Gartner (IT) 8-K Gartner Reports Financial Results for Fourth Quarter and Full Year 2010

Exhibit 99.1

Press Release

CONTACT:
Andrew Spender
Vice President
Corporate Communications
+1 203 316 3286
andrew.spender@gartner.com

Gartner Reports Financial Results for Fourth Quarter and Full Year 2010

Contract Value was $978 Million, Highest in Gartner’s History, Up 25% YoY

Full Year 2010 Diluted Income per Share was $0.96, Up 13% YoY

Full Year 2010 Free Cash Flow was $191.8 Million, Up 31% YoY

STAMFORD, Conn., February 7, 2011 — Gartner, Inc. (NYSE: IT), the leading provider of research and analysis on the global information technology industry, today reported results for fourth quarter and full year 2010, and provided its preliminary financial outlook for 2011.

For fourth quarter 2010, total revenue was $382.3 million, up 17% year-over-year excluding the impact of foreign exchange and 16% as reported. Net income increased 43% and Normalized EBITDA increased 25% to $72.5 million. Diluted income per share was $0.37 compared to $0.26 per share for fourth quarter 2009. Both the fourth quarter of 2010 and 2009 were negatively impacted by Acquisition Adjustments totaling $(0.02) per share after-tax. Diluted Income Per Share Excluding Acquisition Adjustments was $0.39 for fourth quarter 2010 and $0.28 for fourth quarter 2009. See “Non-GAAP Financial Measures” for a discussion of Normalized EBITDA and Diluted Income Per Share Excluding Acquisition Adjustments.

For full year 2010, total revenue was $1,288.5 million, an increase of 13%, and net income was $96.3 million. Normalized EBITDA was $230.4 million, an increase of 20% over 2009. Diluted income per share was $0.96 compared to $0.85 in 2009. The 2010 net income and diluted income per share were negatively impacted by Acquisition Adjustments totaling $22.0 million pre-tax, or $(0.14) per share after-tax. The 2009 results were positively impacted by tax benefits not expected to recur totaling $4.7 million, or $0.05 per share and negatively impacted by Acquisition Adjustments totaling $2.9 million pre-tax, or $(0.02) per share after-tax. Diluted Income Per Share Excluding Acquisition Adjustments was $1.10 for 2010 and $0.87 for 2009.

Gene Hall, Gartner’s chief executive officer, commented, “We achieved record levels of new business and contract value, our client and wallet retention metrics improved for the fifth consecutive quarter, and many of our other key business metrics continued to accelerate during the fourth quarter. We delivered double-digit revenue, normalized EBITDA and EPS growth for the full year 2010 and expect to deliver double-digit growth across those measures in 2011 as well.”

Business Segment Highlights

Research

Revenue for fourth quarter 2010 was $230.6 million, up 19% year-over-year excluding the impact of foreign exchange. Gross contribution margin improved 2 percentage points year-over-year to 65%.

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For full year 2010, revenue was $865.0 million, up 14% year-over-year excluding the impact of foreign exchange. Gross contribution margin was 65% for both periods.

Contract value was $977.7 million at December 31, 2010, up 25% year-over-year and the highest reported contract value in Gartner’s history. Year-over-year, contract value increased 20% excluding the impact of foreign exchange. Client and wallet retention rates for fourth quarter 2010 were 83% and 98%, respectively, up from 78% and 87% for 2009. The 2009 metrics exclude the acquisitions of AMR Research and Burton Group.

Consulting

Revenue for fourth quarter 2010 was $89.3 million, up 11% year-over-year excluding the impact of foreign exchange. Gross contribution margin increased 1 percentage point year-over-year to 42%.

For full year 2010, revenue was $302.1 million, up 6% year-over-year excluding the impact of foreign exchange. Gross contribution margin increased by 1 point, to 40%.

Fourth quarter 2010 utilization was 66% and billable headcount was 473. Backlog was $100.8 million at December 31, 2010, up almost 11% versus December 31, 2009. The 2009 metrics exclude the acquisitions of AMR Research and Burton Group.

