IT - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Gartner's Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to David Cohen, GVP of Investor Relations. begin. may you Sir,

David Cohen

and and quarter for everyone. in earnings Gartner's are current a XXXX Executive me Shannon, This for Financial joining will outlook financial call call. appreciate press results us today's today include Officer; Chief Hall, today second of Gene disclosed Safian, good you, release. Chief We Officer. second morning, discussion you With Craig XXXX Thank as quarter our XXXX and

up Gene the by Craig, and questions. will open for comments call Following we your

In addition release, press investors today's supplemental deck we a to and have as for provided a reference analyst.

posted the deck have to press investor.gartner.com. We release the our and website,

the margin described otherwise, the revenue businesses. margin for adjustments the adjusted to operations earnings All and available revenue, accounting unless stated release revenue EBITDA with used contribution of which to we Investor operations divested are in adjustment divested are excluding the divested website. divested the exclude divested are all for the excluding On EBITDA, Relation our in non-GAAP purchase the operations, deferred excluding numbers recently for section references contribution businesses. and gartner.com recently as excluding call, adjusted adjusted and all Reconciliations references and

metric contract the on excludes and discuss O. divested the deck, all rates. rates, In earnings that are growth operations. XXXX we Finally, values associated based the exchange D. foreign abbreviation indicates Ex

on statements set call in forth certain earnings constitute made this As forward-looking in detail more may release, statements. today's

as encourage XX-K, with Annual as from those Form you documents. filings and in risk the in number risks including factors of review Forward-looking the on of actual contained Form listed reports other these SEC. and on in a to XXXX company's and statements results I to XX-Q, quarterly can vary all are well materially subject the uncertainties, Report

Gene Now, Executive I to the Hall. call Gartner's turn Officer, will over Chief

Eugene A. Hall

profitable growth we QX today. continue objectives. the a another us while business to of to formula Investor CEB to digit applying in joining Day accelerate out on Gartner's both former laid great Gartner the be delivered double-digit At to plan this you'll hear continue quarter year, growth of XXXX. track for we how driving-double traditional on business. our thanks Today, Well, earlier We

grew with EPS to year. and growth largest profitable We XX%. contract grew value million XX% Once year-to-date. segment our and $XXX revenue is revenue more segment. XX% free of Our than EBITDA compared cash growth and Research strong last again, XX% performance, generated XX%. of had our Research flow of most

every we is in strong by discussed, or Research XX% Sales double-digit Global users Global which retention GTS, and with in highs. force GBS, and accelerated and Business had of and technology, every near Sales another now the from XX%, GTS As growth all-time grew manage sales every contract to industry. all clients, wallet a and XXX%, we other or functions. client sales GTS Technology virtually which size quarter. previously QX GTS sales value region, includes retention to was both providers

in accelerate grew the Our and double-digit This QX. we foundation growth. to sales expect head count sustained year-over-year, this for GTS X% provides

expanded we've improved, QX has salesperson. GTS the as Even $XXX,XXX to team, up per XX% in productivity

aggressive growth to by a Gartner developed opportunity applying discussed, We sustained accelerate GBS. capture opportunity to enormous we we've double-digit the GBS an this As have formula to and blueprint growth.

clients Gartner Leaders, formula. new blueprint. immediately were standards. XXXX, developing service in pilot closed and several and sales conditions from feedback on products points We these aligned elements people. we we tested pilot tested Leaders quarter, for implementing QX great Finance We improvements. or this than the new including service pilot set comparable for and the meeting these eliminated our Gartner well clients with In We exceeding with terms of began CEB discounting we without Gartner acquisition, after percentage are Gartner a and the from seat-based executing these others. In expectations products, Retention higher clients of HR

sales the trained also GBS began During first organization accelerated expanded XXXX, that on new hiring. we In of recruiting our quarter sales great and these time, we products. people

hiring sales by our end the of had force Our QX, And grown GBS by XX%. continued. sales

All and remaining the new Gartner out products elements of formula rolling elements of the include products. with the service the legacy we're service

of proceeding better than planned. as are or changes All these

as growth As I GBS is sustained mentioned, priority practical. for our positioning soon double-digit as

GBS QX. had of in in impact short-term with changes were value things contract QX. some X% contract impacted GBS these expected, growth growth As value primary that There two

First, of sales sizable we force to XX%, the needed number a grow GBS additional managers.

usual the people. hires. positions managers new selected former our The with were new is highest practice, from sales manager's backfilled then our were promoted As performing

New particularly their months hires have sales average in low on first productivity. sales few

new people experienced, As get sales productivity rapidly their accelerates.

