months ended December 31, 2023 and 2022, respectively, and (39)%
and 23% for the years ended December 31, 2023 and 2022,
respectively.
(i)
Adjusted EPS was calculated based
on 79.0 million and 80.1 million diluted shares for the three
months ended December 31, 2023 and 2022, respectively, and 79.7
million and 81.1 million diluted shares for the years ended
December 31, 2023 and 2022, respectively.
Reconciliation - GAAP Cash
Provided by Operating Activities to Free Cash Flow
(Unaudited; $ in millions)
Three Months Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
GAAP cash provided by operating
activities
$
224
$
203
$
1,156
$
1,101
Cash paid for capital expenditures
(28
)
(38
)
(103
)
(108
)
Free cash flow
$
196
$
166
$
1,053
$
993
GARTNER, INC.
Condensed Consolidated Statements
of Operations
(Unaudited; in millions, except
per share data)
Three Months Ended
December 31,
2023
2022
Revenues:
Research
$
1,243.2
$
1,178.3
Conferences
214.4
188.3
Consulting
128.5
138.1
Total revenues
1,586.1
1,504.7
Costs and expenses:
Cost of services and product
development
529.8
475.4
Selling, general and administrative
703.8
645.0
Depreciation
26.5
24.4
Amortization of intangibles
22.8
24.3
Acquisition and integration charges
1.8
3.3
Total costs and expenses
1,284.7
1,172.4
Operating income
301.4
332.3
Interest expense, net
(20.5
)
(29.9
)
Other (expense) income, net
(3.7
)
1.7
Income before income taxes
277.2
304.1
Provision for income taxes
68.6
47.3
Net income
$
208.6
$
256.8
Net income per share:
Basic
$
2.66
$
3.24
Diluted
$
2.64
$
3.21
Weighted average shares outstanding:
Basic
78.4
79.2
Diluted
79.0
80.1
Source: Gartner, Inc.
Gartner-IR
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240206364723/en/
David Cohen SVP, Investor Relations, Gartner +1 203.316.6631
investor.relations@gartner.com
Gartner (NYSE:IT)
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