Gartner(US:IT)2022-08-02 15:16Financial Data and Key Metrics Changes - Second quarter revenue was $1.4 billion, up 18% year-over-year as reported and 22% FX neutral [14] - Adjusted EPS was $2.85, up 27% year-over-year [25] - EBITDA was $389 million, up 10% year-over-year and up 14% FX neutral [14][24] - Free cash flow for the quarter was $395 million, down 2% year-over-year when adjusting for insurance proceeds received last year [14][27] Business Line Data and Key Metrics Changes - Research revenue grew 14% year-over-year as reported and 17% FX neutral, with a contribution margin of 74% [15] - Global Technology Sales (GTS) contract value grew 14% year-over-year, with a retention rate of 107% [9][18] - Global Business Sales (GBS) contract value grew 23% year-over-year, with a retention rate of 115% [20] - Consulting revenue increased by 14% year-over-year to $121 million, with a contribution margin of 42% [23] Market Data and Key Metrics Changes - Contract value (CV) was $4.3 billion at the end of Q2, up 15% year-over-year [16] - GTS had quarterly net contract value increase (NCVI) of $60 million, while GBS had NCVI of $37 million [18][20] - Strong growth was observed across all practices, with retail, media, and manufacturing leading CV growth [17] Company Strategy and Development Direction - The company aims for double-digit revenue growth while maintaining strong margins, with underlying margins expected to be in the low twenties [30][34] - Continued investment in sales teams is planned to drive long-term sustained growth [19] - The company is focused on leveraging research insights to address client priorities, including talent acquisition and cost optimization [6][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the selling environment and strong demand for services [43] - The company is prepared for potential macroeconomic downturns, with strategies in place to support clients during challenging times [49][51] - The updated guidance for 2022 reflects strong Q2 performance and an improved outlook for the second half, despite FX headwinds [34][30] Other Important Information - The company repurchased around $930 million of stock in the first half of the year, reducing shares outstanding by 11% since the end of 2020 [29] - The company expects to run all planned in-person conferences, with strong demand from both attendees and exhibitors [21][32] Q&A Session Summary Question: Clarification on underlying margin - Management confirmed that underlying margins are in the low twenties and can be maintained or expanded even in a recession [39][41] Question: Comments on macro perspective and client demand - Management noted stable selling conditions and strong demand across consulting and conferences, with no significant concerns for Q2 [42][43] Question: Resilience in downturns - Management highlighted that clients continue to prioritize technology spending even during downturns, with a focus on securing talent and managing costs [49][50] Question: Differences in GBS and GTS performance - The difference in growth rates reflects prior investments in GBS and a faster growth in sales headcount compared to GTS [55][58] Question: Expectations for non-subscription revenue - Management expects non-subscription revenue to remain strong but acknowledges tough comparisons to last year's performance [81]