Events

Revenue for fourth quarter 2010 was $62.4 million, up 21% year-over-year excluding the impact of foreign exchange. Gross contribution margin increased 6 percentage points year-over-year to 53%.

For full year 2010, revenue was $121.3 million, up 21% excluding the impact of foreign exchange. Gross contribution margin was 46%, an increase of 5 points.

During fourth quarter 2010, the Company held 12 events with 18,194 attendees. During full year 2010, the Company held 56 events with 37,219 attendees.

Cash Flow and Balance Sheet Highlights

Gartner generated cash provided by operating activities of $79.1 million during fourth quarter 2010 and $205.5 million during full year 2010. Additions to property, equipment and leasehold improvements (“Capital Expenditures”) were $9.5 million for fourth quarter 2010 and $21.7 million for full year 2010. Free Cash Flow for full year 2010 was $191.8 million, an increase of 31% over 2009. See “Non-GAAP Financial Measures” for a definition of Free Cash Flow.

The Company had cash of $120.2 million at December 31, 2010. During 2010, the Company deployed its cash principally to repurchase 3.9 million of its shares and to pay down debt.

As of December 31, 2010, the Company had total debt of $220.2 million compared to total debt of $329.0 million at year-end 2009. The Company refinanced its debt in late 2010 to take advantage of favorable financing conditions and to obtain greater financial flexibility and liquidity through a larger revolving credit facility. The new credit arrangement provides for a five-year, $200.0 million term loan and a $400.0 million revolving credit facility.

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Preliminary Financial Outlook for 2011

Gartner also provided its preliminary financial outlook for 2011:

Projected Revenue

($ in millions)	2011 Projected		% Change
Research	$	990 – 1,010		14% – 17	%
Consulting		310 – 330		3% – 9	%
Events		130 – 140		7% – 15	%
Total Revenue	$	1,430 – 1,480		11% – 15	%

Projected Earnings and Cash Flow

($ in millions, except per share data)	2011 Projected			% Change
Diluted Income Per Share (1)	$	1.29 – $1.41			34% – 47	%
Normalized EBITDA (2)	$	270 – 290			17% – 26	%
Operating cash flow(3)	$	250 – 270			22% – 31	%
Capital Expenditures(3)		(39) – (41	)
Free Cash Flow(2)	$	211 – 229			10% – 19	%

(1)	Includes a projected $(0.04) per share impact from AMR Research and Burton Group Acquisition Adjustments. In 2010, these charges were $(0.14) per share.
(2)	See “Non-GAAP Financial Measures” below for a discussion of Normalized EBITDA and Free Cash Flow.
(3)	Includes approximately $15.0 million of estimated payments for the renovation of our Stamford headquarters facility. The accounting impact of these renovation payments increases both cash flow from operations and capital expenditures (investing activities) by the same amount and as a result has no net impact on Free Cash Flow. These expenditures are contractually reimbursable from the landlord.

Conference Call and Investor Day Information

Gartner has scheduled a conference call at 8:30 a.m. Tuesday, February 8, 2011, to discuss the Company’s financial results. The conference call will be available via the Internet by accessing the Company’s web site at http://investor.gartner.com. A replay of the webcast will be available for approximately 90 days following the call.

The Company will also host an Investor Day for institutional investors and sell-side analysts beginning at 9:00 a.m. eastern time on Wednesday, February 16, 2011 in Greenwich, Connecticut. The Investor Day is by invitation only and registration is required. It will also be webcast live via the Internet on the Company’s web site at http://investor.gartner.com and a replay will be available following the event. Please contact Germaine Scott at 203-316-3411 for further information.

Annual Meeting of Stockholders

Gartner will hold its 2011 Annual Meeting of Stockholders at 10:00 a.m. eastern time on Thursday, June 2, 2011, at the Company’s offices in Stamford, Connecticut.

About Gartner

Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to 60,000 clients in 11,000 distinct organizations. Through the resources of Gartner

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Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,500 associates, including 1,200 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.