learning people the sales seat-based GBS very to Second, legacy new from transitioning curve, are products. in early the the products

on new in the As QX. sales I trained were GBS products discussed, just people

products, positioned seat-based XX% products implement changes a the quickly. Total new having the to a clients last and already GBS sales opportunity are indicators were about in Sales QX a sustained, make the grew selling the up total than with with made, more of we're during curve their we've sale double-digit a learning much during growth. about sales. Gartner experience for early in one-third these the had represented similar year half with than We formula are testing clients clients. to by most and to cycles QX than pilot the compared past to lower developed strong. future compared well quarter. and curve selling to tenure force our sales to of longer learning existing QX, that of to So come XX% first Even We note our often single QX QX. increased that And transitions products GBS. more on existing seat-based blueprint leading being sales and And our seat-based average they'll

greater provide retention. clients, both and much products seat-based value drive stronger new will new which business to Our accelerated

amount allow force tenured, great more that enter sales had force With trained significant to to improved the which This legacy will growth aggressive in products drive Our new double-digit we and with growth products. XXXX implementation service of GBS experienced will expect about our continue be sales as value retention. for us formula, expansion least will the selling All of Gartner Gartner larger we XXXX. will these in at XX% have is support products contract well expanded new as than in and XXXX. the a the force sales XX% in next year, formula,

the conference outstanding the executives Our with important of Events value events, we of for experience serve. the most gathering Research produce immersive combines live we the making segment every

had Revenues segment Events strong Our XX%. another grew quarter.

Events same-event strong. destination to basis, the extension Gartner with an segment Revenue XX% During grew Consulting clients quarter, QX On compared continues growing metrics we segment of events, project-based strategic most Evanta held for remained to year. year-over-year. forward-looking help double-digit XX% on involvement Research provides last their attendance attendance them growth see Gartner the XX of to and for a is The deeper level execute work initiatives. extended our and through a

growing with solid QX segment had X%. revenues a Our quarter Consulting Consulting

strong labor-based performance, XX%. had Our a business growing

past the to backlog be up our five highest strong I growth business, had drive to our a in ago. quarter Consulting second In about quarter continue business Our QX year prospects contract our for long-term had XX%. summary, our we optimization with value the excited because XX% years, strongest year-over-year bookings strategy our business although for down their remained for and shareholders.

Gartner Our the the our formula. results right to business in by drive applying strong demonstrate success we QX know do things to

in capability that over the the needs an With our technology to business Safian, our Craig Financial critical turn outstanding we major enterprise, remain in with Officer. across in all address I'll provide position now double-digit call and to every Chief introduction, And client the metrics. function sustained in key across to growth

Craig W. Safian

and everyone. Gene, morning, you, Thank good

for continue the see services our We robust to across demand globe.

contract to to flow quarter, double-digit good we saw continues and very outlook we in year-over-year another demonstrate, expect primary as three acceleration deliver EBITDA And second generation. year During a our and growth our our XXXX with cash across strong revenue results operating segments. financial the of value

was for revenue quarter. in up and Second another margins purchase prior in improvements XX% year. in the FX-neutral the XX%, The quarter, for was billion, quarter, FX-neutral second deferred quarter FX-neutral terms. Research on and of prior the basis. $X.X revenue revenue revenue in an the XX% modestly on EPS growth the $XXX of billion up accounting $XXX for up up down the contribution Research flow adjusted million. always from Also year-over-year XX% adjustment XX% million $X year, report quarter quarter $X XX% growth basis. second cash was year-over-year, up of in value EBITDA XX% Total prior XX%. delivered Research margin. versus and grew share, Free million, was in contract contribution The of we significant contribution $X.XX June growth XX, per at contract XX% the with was and year. had We an excellent margin versus value to

New business Technology strong was growth Global very Sales. in

first GTS and of We our contract billion. to combination and team at execute in to We all-time GTS new basis ability contract of spending was spending business both the larger new GTS now and quarter with clients, growth for $X.X in our GBS. for our It at now GTS The to second sales enterprise, consistent the continued a as mix clients, details was enterprises. X% through existing across with now clients. our value the increase CV Wallet $XXX,XXX new of compared X% quarter, year-over-year year. and of These GTS average greater continues new growth value the of rates for XX% retention in high. at the a almost up I'll business remained and GTS to XX%. per ended accelerated and clients. QX very second up services, from XX%. has value retention This an well. the XXX% continues continue quarter an greater the XX,XXX drive Client reflect to In points and grow. existing for see both reflects healthy up XXXX. GTS strong growth enterprise additional higher stands acceleration upgrades quarter, for retention rates contract XX retention spend, average versus to second review to sales prior also quarter, performance

again increase force an off this sales continued pay quarter. improve to investments with Our to productivity

or quota-bearing second XX% For increase, the GTS, contract period quarter value salesperson, per the head net NCVI, the year. of $XXX,XXX divided count last by was year-over-year versus up beginning

