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Gartner Reports Fourth Quarter 2018 Financial Results

February 5, 2019

STAMFORD, Conn.--(BUSINESS WIRE)--Feb 5, 2019--Gartner, Inc. (NYSE:IT), the world’s leading research and advisory company, today reported results for fourth quarter 2018 and provided guidance for full year 2019. Additional information regarding the Company’s results 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, “In 2018, we delivered another year of double-digit revenue growth and strong results across our three segments. We continue to achieve sustained, free cash flow growth and have resumed our share repurchase program to return capital to shareholders. As we enter 2019, we’re better positioned than ever to deliver indispensable value to leaders across every function in the enterprise.”

CONFERENCE CALL INFORMATION

The Company will host a webcast call at 8:00 a.m. Eastern time on Tuesday, February 5, 2019 to discuss the Company’s financial results. The call will be available via the Internet by accessing the Company’s website at http://investor.gartner.com or by dialing 844-413-7151 (conference ID 3219098). A replay of the webcast will be available for approximately 30 days following the call on the Company’s website.

CONSOLIDATED RESULTS HIGHLIGHTS

na=not available.

SEGMENT RESULTS HIGHLIGHTS

Global Technology Sales Contract Value (GTS CV): $2.6 billion, +14% YOY FX Neutral Global Business Sales Contract Value (GBS CV): $0.6 billion, +1% YOY FX Neutral

The Company’s segment results for the three months ended December 31, 2018 are as follows (Unaudited; $ in millions) (a), (b):

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 reconciliations under “Supplemental Information — Non-GAAP Reconciliations.”

FINANCIAL OUTLOOK FOR 2019

Additional details regarding our 2019 financial outlook are available in the Earnings Supplement.

ANNUAL MEETING OF STOCKHOLDERS

Gartner will hold its 2019 Annual Meeting of Stockholders at 10:00 a.m. eastern time on Thursday, May 30, 2019 at the Company’s offices in Stamford, Connecticut.

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 goals and build the successful organizations of tomorrow. We believe we have an unmatched combination of expert-led, practitioner-sourced and data-driven research that steers clients toward the right decisions on the issues that matter most. We’re a trusted advisor and an objective resource for more than 15,000 organizations 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 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 factors include, but are not limited to, the following: 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; 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 or protect our intellectual property rights; additional risks associated with international operations including foreign currency fluctuations; the impact of restructuring and other charges on our businesses and operations; general economic conditions; risks associated with the creditworthiness, budget cuts, and shutdown of governments and agencies; the impact of the U.S. Tax Cuts and Jobs Act of 2017; and other factors described under “Risk Factors” contained 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 http://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 Release are defined as follows:

Adjusted Revenue: Represents GAAP revenue plus: (i) revenue from pre-acquisition periods, as applicable; (ii) the amortization of non-cash fair value adjustments on pre-acquisition deferred revenues. The majority of the non-cash fair value adjustments on pre-acquisition deferred revenues is recognized ratably over the remaining period of the underlying revenue contract. We believe Adjusted Revenue is an important measure of our recurring operations as it provides a more accurate period-over-period comparison of trends in revenues.

Adjusted Contribution and Adjusted Contribution Margin: GAAP gross contribution is derived from our GAAP-based financial statements and represents revenue less direct expense; certain unallocated corporate costs are excluded. Adjusted Contribution represents GAAP gross contribution plus: (i) the contribution from pre-acquisition periods, as applicable, and (ii) the amortization of non-cash fair value adjustments on pre-acquisition deferred revenues; and (iii) an adjustment for the unallocated corporate costs. Adjusted Contribution Margin represents the contribution margin on Adjusted Revenue. We believe these are important measures of our recurring operations as they provide a more accurate and consistent period-over-period comparison of our segment results.

Adjusted Revenue, Adjusted Contribution, and Adjusted Contribution Margin - Excluding Divested Operations: Represent the non-GAAP metrics defined above less results of divested operations. We believe these are important measures of our recurring operations as they provide a more accurate and consistent period-over-period comparison of our segment results.

Adjusted EBITDA: Represents GAAP net income (loss) plus: (i) interest expense, net; (ii) tax provision (benefit); (iii) other operating expense, net; (iv) stock-based compensation expense; (v) depreciation, amortization, and accretion on excess facilities obligations; (vi) the amortization of non-cash fair value adjustments on pre-acquisition deferred revenues; (vii) acquisition and integration charges and certain other non-recurring items; (viii) the EBITDA from pre-acquisition periods, as applicable; less (ix) gain on divestitures. We believe Adjusted EBITDA is an important measure of our recurring operations as it excludes items not representative of our core operating results.

Adjusted EBITDA Excluding Divested Operations: Represents Adjusted EBITDA as defined above less EBITDA from divested operations. We believe this metric is an important measure of our recurring operations as it provides a more accurate and consistent period-over-period comparison of our 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; (iii) the amortization of non-cash fair value adjustments on pre-acquisition deferred revenues; (iv) the non-recurring impact from the enactment of the Tax Cuts and Jobs Act of 2017; (v) gains on divestitures; (vi) certain other non-recurring items; and (vii) the related tax effect. We believe Adjusted Net Income is an important measure of our recurring operations as it excludes items not indicative of our core operating results.

Adjusted EPS: Represents Adjusted Net Income as defined above divided by the weighted-average diluted shares outstanding. 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: (i) plus payments for acquisition and integration items directly-related to our acquisitions and certain other non-recurring items; (ii) less payments for capital expenditures. We believe that 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.

SUPPLEMENTAL INFORMATION - NON-GAAP RECONCILIATIONS

The following tables 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. In the following Non-GAAP reconciliation tables, some totals may not add due to rounding and percentage changes are based on the whole number and recalculation based on millions may yield a different result.

Reconciliation - GAAP Revenue to Adjusted Revenue and GAAP Contribution to Adjusted Contribution - Excluding Divested Operations (Unaudited; in millions):

For the three months ended December 31, 2018:

For the three months ended December 31, 2017:

For the twelve months ended December 31, 2018:

For the twelve months ended December 31, 2017:

na=not applicable.

Reconciliation - GAAP Net Income to Adjusted EBITDA Excluding Divested Operations (Unaudited; in millions):

Reconciliation - GAAP Net Income to Adjusted Net Income and Adjusted EPS (Unaudited; in millions, except per share amounts) :

Reconciliation - GAAP Cash Provided by Operating Activities to Free Cash Flow ( Unaudited; in millions):

Financial Outlook Reconciliation - GAAP Net Income to Adjusted EBITDA ( Unaudited; in millions):

Financial Outlook Reconciliation - GAAP EPS to Adjusted EPS ( Unaudited):

Financial Outlook Reconciliation - GAAP Cash Provided by Operating Activities to Free Cash Flow ( Unaudited; in millions):

GARTNER, INC.

Condensed Consolidated Statements of Operations

(Unaudited; in thousands, except per share data)

Gartner-IR

View source version on businesswire.com:https://www.businesswire.com/news/home/20190205005322/en/

CONTACT: David Cohen

GVP, Investor Relations, Gartner

+1 203.316.6631

investor.relations@gartner.com

KEYWORD: UNITED STATES NORTH AMERICA CONNECTICUT

INDUSTRY KEYWORD: PROFESSIONAL SERVICES CONSULTING FINANCE

SOURCE: Gartner, Inc.

Copyright Business Wire 2019.

PUB: 02/05/2019 06:00 AM/DISC: 02/05/2019 06:00 AM

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