Non-GAAP Financial Measures

Investors are cautioned thatNormalized EBITDA,Diluted Income Per Share Excluding Acquisition Adjustments, andFree Cash Floware not financial measures under generally accepted accounting principles. In addition, they should not be construed as alternatives to any other measures of performance determined in accordance with generally accepted accounting principles. These non-GAAP financial measures are provided to enhance the user’s overall understanding of the Company’s current financial performance and the Company’s prospects for the future.

Normalized EBITDA: Represents operating income excluding depreciation, accretion on obligations related to excess facilities, amortization, stock based compensation expense, Acquisition Adjustments, and Other charges. We believe Normalized EBITDA is an important measure of our recurring operations as it excludes items that may not be indicative of our core operating results.

Diluted Income Per Share Excluding Acquisition Adjustments: Represents diluted income per share excluding charges related to the acquisitions of AMR Research and Burton Group, which primarily consist of amortization of identifiable intangibles, fair value adjustments on pre-acquisition deferred revenue and certain non-recurring costs such as legal, consulting, severance and other exit costs (“Acquisition Adjustments”). We believe Diluted Income Per Share Excluding Acquisition Adjustments is an important measure of our recurring operations as it excludes items that may not be indicative of our core operating results.

Free Cash Flow:Represents cash provided by operating activities excluding cash charges related to the acquisitions of AMR Research and Burton Group, which primarily consist of certain non-recurring costs such as severance and other exit costs (“Cash Acquisition and Integration Charges”), less additions to property, equipment and leasehold improvements (“Capital Expenditures”). We believe that Free Cash Flow is an important measure of the recurring cash generated by the Company’s core operations that is available to be used to repurchase stock, repay debt obligations and invest in future growth through new business development activities or acquisitions.

Safe Harbor Statement

Statements contained in this press release regarding the growth and prospects of the business, the Company’s projected 2011 financial results and all other statements in this release other than recitation of historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby. Factors that could cause actual results to differ materially include, but are not limited to, the ability to expand or retain Gartner’s customer base; the ability to grow or sustain revenue from individual customers; the ability to retain and expand the professional staff of research analysts and consultants upon whom Gartner is dependent; the ability to achieve and effectively manage growth; the ability to pay Gartner’s debt obligations; the ability to achieve continued customer renewals and achieve new contract value, backlog and deferred revenue growth in light of competitive pressures; the ability to carry out Gartner’s strategic initiatives and manage associated costs; the ability to effectively integrate the businesses of AMR Research and Burton Group; substantial competition from existing competitors and potential new competitors; additional risks associated with international operations including foreign currency fluctuations; the impact of restructuring and other charges on Gartner’s businesses and operations; general economic conditions; risks associated with the creditworthiness of governments and agencies; and all other risks described from time to time in Gartner’s

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reports filed with the Securities and Exchange Commission, including Gartner’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. These filings can be found on Gartner’s website at www.gartner.com/investors and the SEC’s website at www.sec.gov. Forward-looking statements included herein speak only as of the date hereof and Gartner disclaims any obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.

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GARTNER, INC.
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)

	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2010 (a)			2009					2010 (a)			2009
Revenues:
Research	$	230,552		$	195,180		18	%	$	865,000		$	752,505		15	%
Consulting		89,321			81,506		10	%		302,117			286,847		5	%
Events		62,431			52,141		20	%		121,337			100,448		21	%
Total revenues		382,304			328,827		16	%		1,288,454			1,139,800		13	%
Costs and expenses:
Cost of services and product development		164,959			146,499		13	%		552,238			498,363		11	%
Selling, general and administrative		154,796			131,023		18	%		543,174			477,003		14	%
Depreciation		6,131			6,211		-1	%		25,349			25,387		0	%
Amortization of intangibles		2,531			416		>100	%		10,525			1,636		>100	%
Acquisition and integration charges		813			2,934		-72	%		7,903			2,934		>100	%
Total costs and expenses		329,230			287,083		15	%		1,139,189			1,005,323		13	%
Operating income		53,074			41,744		27	%		149,265			134,477		11	%
Interest expense, net		(6,047	)		(2,927	)	>100	%		(15,616	)		(16,032	)	-3	%
Other (expense) income, net		(300	)		(414	)	-28	%		436			(2,919	)	>100	%
Income before income taxes		46,727			38,403		22	%		134,085			115,526		16	%
Provision for income taxes		10,033			12,687		-21	%		37,800			32,562		16	%
Net income	$	36,694		$	25,716		43	%	$	96,285		$	82,964		16	%
Income per common share:
Basic:	$	0.38		$	0.27		41	%	$	1.01		$	0.88		15	%
Diluted:	$	0.37		$	0.26		42	%	$	0.96		$	0.85		13	%
Weighted average shares outstanding:
Basic		95,895			95,493		0	%		95,747			94,658		1	%
Diluted		99,567			99,241		0	%		99,834			97,549		2	%

