Gartner, Inc. (IT - Free Report) reported strong first-quarter 2018 results with revenues and earnings surpassing the Zacks Consensus Estimate.
Adjusted earnings of 72 cents per share beat the consensus mark by 14 cents and increased 20% year over year.
Total revenues of $963.56 million beat the Zacks Consensus Estimate of $929 million. The figure was up 54% year over year. Adjusted revenues of $974 million were up 16% from the year-ago quarter. Strength across the majority of the segments drove the top line.
Total contract value for Gartner business was approximately $2.9 billion, up 12% year over year.
We observe that shares of Gartner have gained 7.2% in the past three months, outperforming the industry’s gain of 1.4%.
Let’s check out the numbers.
Revenues by Segment
Research segment’s revenues increased 49% year over year to $763.92 million. The quarterly gross contribution margin was 70% for the quarter, up from 69% in the year-ago period.
Under Global Technology Sales, client retention was 83% and wallet retention was 104%. Global Business Sales client retention was 82% and wallet retention was 99%.
Consulting segment revenues grew 5% from the year-ago quarter to $82.89 million. Backlog, the key leading indicator of future revenue growth for the Consulting business, was $104 million compared with $89 million in the prior-year period. Gross contribution margin was 29% compared with 30% in the year-earlier quarter.
Events segment revenues increased 31% from the year-ago quarter to $46.08 million. Gross contribution margin was 35%, down from 38% in the first quarter of 2017.
Talent Assessment & Other segment revenues were $70.65 million, while gross contribution margin was 61%.
Operating Results
Adjusted EBITDA increased 13.4% year over year to $161 million. Adjusted EBITDA margin declined to 16.7% from 22.7% in the year-ago quarter.
Balance Sheet and Cash Flow
Gartner exited first-quarter 2018 with cash and cash equivalents of $189.98 million compared with $538.91 million at the end of December 2017. As of Mar 31, 2018, long-term debt was $2,186.06 million compared with $2,899.12 million at the end of December 2017.
Operating cash flow was $3 million and free cash flow was $27 million in the reported quarter.
2018 Outlook
Gartner lowered its guidance for 2018. The company currently expects revenues in the range of $3.9–$4.0 billion, compared with the earlier expectations of $4.1-4.2 billion. The Zacks Consensus Estimate stands at $4.2 billion, which is above the currently guided range.
Adjusted earnings are expected in the range of $3.51–$3.91 per share, compared with $3.71–$4.11 expected earlier. The Zacks Consensus Estimate stands at $3.89, within the currently guided range.
Adjusted EBITDA is expected in the range of $710-760 million compared with $750-$800 million expected earlier.
Operating cash flow is expected in the range of $425-475 million compared with $460-$510 million expected earlier. Free cash flow is expected in the range of $416-456 million compared with $451-$491 million expected earlier.
Zacks Rank & Upcoming Releases
Gartner currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services sector are keenly awaiting earnings reports from key players like ABM Industries Incorporated (ABM - Free Report) , Accenture plc (ACN - Free Report) and FactSet Research Systems Inc. . While Accenture and FactSet Research Systems are expected to report third-quarter fiscal 2018 numbers on Jun 28 and Jun 26, respectively, ABM Industries is expected to release second-quarter fiscal 2018 results on Jun 6.
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Gartner, Inc. (IT - Free Report) reported strong first-quarter 2018 results with revenues and earnings surpassing the Zacks Consensus Estimate.
Adjusted earnings of 72 cents per share beat the consensus mark by 14 cents and increased 20% year over year.
Total revenues of $963.56 million beat the Zacks Consensus Estimate of $929 million. The figure was up 54% year over year. Adjusted revenues of $974 million were up 16% from the year-ago quarter. Strength across the majority of the segments drove the top line.
Total contract value for Gartner business was approximately $2.9 billion, up 12% year over year.
We observe that shares of Gartner have gained 7.2% in the past three months, outperforming the industry’s gain of 1.4%.
Let’s check out the numbers.
Revenues by Segment
Research segment’s revenues increased 49% year over year to $763.92 million. The quarterly gross contribution margin was 70% for the quarter, up from 69% in the year-ago period.
Under Global Technology Sales, client retention was 83% and wallet retention was 104%. Global Business Sales client retention was 82% and wallet retention was 99%.
Consulting segment revenues grew 5% from the year-ago quarter to $82.89 million. Backlog, the key leading indicator of future revenue growth for the Consulting business, was $104 million compared with $89 million in the prior-year period. Gross contribution margin was 29% compared with 30% in the year-earlier quarter.
Events segment revenues increased 31% from the year-ago quarter to $46.08 million. Gross contribution margin was 35%, down from 38% in the first quarter of 2017.
Talent Assessment & Other segment revenues were $70.65 million, while gross contribution margin was 61%.
Operating Results
Adjusted EBITDA increased 13.4% year over year to $161 million. Adjusted EBITDA margin declined to 16.7% from 22.7% in the year-ago quarter.
Balance Sheet and Cash Flow
Gartner exited first-quarter 2018 with cash and cash equivalents of $189.98 million compared with $538.91 million at the end of December 2017. As of Mar 31, 2018, long-term debt was $2,186.06 million compared with $2,899.12 million at the end of December 2017.
Operating cash flow was $3 million and free cash flow was $27 million in the reported quarter.
2018 Outlook
Gartner lowered its guidance for 2018. The company currently expects revenues in the range of $3.9–$4.0 billion, compared with the earlier expectations of $4.1-4.2 billion. The Zacks Consensus Estimate stands at $4.2 billion, which is above the currently guided range.
Adjusted earnings are expected in the range of $3.51–$3.91 per share, compared with $3.71–$4.11 expected earlier. The Zacks Consensus Estimate stands at $3.89, within the currently guided range.
Adjusted EBITDA is expected in the range of $710-760 million compared with $750-$800 million expected earlier.
Operating cash flow is expected in the range of $425-475 million compared with $460-$510 million expected earlier. Free cash flow is expected in the range of $416-456 million compared with $451-$491 million expected earlier.
Zacks Rank & Upcoming Releases
Gartner currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services sector are keenly awaiting earnings reports from key players like ABM Industries Incorporated (ABM - Free Report) , Accenture plc (ACN - Free Report) and FactSet Research Systems Inc. . While Accenture and FactSet Research Systems are expected to report third-quarter fiscal 2018 numbers on Jun 28 and Jun 26, respectively, ABM Industries is expected to release second-quarter fiscal 2018 results on Jun 6.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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