Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gartner Inc (IT, Financial) reported a 6% year-over-year increase in contract value, with Global Technology Sales (GTS) growing by 8%.
- The company achieved a 13% increase in conference revenue for the second quarter, indicating strong engagement and valuable insights delivered.
- Adjusted EPS was $3.22, up 13% from the previous year, showcasing strong profitability.
- Free cash flow for the quarter was $341 million, demonstrating robust cash generation capabilities.
- Gartner Inc (IT) repurchased $340 million of its stock during the second quarter, reflecting a commitment to returning capital to shareholders.
Negative Points
- The banking industry continues to face challenges due to higher interest rates, which could impact Gartner Inc (IT)'s clients in this sector.
- Persistent cybersecurity threats and potential impacts from geopolitical events create a volatile operating environment.
- Global Business Sales (GBS) contract value growth has been moderating, potentially due to macroeconomic conditions.
- Retention metrics, particularly for small tech vendors, have been declining, indicating challenges in maintaining client relationships in this segment.
- The company faces higher compensation costs and increased SG&A expenses due to headcount growth, which could pressure margins.
Q & A Highlights
Q: What kind of reiterate in Q1 a bottom for CV growth, macro and geopolitical caveats that growth maybe a quarter to quarter, I guess was zoom in on what you're trying to layer in just a acknowledgment or volatile market environment or you expect that you expect a deceleration from client or future river like a known year-over-year, Chris, you or anything else that you're seeing?
A: Hey, so I'd say it's definitely a lot about the fact that we're operating in a very volatile operating environment and 10 basis points up or down. There is a relevant role on SEDAR and EDGAR. The core of it is 6.9 marks the bottom and we should be above that. And every quarter moving forward could bounce around a little bit. And then obviously our medium-term objective is to get both GTS and GBS back to 12% to 16% annual rates. - Eugene Hall, CEO & Chairman of the Board
Q: Got it. And not on a building from cell phones from here, I guess vendor territory, I don't know exactly the phrase you used, but enough it's just territory thing. But what was that something that you recently like the gear? Or was that a ongoing dynamic? Just not sure what you're trying to signal they are and as it reassigning salespeople or just managing those territories through attrition?
A: HSG. So we do do what we call dynamic charge for plan, which is we look at every territory literally every territory, nice to see what the productivity is kind of trend is literally generalized as we have turnover as one sales person leaves. And of course, we have the available data or we do have the only site every quarter we look at where is the most productive place, but those territories. - Eugene Hall, CEO & Chairman of the Board
Q: I think you need to focus on their retail revenue guide. Seems like you lowered it becomes. And then on SAP's business and IT vendor actually returned to growth on the subscription side. But in that sense piece, I think so it seems to be declining. I guess what was it because your guide down like it has nine steps was worse than you originally thought or on that trajectory is not going to be as quick as you are thinking. Just maybe help us through the trajectory on subsidies. Thank you.
A: Tony. I mean the first thing I'd say is that at the entire operation or any related to the nine months of piece, that subscription revenue piece, overall research revenue, I mean, it's up a little bit from foreign exchange were from an operational perspective. Guidance is essentially the items from last quarter. And again, as we talked about last quarter, we believe that the bottom was going to be either Q1 or Q2. And so we have had a strong solid Q2 of NCVI. and CV. growth have dialed into our outlook. And so everything all the time and really do not have subscription business. - Eugene Hall, CEO & Chairman of the Board
Q: Great. And then on that cash balances by Apollo, let Brad, you added capacity to the buyback program and maybe just give us an update on what conditions could be for the sort of tying that back more stock. I know you already did there, but just trying to validate that level. Thanks.
A: Yes or so, we've got our basic philosophy on buybacks is to be price sensitive, opportunistic and business. As you know, I'd underscore each of the way to there are three important influence today. Our philosophy on buybacks will also say, obviously, you know this. And most of our goal, though, is we returned capital on since 2024. While back to our shareholders, we're close to what we did a full year 23 A. for the first half of 24 or are you free flow or Oslo and buybacks are pretty pretty close on top of each other for the first six months of the year. - Eugene Hall, CEO & Chairman of the Board
Q: Good morning. Thank you for taking my questions. I wanted to focus on new business growth seemingly stepped up pretty nicely relative to the first quarter. Can you unpack that a little bit? I know that we did 10 GTS., some of that might be some easier comps, but they seem better productivity from your sales force. Is there any change to the selling environment? Any color there, the hydro as James.
A: So what I'd say that the selling environment remain pretty much the same budgeting. We focused on improving the productivity of our teams. And as you know, we're always taking actions to be agile response will change the world. I think that's really the vectors, the startup of the environment got in any way, really. - Eugene Hall, CEO & Chairman of the Board
Q: Understood. And then I'm looking at the contract value per client per mil per client and enterprise, and it continues to tick up nicely. Just want to get it for my hunch that that the result of losing some small biotech vendor client is more so than doing a bunch more seats into the larger enterprises. But any any confirmation their color on that metric and how you'd expect it to evolve as you have seen the trough of CV growth? Thank you.
A: So Andrew, I'll just started a project finished with the basically the our strategy with clients is only solid client, best thought the handling of opportunity to sell more seasonal time. A one-quarter of our southern strategy is to keep selling additional business, additional licenses users through a bunch of some of the other part of our strategy to Southern well. And so because of a factor there we see there is that actually we've always had this because of our strategy, which is always to keep growing existing clients as well as declines. - Eugene Hall, CEO & Chairman of the Board
Q: Hi, thank you very much. And I was hoping you could talk about or medium term outlook and you're getting back to that low-teens growth number. And in the context of the environment right now, the selling environment, how are they thinking about out the time it could take it back. They're also going back to your comments on the third quarter call and '23 period ahead tech vendors to return to normal growth and demand. Is that still on the table right now? Or do you think obtained?
A: Or do you think obtained? Good morning, Heather. Thank you from you. In terms of the medium-term outlook, it is our golf ball. And again, we do need a a stable, I will say great operating environment, but it's stable operating environment. I would argue we're doing really well in a very, very volatile operating environment globally. - Eugene Hall, CEO & Chairman of the Board
Q: That's helpful. And as a follow up and the business is a bit, can
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