(a) Includes the full three and twelve month results of AMR Research, Inc. and Burton Group, Inc., which were acquired in December 2009.

BUSINESS SEGMENT DATA
(Dollars in thousands)

			Direct		Gross		Contribution
	Revenue		Expense		Contribution		Margin
Three Months Ended 12/31/10(a)
Research	$	230,552	$	81,333	$	149,219		65	%
Consulting		89,321		51,658		37,663		42	%
Events		62,431		29,234		33,197		53	%
TOTAL	$	382,304	$	162,225	$	220,079		58	%
Three Months Ended 12/31/09
Research	$	195,180	$	72,125	$	123,055		63	%
Consulting		81,506		47,721		33,785		41	%
Events		52,141		27,496		24,645		47	%
TOTAL	$	328,827	$	147,342	$	181,485		55	%
Twelve Months Ended 12/31/10(a)
Research	$	865,000	$	300,473	$	564,527		65	%
Consulting		302,117		180,232		121,885		40	%
Events		121,337		65,453		55,884		46	%
TOTAL	$	1,288,454	$	546,158	$	742,296		58	%
Twelve Months Ended 12/31/09
Research	$	752,505	$	262,643	$	489,862		65	%
Consulting		286,847		174,748		112,099		39	%
Events		100,448		59,503		40,945		41	%
TOTAL	$	1,139,800	$	496,894	$	642,906		56	%

(a) Includes the full three and twelve month results of AMR Research, Inc. and Burton Group, Inc., which were acquired in December 2009.

SELECTED STATISTICAL DATA

	December 31,			December 31,
	2010 (a)			2009
Research contract value	$	977,710	(b)	$	784,443	(b)
Research client retention		83	%		78	%
Research wallet retention		98	%		87	%
Research client organizations		11,601			10,492
Consulting backlog	$	100,839	(b)	$	90,891	(b)
Consulting—quarterly utilization		66	%		68	%
Consulting billable headcount		473			422
Consulting—average annualized revenue per billable headcount	$	419	(b)	$	435	(b)
Events—number of events for the quarter		12			13
Events—attendees for the quarter		18,194			15,634

(a)	Includes metrics for AMR Research, Inc. and Burton Group, Inc.
(b)	Dollars in thousands.

SUPPLEMENTAL INFORMATION (in thousands, except per share amounts)

Reconciliation — Operating income to Normalized EBITDA(a):

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2010		2009		2010			2009
Net income	$	36,694	$	25,716	$	96,285		$	82,964
Interest expense, net		6,047		2,927		15,616			16,032
Other expense (income), net		300		414		(436	)		2,919
Tax provision		10,033		12,687		37,800			32,562
Operating income	$	53,074	$	41,744	$	149,265		$	134,477
Normalizing adjustments:
Depreciation, accretion, and amortization (b)		8,777		6,769		36,475			27,704
Stock-based compensation expense (c)		9,336		6,589		32,634			26,066
Pre-acquisition deferred revenue (d)		522		—		4,095			—
Acquisition and integration charges (e)		813		2,934		7,903			2,934
Normalized EBITDA	$	72,522	$	58,036	$	230,372		$	191,181

(a)	Normalized EBITDA is based on GAAP operating income adjusted for certain normalizing adjustments.
(b)	Consists of depreciation, accretion on obligations related to excess facilities, and amortization of intangibles.
(c)	Consists of charges for stock-based compensation awards determined in accordance with FASB ASC Topic 718.
(d)	Consists of non-cash fair value adjustments on pre-acquisition AMR Research and Burton Group deferred revenue. These amounts are amortized ratably over the life of the underlying contract.
(e)	Includes non-recurring cash charges incurred to acquire and integrate the acquisitions of AMR Research and Burton Group, such as legal, consulting, severance, and other costs.

