Gartner's CEO Discusses Q1 2012 Results- Earnings Call Transcript

Gartner Inc. (IT)

Q1 2012 Earnings Call

May 3, 2012 8:30 am ET


Eugene Hall – Chief Executive Officer

Christopher Lafond – Chief Financial Officer

Brian Shipman – Vice President, Investor Relations


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



Good morning ladies and gentlemen and welcome to Garner’s Earnings Conference Call for the First Quarter 2012. A replay of this call will be available through June 4, 2012. The replay can be accessed by dialing 888-286-8010 for domestic calls and 617-801-6888 for international calls and by entering the pass code 92101447. This call is being simultaneously webcast and will be archived on Gartner’s website at for approximately 90 days.

I will now turn the conference over to Brian Shipman, Gartner’s Group Vice President of Investor Relations for opening remarks and introductions. Please go ahead, sir.

Brian Shipman

Thank you and good morning everyone. Welcome to Gartner’s First Quarter 2012 Earnings call. With me today is our Chief Executive Officer, Gene Hall, and our Chief Financial Officer, Chris Lafond. This call will begin with a discussion of Q1 2012 financial results disclosed in today’s press release, followed by an opportunity for you to ask questions. I’d like to remind everyone that the press release is available on our website. That URL is

Before we begin, we need to remind you that certain statements made on this call may constitute forward-looking statements. Forward-looking statements can vary materially from actual results and are subject to a number of risks and uncertainties, including those contained in the Company’s 2011 annual report on Form 10-K and quarterly reports on Form 10-Q, as well as in other filings with the SEC. I would encourage all of you to review the risk factors listed in these documents. The Company undertakes no obligation to update any of its forward-looking statements.

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.

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