Gartner Inc. (IT) Q1 2012 Earnings Call May 3, 2012 8:30 am ET Executives Eugene Hall – Chief Executive Officer Christopher Lafond – Chief Financial Officer Brian Shipman – Vice President, Investor Relations Analysts Peter Appert – Piper Jaffray William Bird – Lazard Robert Riggs – William Blair Manav Patnaik – Barclays Kelly Flynn – Credit Suisse Dan Leben – Robert W. Baird Brian Karimzad – Goldman Sachs Presentation Operator
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With that, I’d like to hand the call over to Gartner’s Chief Executive Officer, Gene Hall. Gene?Eugene Hall Good morning everyone. Welcome to our first earnings call for 2012. We had a great first quarter and our business is performing extraordinarily well. We continue to experience the strong growth trends we saw in 2011 and our business accelerated in all three segments. As you’ll hear in more detail from Chris, Gartner is in the strongest position we’ve ever been. Research, our largest and most profitable segment, continues to grow at double-digit growth rates. Consulting had its strongest quarter in years and events continued to exceed our long-term growth targets. Normalized EBITDA was up 11% and diluted earnings per share was up 24% over first quarter 2011. These results demonstrate the strength achieved through successful execution of our consistent strategy. Our sales capabilities were the strongest we’ve ever had. The productivity of our new hires is on a great trajectory and we’re bringing in strong talent. We continue to invest in our sales force and benefit from great sales leadership. I recently spent several days at a meeting with several hundred of our top performing sales associates. They are excited about Gartner. They know we deliver a huge value to our clients and they also know the importance and relevance of our insights within our client organizations is growing. Why? Because IT is one of the most important drivers of growth and competitive advantage for virtually every institution in the world, and IT is complex and continuously evolving. Whether an organization is looking to leverage technology to achieve rapid growth or whether they are looking to manage costs, Gartner is the best resource these professionals can turn to for help, and our assistance often makes the difference between success and failure for our clients. Because of this, we benefit from a vast untapped market opportunity for our services which, as I stated before, we estimate at $47 billion.
There are hundreds of thousands of IT and supply chain professionals who could potentially be Gartner clients but had never been educated on the value we can provide. The same is true of our events business, which continues to deliver extraordinary performance.We have the right strategy to capture this opportunity. As some of you know, the fundamentals of our strategy are to create extraordinary research insights, to build strong sales capability, to deliver high value differentiated offerings, to provide world-class service, and to continually improve our operational effectiveness. This consistent strategy is driving our growth and will allow us to maintain sustained double-digit growth over time. I remain confident in and excited about our prospects for sustained accelerated growth. The Gartner brand is in a class by itself. Our products, services and people are superior to the competition and we have a successful and attractive business model. We delivered another successive quarter of strong growth and we’re well poised to achieve strong results in 2012 and beyond. As you’ll hear from Chris in a minute, we demonstrated growth across all three of our business segments as well as in normalized EBITDA and diluted EPS. Our business model is attractive with high renewal rates, great cash flow, and incremental margins, and we have the right strategy to achieve our goals. Finally, we’re well positioned to achieve our long-term targets with the leading brand in IT and supply chain research, a strong value proposition for our clients, great operational capabilities, and a vast untapped market opportunity. Read the rest of this transcript for free on seekingalpha.com