Gartner(IT) - 2024 Q3 - Quarterly Results

Gartner Third Quarter 2024 Financial Results Financial Highlights Gartner reported strong Q3 2024 results, with revenues rising 5.4% to $1.5 billion and a significant 130.6% increase in net income to $415 million. Total contract value grew 7.3% (FX neutral) to $5.0 billion. While GAAP Diluted EPS surged 135.4%, Adjusted EPS saw a slight decline of 2.3%. The company's performance was ahead of expectations, driven by growth in the Research and Conferences segments Consolidated Results In Q3 2024, Gartner's revenue increased by 5.4% to $1.484 billion. GAAP net income surged by 130.6% to $415 million, and GAAP Diluted EPS grew 135.4% to $5.32. On a non-GAAP basis, Adjusted EBITDA rose 2.1% to $340 million, while Adjusted EPS fell 2.3% to $2.50. The company also demonstrated strong liquidity with operating and free cash flow growing 78.5% and 86.8% respectively | Metric | Q3 2024 | Q3 2023 | % Change | % Change (FX Neutral) | | :--- | :--- | :--- | :--- | :--- | | GAAP Metrics | | | | | | Revenues | $1,484M | $1,409M | +5.4% | +5.6% | | Net Income | $415M | $180M | +130.6% | N/A | | Diluted EPS | $5.32 | $2.26 | +135.4% | N/A | | Operating Cash Flow | $591M | $331M | +78.5% | N/A | | Non-GAAP Metrics | | | | | | Adjusted EBITDA | $340M | $333M | +2.1% | +2.8% | | Adjusted EPS | $2.50 | $2.56 | -2.3% | N/A | | Free Cash Flow | $565M | $302M | +86.8% | N/A | - CEO Gene Hall noted that Revenue, Adjusted EBITDA, and Adjusted EPS were ahead of expectations, and the company remains on a path for long-term, sustained, double-digit growth[3] Contract Value and Segment Performance Total contract value reached $5.0 billion, marking a 7.3% year-over-year increase on an FX neutral basis. This growth was supported by a notable 11.6% FX neutral increase in Global Business Sales (GBS) contract value. By segment, Conferences revenue showed the strongest growth at 32.5%, followed by Research at 5.1%, while Consulting revenue declined by 3.9% - Key contract value highlights include: - Total Contract Value: $5.0 billion, +7.3% YoY FX Neutral - Global Technology Sales (GTS) CV: $3.9 billion, +6.1% YoY FX Neutral - Global Business Sales (GBS) CV: $1.2 billion, +11.6% YoY FX Neutral[1][5] | Segment | Revenue (Q3 2024) | YoY % Change | YoY % Change (FX Neutral) | Gross Contribution | Contribution Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Research | $1,281M | +5.1% | +5.4% | $943M | 73.7% | | Conferences | $76M | +32.5% | +30.5% | $30M | 40.2% | | Consulting | $128M | -3.9% | -3.7% | $42M | 32.5% | Financial Statements and Reconciliations This section provides the detailed GAAP financial statements and reconciles them to the non-GAAP measures used by management. It includes the Condensed Consolidated Statement of Operations and detailed calculations for Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow, highlighting a significant $300 million gain from event cancellation insurance claims which impacted GAAP results Condensed Consolidated Statement of Operations For Q3 2024, total revenues were $1.484 billion, up from $1.409 billion in Q3 2023, driven by growth in Research and Conferences. A significant $300 million gain on event cancellation insurance claims substantially boosted income before taxes to $526.8 million and resulted in a net income of $415.0 million, compared to $180.0 million in the prior-year period | (In millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenues | $1,484.3 | $1,408.8 | | Total costs and expenses | $1,238.5 | $1,164.4 | | Operating income | $245.8 | $244.4 | | Gain on event cancellation insurance claims | $300.0 | $— | | Income before income taxes | $526.8 | $224.5 | | Net income | $415.0 | $180.0 | | Diluted EPS | $5.32 | $2.26 | Non-GAAP Reconciliations The reconciliation tables detail adjustments from GAAP to non-GAAP figures. To calculate Adjusted EBITDA of $340 million, GAAP net income of $415 million was adjusted for items including a $300 million gain on insurance claims. Similarly, Adjusted Net Income of $195 million and Adjusted EPS of $2.50 were derived after adjusting for the insurance gain, amortization of acquired intangibles, and other non-recurring items. Free Cash Flow was calculated at $565 million after deducting $26 million in capital expenditures from operating cash flow Reconciliation of GAAP Net Income to Adjusted EBITDA | (In millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | GAAP net income | $415 | $180 | | Gain on event cancellation insurance claims | ($300) | $— | | Tax provision | $112 | $44 | | Interest expense, net | $18 | $22 | | Other adjustments | $95 | $89 | | Adjusted EBITDA | $340 | $333 | Reconciliation of GAAP Net Income to Adjusted Net Income | (In millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | GAAP net income | $415 | $180 | | Gain on event cancellation insurance claims | ($300) | $— | | Amortization of acquired intangibles | $22 | $24 | | Tax impact of adjustments | $45 | ($12) | | Other adjustments | $12 | $11 | | Adjusted net income | $195 | $203 | Reconciliation of Operating Cash Flow to Free Cash Flow | (In millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | GAAP cash provided by operating activities | $591 | $331 | | Cash paid for capital expenditures | ($26) | ($28) | | Free Cash Flow | $565 | $302 | Other Information This section contains important supplementary information, including definitions of the non-GAAP financial measures used throughout the report and the standard forward-looking statements disclaimer, which outlines potential risks and uncertainties that could affect future results Non-GAAP Financial Measures Definitions This section defines the key non-GAAP metrics used by Gartner to provide a clearer view of its core operational performance. It explains the calculation and rationale for using Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Free Cash Flow, and Foreign Currency Neutral (FX Neutral) figures, which are intended to exclude items not representative of core operating results - Gartner uses non-GAAP measures to enhance understanding of its current and future financial performance. These measures include: - Adjusted EBITDA: Excludes items like interest, taxes, stock-based compensation, and other non-recurring items. - Adjusted Net Income & Adjusted EPS: Excludes items like amortization of acquired intangibles and other non-recurring charges. - Free Cash Flow: Represents operating cash flow less capital expenditures, indicating cash available for debt repayment, stock repurchases, or investments. - Foreign Currency Neutral (FX Neutral): Eliminates the effects of exchange rate fluctuations to show underlying trends[11][12][15] Forward-Looking Statements This section is a legal disclaimer that cautions investors that statements in the press release about future performance are subject to various risks and uncertainties. Key risks mentioned include general economic conditions, inflation, competition, ability to retain key personnel, cybersecurity incidents, and geopolitical conditions - The forward-looking statements section outlines potential risks that could cause actual results to differ materially from projections. Key risk factors include: - General economic conditions, including inflation and recession. - Ability to manage growth and integrate acquisitions. - Ability to attract and retain key research, consulting, and sales personnel. - Competitive pressures. - Cybersecurity incidents and geopolitical conditions[9]