Exhibit 99.1
In order to provide a basis for comparability to historical data, Gartner, Inc. (“Gartner”, “we” or us”) is today providing recast reportable business segment results for the four quarters of 2016 as well as the first quarter of 2017, for each of Gartner and CEB Inc. (“CEB”), as well as combined company information showing the combined results of Gartner and CEB during those periods, which occurred prior to Gartner’s acquisition of CEB on April 5, 2017.
Following our acquisition of CEB, Gartner is reporting the results of four business segments, which are defined as follows:
| · | Research– includes the results of our previous Gartner Research segment and the results of CEB’s core subscription-based best practice and decision support research activities. In addition, Research now includes our Strategic Advisory Services (“SAS”) business, which was previously included in the Consulting segment. |
| · | Consulting- includes our previous Gartner Consulting segment except, as noted above, the results of our SAS business are now included in the Research segment. |
| · | Events- includes the results of our previous Gartner Events segment and the results of CEB’s former Evanta business and destination event activities. |
| · | Talent Assessment & Other– this is a new segment for Gartner and it includes CEB’s previously disclosed Talent Assessment business as well as certain CEB non-subscription based talent products and services. |
The information set forth below recasts certain historical GAAP and non-GAAP operating results for each of Gartner and CEB on the basis of these four segments during the four quarters of 2016 as well as the first quarter of 2017. In addition, the information set forth below includes “Combined Company” numbers, which are the sum of the results of Gartner and CEB for each line item during each period, notwithstanding the fact that the acquisition was not completed until after those periods.
The calculation of Combined Company numbers excludes certain adjustments with respect to presentation of pro forma financial information required under U.S. GAAP and the rules and regulations of the SEC. Accordingly, the Combined Company numbers are non-GAAP. We believe Combined Company numbers are useful in comparing our performance following the CEB acquisition with our and CEB’s independent performances prior to our acquisition of CEB. The Combined Company numbers should be read together with our and CEB’s historical financial statements included in our and their respective quarterly reports on Form 10-Q and annual reports on Form 10-K, and the pro forma financial statements included in Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on April 6, 2017 and footnote 5 to our Current Report on Form 10-Q for the period ending June 30, 2017.
-more-
Adjusted Historical Recast Segments
| | GAAP Revenue | | | Deferred Revenue Fair Value Adjustment | | | Adjusted Revenue | | | GAAP Direct Expense | | | Adjusted Gross Contribution | | | Adjusted Contribution Margin | |
| | Gartner | | | CEB | | | Gartner | | | CEB | | | Gartner | | | CEB | | | Combined Company | | | Gartner | | | CEB (1) | | | Combined Company | | | Gartner | | | CEB | | | Combined Company | | | Combined Company | |
Three Months Ended 03/31/17 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Research | | $ | 511,306 | | | $ | 144,233 | | | $ | 143 | | | $ | — | | | $ | 511,449 | | | $ | 144,233 | | | $ | 655,682 | | | $ | 160,192 | | | $ | 41,800 | | | $ | 201,992 | | | $ | 351,257 | | | $ | 102,433 | | | $ | 453,690 | | | | 69 | % |
Consulting | | | 78,594 | | | | — | | | | — | | | | — | | | | 78,594 | | | | — | | | | 78,594 | | | | 54,658 | | | | — | | | | 54,658 | | | | 23,936 | | | | — | | | | 23,936 | | | | 30 | % |
Events | | | 35,269 | | | | 1,180 | | | | — | | | | 60 | | | | 35,269 | | | | 1,240 | | | | 36,509 | | | | 21,702 | | | | 3,320 | | | | 25,022 | | | | 13,567 | | | | (2,080 | ) | | | 11,487 | | | | 31 | % |
Talent Assessment & Other | | | — | | | | 68,837 | | | | — | | | | — | | | | — | | | | 68,837 | | | | 68,837 | | | | — | | | | 31,917 | | | | 31,917 | | | | — | | | | 36,920 | | | | 36,920 | | | | 54 | % |
TOTAL | | $ | 625,169 | | | $ | 214,250 | | | $ | 143 | | | $ | 60 | | | $ | 625,312 | | | $ | 214,310 | | | $ | 839,622 | | | $ | 236,552 | | | $ | 77,037 | | | $ | 313,589 | | | $ | 388,760 | | | $ | 137,273 | | | $ | 526,033 | | | | 63 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended 12/31/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Research | | $ | 485,844 | | | $ | 155,391 | | | $ | 258 | | | $ | — | | | $ | 486,102 | | | $ | 155,391 | | | $ | 641,493 | | | $ | 154,509 | | | $ | 45,981 | | | $ | 200,490 | | | $ | 331,593 | | | $ | 109,410 | | | $ | 441,003 | | | | 69 | % |
