It Data Into Dollars Gartner

Image source: Gartner.

Gartner (NYSE:IT) reported fourth-quarter results on Feb 4. The leading provider of research and analysis on the global information technology industry delivered solid growth despite significant foreign exchange headwinds.

Gartner results: The raw numbers

 

Q4 2015

Q4 2014

Growth (YOY)

Revenue

$643.768 million

$583.979 million

10%

Net Income

$65.763 million

$59.144 million

11%

Earnings Per Share

$0.78

$0.66

18%

Data source: Gartner Q4 2015 earnings press release.

What happened with Gartner this quarter?

  • Total revenue increased 10% year over year to $643.8 million, and 16% excluding the negative impact of foreign exchange rate fluctuations.
  • Normalized EBITDA (earnings before interest, taxes, depreciation, and amortization), which excludes stock-based compensation and certain acquisition-related charges, rose 13% to $136.9 million, and 19% on a constant dollar basis.
  • Adjusted earnings per share, which excludes acquisition-related charges, jumped 28% to $0.92.

Business segment results
Drilling down into Gartner's individual business segments, we see that research revenue rose 13% (18% on a constant-currency basis) to $420.5 million. Gross margin declined to 68% from 69% in Q4 2014. Contract value was $1.761 billion at Dec. 31, 2015, an increase of 10% (14% on a constant-currency basis). Client retention and wallet retention (retention times revenue per customer) each declined about 1 percentage point to 84% and 105%, respectively, compared to the year-ago quarter.

Consulting revenue remained flat at $87.9 million, but increased 5% on a currency-neutral basis. Consulting segment gross contribution margin declined to 30% from 32% in Q4 2014, and utilization fell to 67% compared to 72% in the prior-year period. Gartner did, however, grow both its consultant force and backlog during the fourth quarter, with its billable head count and backlog rising to 606 and $117.7 million, respectively, as of Dec. 31, 2015, compared to 535 and $102.6 million at the end of the fourth quarter of 2014.

Revenue for Gartner's event business was $135.3 million, representing a year-over-year increase of 11% (17% on a constant-currency basis.) Gross contribution margin for the events segment climbed to 57%, up from 56% in the prior-year quarter. 

Looking forward
Management provided its preliminary financial outlook for 2016, including:

  • Total revenue of $2.39 billion to $2.45 billion, up 10% to 13% year over year
  • Adjusted EPS of $2.55 to $2.77, up 7% to 16%
  • Normalized EBITDA of $440 million to $470 million, up 8% to 15%
  • Operating cash flow of $350 million to $375 million, up 1% to 9%
  • Free cash flow of $345 million to $370 million, up 9% to 17%

"Gartner continued its trend of strong results in 2015 and executed on a number of key strategic initiatives designed to drive long term growth," said CEO Gene Hall. "I remain confident that we will continue to deliver strong results in 2016 and beyond."

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends Gartner. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.