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Gartner Reports Financial Results For Third Quarter 2015

The following excerpt is from the company's SEC filing.

Contract Value Increased 14% YoY FX Neutral to $1.643 billion

Research Revenue Increased 16% YOY FX Neutral

STAMFORD, Conn., November 5, 2015 — Gartner, Inc. (NYSE: IT), the leading provider of research and analysis on the global information technology industry, today reported results for third quarter 2015 and updated its financial outlook for full year 2015.

For third quarter 2015, total revenue was $500.2 million, an increase of 6% over third quarter 2014 and 13% excluding the foreign exchange impact. Third quarter 2015 net income was $30.4 million, a decrease of 10% compared to third quar ter 2014. Normalized EBITDA was $79.8 million for third quarter 2015, an increase of 7%, while diluted earnings per share was $0.36 in third quarter 2015 compared to $0.38 in third quarter 2014. Diluted Earnings Per Share Excluding Acquisition Adjustments was $0.45 in third quarter 2015 compared to $0.44 in third quarter 2014. (See “Non-GAAP Financial Measures” below for a discussion of Normalized EBITDA and Diluted Earnings Per Share Excluding Acquisition Adjustments).

For the nine months ended September 30, 2015, total revenue was $1.519 billion, an increase of 6% over the same period in 2014 and 13% adjusted for the foreign exchange impact. Net income for nine months ended September 30, 2015 was $109.9 million while Normalized EBITDA was $270.6 million. Diluted earnings per share for the nine month period was $1.29 in 2015 compared to $1.37 in 2014. Diluted Earnings Per Share Excluding Acquisition Adjustments was $1.47 per share and $1.52 per share for the nine months ended September 30, 2015 and 2014, respectively.

Gene Hall, Gartner’s chief executive officer, commented, “Gartner continues to deliver robust results as a company. We achieved another quarter of double-digit CV growth and we continue to deliver strong results across our underlying metrics.”

Business Segment Highlights

Revenue for third quarter 2015 was $396.2 million, up 8% compared to third quarter 2014 and 16% excluding the foreign exchange impact. The quarterly gross contribution margin was 69% for both 2015 and 2014. Contract value was $1.643 billion at September 30, 2015, an increase of 11% on a reported basis and 14% on a foreign exchange neutral basis compared to September 30, 2014. Client retention was 84% for both the third quarter of 2015 and 2014, while wallet retention was 106% in the 2015 quarter and 105% in the 2014 quarter.

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Consulting

Revenue for third quarter 2015 was $74.7 million, a decrease of 9% compared to third quarter 2014. Excluding the foreign exchange impact, quarterly revenues decreased 3%. The gross contribution margin was 29% and 30% in third quarter 2015 and 2014, respectively. Third quarter 2015 utilization was 63% compared to 65% in third quarter 2014. As of September 30, 2015, billable headcount was 588 compared to 534 as of September 30, 2014. Backlog was $109.6 million at September 30, 2015 compared to $108.5 million at September 30, 2014.

Events

Revenue for third quarter 2015 was $29.3 million, an increase of 26% compared to third quarter 2014. Adjusted for the foreign exchange impact, quarterly revenue increased 38% in the 2015 period. The gross contribution margin was 39% in third quarter 2015 compared to 30% in the prior year quarter. The Company held 15 events with 7,215 attendees in third quarter 2015 compared to 12 events and 5,606 attendees in third quarter 2014.

Cash Flow and Balance Sheet Highlights

Gartner generated $266 million of operating cash flow in the nine months ended September 30, 2015 compared to $276 million in the same period of 2014. Additions to property, equipment and leasehold improvements (“Capital Expenditures”) totaled $36 million in the nine months ended September 30, 2015. At September 30, 2015, the Company had $371 million of cash and $646 million of available borrowing capacity on its revolving credit facility. Through September 30, 2015, the Company used $453 million in cash to repurchase its common shares and $196 million in cash to complete the purchases of two businesses, Nubera eBusiness S.L., and Capterra, Inc. Both acquired businesses assist organizations in selecting the right business software for their needs.

Financial Outlook for 2015

The Company also updated its full year 2015 projections for revenues, EPS, Normalized EBITDA, and cash flows. The updated full year projections are...


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