Consulting | | | 81,058 | | | | — | | | | — | | | | — | | | | 81,058 | | | $ | — | | | | 81,058 | | | | 62,433 | | | | — | | | | 62,433 | | | | 18,625 | | | | — | | | | 18,625 | | | | 23 | % |
Events | | | 136,315 | | | | 20,865 | | | | — | | | | 2,653 | | | | 136,315 | | | $ | 23,518 | | | | 159,833 | | | | 63,234 | | | | 9,416 | | | | 72,650 | | | | 73,081 | | | | 14,102 | | | | 87,183 | | | | 55 | % |
Talent Assessment & Other | | | — | | | | 77,894 | | | | — | | | | — | | | | — | | | $ | 77,894 | | | | 77,894 | | | | — | | | | 32,042 | | | | 32,042 | | | | — | | | | 45,852 | | | | 45,852 | | | | 59 | % |
TOTAL | | $ | 703,217 | | | $ | 254,150 | | | $ | 258 | | | $ | 2,653 | | | $ | 703,475 | | | $ | 256,803 | | | $ | 960,278 | | | $ | 280,176 | | | $ | 87,439 | | | $ | 367,615 | | | $ | 423,299 | | | $ | 169,364 | | | $ | 592,663 | | | | 62 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended 09/30/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Research | | $ | 466,877 | | | $ | 151,759 | | | $ | 429 | | | $ | — | | | $ | 467,306 | | | $ | 151,759 | | | $ | 619,065 | | | $ | 144,231 | | | $ | 42,429 | | | $ | 186,660 | | | $ | 323,075 | | | $ | 109,330 | | | $ | 432,405 | | | | 70 | % |
Consulting | | | 73,707 | | | | — | | | | — | | | | — | | | | 73,707 | | | | — | | | | 73,707 | | | | 55,492 | | | | — | | | | 55,492 | | | | 18,215 | | | | — | | | | 18,215 | | | | 25 | % |
Events | | | 33,475 | | | | 1,644 | | | | — | | | | 1,106 | | | | 33,475 | | | | 2,750 | | | | 36,225 | | | | 18,946 | | | | 4,446 | | | | 23,392 | | | | 14,529 | | | | (1,696 | ) | | | 12,833 | | | | 35 | % |
Talent Assessment & Other | | | — | | | | 76,441 | | | | — | | | | — | | | | — | | | | 76,441 | | | | 76,441 | | | | — | | | | 31,449 | | | | 31,449 | | | | — | | | | 44,992 | | | | 44,992 | | | | 59 | % |
TOTAL | | $ | 574,059 | | | $ | 229,844 | | | $ | 429 | | | $ | 1,106 | | | $ | 574,488 | | | $ | 230,950 | | | $ | 805,438 | | | $ | 218,669 | | | $ | 78,324 | | | $ | 296,993 | | | $ | 355,819 | | | $ | 152,626 | | | $ | 508,445 | | | | 63 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended 06/30/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Research | | $ | 456,690 | | | $ | 152,221 | | | $ | — | | | $ | — | | | $ | 456,690 | | | $ | 152,221 | | | $ | 608,911 | | | $ | 138,069 | | | $ | 46,740 | | | $ | 184,809 | | | $ | 318,621 | | | $ | 105,481 | | | $ | 424,102 | | | | 70 | % |
Consulting | | | 86,548 | | | | — | | | | — | | | | — | | | | 86,548 | | | | — | | | | 86,548 | | | | 58,207 | | | | — | | | | 58,207 | | | | 28,341 | | | | — | | | | 28,341 | | | | 33 | % |
Events | | | 66,760 | | | | 11,416 | | | | — | | | | 8,544 | | | | 66,760 | | | | 19,960 | | | | 86,720 | | | | 30,698 | | | | 5,193 | | | | 35,891 | | | | 36,062 | | | | 14,767 | | | | 50,829 | | | | 59 | % |
Talent Assessment & Other | | | — | | | | 78,965 | | | | — | | | | — | | | | — | | | | 78,965 | | | | 78,965 | | | | — | | | | 35,089 | | | | 35,089 | | | | — | | | | 43,876 | | | | 43,876 | | | | 56 | % |
TOTAL | | $ | 609,998 | | | $ | 242,602 | | | $ | — | | | $ | 8,544 | | | $ | 609,998 | | | $ | 251,146 | | | $ | 861,144 | | | $ | 226,974 | | | $ | 87,022 | | | $ | 313,996 | | | $ | 383,024 | | | $ | 164,124 | | | $ | 547,148 | | | | 64 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended 03/31/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Research | | $ | 447,590 | | | $ | 149,673 | | | $ | — | | | $ | 774 | | | $ | 447,590 | | | $ | 150,447 | | | $ | 598,037 | | | $ | 134,581 | | | $ | 42,948 | | | $ | 177,529 | | | $ | 313,009 | | | $ | 107,499 | | | $ | 420,508 | | | | 70 | % |
Consulting | | | 77,621 | | | | — | | | | — | | | | — | | | | 77,621 | | | | — | | | | 77,621 | | | | 53,066 | | | | — | | | | 53,066 | | | | 24,555 | | | | — | | | | 24,555 | | | | 32 | % |
Events | | | 32,055 | | | | 52 | | | | — | | | | — | | | | 32,055 | | | | 52 | | | | 32,107 | | | | 19,072 | | | | 586 | | | | 19,658 | | | | 12,983 | | | | (534 | ) | | | 12,449 | | | | 39 | % |
Talent Assessment & Other | | | — | | | | 73,473 | | | | — | | | | — | | | | — | | | | 73,473 | | | | 73,473 | | | | — | | | | 32,660 | | | | 32,660 | | | | — | | | | 40,813 | | | | 40,813 | | | | 56 | % |
TOTAL | | $ | 557,266 | | | $ | 223,198 | | | $ | — | | | $ | 774 | | | $ | 557,266 | | | $ | 223,972 | | | $ | 781,238 | | | $ | 206,719 | | | $ | 76,194 | | | $ | 282,913 | | | $ | 350,547 | | | $ | 147,778 | | | $ | 498,325 | | | | 64 | % |
(1) - Certain items have been reclassified to conform to Gartner’s direct expense and segment presentation.