Reconciliation — Diluted income per share to Diluted Income Per ShareExcluding Acquisition Adjustments(a):

	Three Months Ended December 31,
	2010				2009
	After-tax				After-tax
	Amount		EPS		Amount		EPS
Diluted income per share	$	36,694	$	0.37	$	25,716	$	0.26
Acquisition adjustments, net of tax effect (b):
Amortization of intangibles (c)		1,519		0.02		—		—
Pre-acquisition deferred revenue (d)		316		—		—		—
Acquisition and integration charges (e)		492		—		1,775		0.02
Diluted Income Per Share Excluding Acquisition Adjustments (f)	$	39,021	$	0.39	$	27,491	$	0.28

	Twelve Months Ended December 31,
	2010				2009
	After-tax				After-tax
	Amount		EPS		Amount		EPS
Diluted income per share	$	96,285	$	0.96	$	82,964	$	0.85
Acquisition adjustments, net of tax effect (b):
Amortization of intangibles (c)		6,076		0.06		—		—
Pre-acquisition deferred revenue (d)		2,477		0.03		—		—
Acquisition and integration charges (e)		4,781		0.05		1,775		0.02
Diluted Income Per Share Excluding Acquisition Adjustments (g)	$	109,619	$	1.10	$	84,739	$	0.87

(a)	Diluted Income Per Share Excluding Acquisition Adjustments is based on GAAP diluted income per share adjusted for the per share impact of certain AMR Research and Burton Group acquisition adjustments, net of tax effect.
(b)	Acquisition adjustments reflect an effective tax rate of 39.5%.
(c)	Consists of non-cash amortization charges related to AMR Research and Burton Group intangibles.
(d)	Consists of non-cash fair value adjustments on pre-acquisition AMR Research and Burton Group deferred revenue. These amounts are amortized ratably over the life of the underlying contract.
(e)	Includes non-recurring cash charges incurred to acquire and integrate the acquisitions of AMR Research and Burton Group, such as legal, consulting, severance, and other costs.
(f)	Based on fully diluted shares of 99.6 million and 99.2 million in 2010 and 2009, respectively.
(g)	Based on fully diluted shares of 99.8 million and 97.5 million in 2010 and 2009, respectively.

SUPPLEMENTAL INFORMATION continued (in thousands)

	Selected Balance Sheet Data
	(unaudited and preliminary)
	December 31,
	2010		2009
Cash and cash equivalents	$	120,181	$	116,574
Fees receivable, net		364,818		317,598
Total assets		1,285,658		1,215,279
Deferred revenues		523,263		437,207
Total current and long-term debt		220,156		329,000
Total liabilities		1,098,602		1,102,744
Total stockholders’ equity		187,056		112,535

	Selected Cash Flow Data
	(unaudited and preliminary)
	Twelve Months Ended
	December 31,
	2010			2009
Cash provided by operating activities	$	205,499		$	161,937
Additions to capital expenditures		(21,694	)		(15,142	)
Cash paid for AMR & Burton acquisitions		(12,151	)		(104,523	)
Purchases of treasury shares		(99,820	)		(3,744	)
Net debt activity		(108,844	)		(87,250	)
Payments for debt issue costs		(4,783	)		—

Reconciliation — Cash Provided by Operating Activities to Free Cash Flow (a):
(unaudited and preliminary)

	Twelve Months Ended
	December 31,
	2010			2009
Cash provided by operating activities	$	205,499		$	161,937
Adjustments:
Cash acquisition and integration charges		8,003			—
Additions to capital expenditures		(21,694	)		(15,142	)
Free Cash Flow	$	191,808		$	146,795

(a) Free cash flow is based on cash provided by operating activities determined in accordance with GAAP plus cash acquisition and integration charges less additions to capital expenditures.