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."