Reconciliation of GAAP Operating income to Combined Adjusted EBITDA(a):
| | Three Months Ended | | Three Months Ended | | Three Months Ended | | Three Months Ended | | Three Months Ended |
| | 31-Mar-17 | | 31-Dec-16 | | 30-Sep-16 | | 30-Jun-16 | | 31-Mar-16 |
| | Gartner | | CEB | | Combined Company | | Gartner | | CEB | | Combined Company | | Gartner | | CEB | | Combined Company | | Gartner | | CEB | | Combined Company | | Gartner | | CEB | | Combined Company |
Operating income | | $ | 53,514 | | | $ | (10,537 | ) | | $ | 42,977 | | | $ | 108,687 | | | $ | (41,429 | ) | | $ | 67,258 | | | $ | 48,726 | | | $ | 17,562 | | | $ | 66,288 | | | $ | 83,299 | | | $ | 14,578 | | | $ | 97,877 | | | $ | 64,429 | | | $ | 16,125 | | | $ | 80,554 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | |
Stock-based compensation expense (b) | | | 22,576 | | | | 5,238 | | | | 27,814 | | | | 10,533 | | | | 5,706 | | | | 16,239 | | | | 9,520 | | | | 4,893 | | | | 14,413 | | | | 11,112 | | | | 5,006 | | | | 16,118 | | | | 15,495 | | | | 4,218 | | | | 19,713 | |
Depreciation, accretion, and amortization (c) | | | 16,553 | | | | 17,131 | | | | 33,684 | | | | 15,986 | | | | 25,385 | | | | 41,371 | | | | 15,776 | | | | 24,900 | | | | 40,676 | | | | 15,258 | | | | 26,265 | | | | 41,523 | | | | 15,038 | | | | 25,626 | | | | 40,664 | |
Amortization of pre-acquisition deferred revenues (d) | | | 143 | | | | 60 | | | | 203 | | | | 258 | | | | 2,653 | | | | 2,911 | | | | 429 | | | | 1,106 | | | | 1,535 | | | | | | | | 8,544 | | | | 8,544 | | | | | | | | 774 | | | | 774 | |
Acquisition and integration charges and other nonrecurring items (e) | | | 13,272 | | | | 4,243 | | | | 17,515 | | | | 9,641 | | | | 1,735 | | | | 11,376 | | | | 16,556 | | | | 840 | | | | 17,396 | | | | 8,033 | | | | 3,662 | | | | 11,695 | | | | 8,368 | | | | 1,457 | | | | 9,825 | |
Other charges (f) | | | | | | | 19,736 | | | | 19,736 | | | | | | | | 77,608 | | | | 77,608 | | | | | | | | 10,368 | | | | 10,368 | | | | | | | | 6,460 | | | | 6,460 | | | | | | | | 4,758 | | | | 4,758 | |
Adjusted EBITDA | | $ | 106,058 | | | $ | 35,871 | | | $ | 141,929 | | | $ | 145,105 | | | $ | 71,658 | | | $ | 216,763 | | | $ | 91,007 | | | $ | 59,669 | | | $ | 150,676 | | | $ | 117,702 | | | $ | 64,515 | | | $ | 182,217 | | | $ | 103,330 | | | $ | 52,958 | | | $ | 156,288 | |
(a) Adjusted EBITDA is based on GAAP operating income adjusted for certain normalizing adjustments.
(b) Consists of charges for stock-based compensation awards.
(c) Includes depreciation expense, accretion on excess facilities accruals, and amortization of intangibles. The depreciation and amortization amounts do not include any fair value adjustments as a result of the acquisition.
(d) Consists of the amortization of non-cash fair value adjustments on pre-acquisition deferred revenues. The majority of the pre-acquisition deferred revenue is recognized ratably over the remaining period of the underlying revenue contract.
(e) Consists of incremental and directly-related charges related to acquisitions and other non-recurring items.
(f) Primarily consists of restructuring costs, real estate and business transformation costs, equity investment losses and non-operating foreign currency impact related to the acquired CEB business