Global to Sales. Turning Business

double-digit GBS the growth. to detailed last Gartner at long-term, representing we of quarter growth Investor XX, third number changes $XXX year, us June of of As for the and position contract operational improvements improvements million, have Day. X%. we changes and value follow All that of Since had of year-over-year a formula made growth these sustained,

make to up from new was progress XXX business continue metrics. to improvement basis the in up points the quarter, prior and down prior wallet renewal than year GBS up clients. sequentially. for for more GBS retention retention to saw We deals wallet was in XX%, due year-over-year retention good we lower XX year. client versus with sequentially. was points significant And the GBS XX%, both The decline sequential and sales existing basis retention

year, New prior due by the business declined product sales. legacy declines XX% versus to in quarter in the primarily

detailed, a business we positive new results. trends within are Gene As our of number seeing

the sequentially, First, seat-based sales new new second greater to up The in business products. driven clients XX% new clients made than was more of in products growth quarter. business by to XX% significant than seat-based new up

uptake These curve the learning existing the clients up We are sales new forces' business of up around business while on fast seat-based second seat-based coming particularly lower the seat-based X% sequentially. right described seat-based to XX% in tenure was X,XXX enterprise business that wasn't direction. from decline products. new selling product GBS trending up of Second, prior-year given XX% encouraging enough period. new ended results the that to and clients the down Gene of compensate legacy the GBS growth clients, context with quarter the versus for the Though QX, was existing sequentially the the new are products products, to

their we NCVI, net down versus $XX,XXX, sales year-over-year count beginning have The divided head all formula growth. to making the analytics in the increase, the the that seat-based show contract reflects the of our new the GBS, more products, and was are productivity And quota-bearing period changes sellers productivity The gain decline experience Gartner team our value quarter last For made as by shifts or we've Gartner operational for improves. data the operational with new year. products. second XX% part

value sales Our performance GTS business in retention QX Research growth. increases an with contract and acceleration wallet in strong. in productivity was was and outstanding

For margin XXXX. next last by XX-plus-percent second $XXX to was Events, growth revenues GBS, quarter. for QX double-digit XX% year-on-year contribution FX-neutral gross stable million. indications growth XX%, the early reinforced In was our in and in increased contract outlook Events value growth quarter year's XX%. with year

The events in our than second of quarter second same-event, our same-event is after last strong destination On for also two typically the robust. the revenues fewer metrics forward-looking a a the quarter. attendees. FX-neutral XX%, basis, We were increase largest up Events fourth quarter was XX% year business had and remain QX with year.

Second quarter revenues labor-based X% increased increased of million. last year about was $XX In Consulting FX-neutral a $XX were the to QX or business, by FX-neutral Labor-based million. X% revenues basis. XX% growth on revenues X%. versus

versus end at is key future $XXX XX% billable leading prior the of projects under terms. X% QX, was growth side, XXX and count Backlog, ended Consulting million, contract where labor-based revenue about year. is of up head XX% done, measures which indicator there and the for On be partners had business. X% the up quarter to the up in the we managing our more XXX FX-neutral Backlog of labor-based year-over-year work at

to divestitures contribution remains by performance second Consulting million nonrecurring second the and second and XX% SG&A Surveys by to on Workforce was items, basis, down Assessment XXXX about year-over-year an quarter due XX% Revenue pipeline the $XX XX% in contribution year-ago On business for in increased The is strong the for the a encouraging. quarter. was booking Gross increased compared XX% FX-neutral basis. million. CEB Talent a year an margin Early Other prior million. Overall, for the versus Our XX% GAAP we optimization XX%. the $XXX increased and basis. CEB divested compare. contract segment gross the very was to our FX-neutral in year-over-year quarter margin $XX SG&A in other quarter, tough on and quarter XX% Adjusting

capacity resources world. functions support of of number the recruiting sales over grow includes to increased the double-digit associates and delivering real to the to the enabling infrastructure infrastructure human continue estate support around enabling growth The We sustained in our strategy long-term. like investments and

Our of in divestitures. interest down result the expected. had continues strong were $XX includes with end to in GBS GTS be and as offset SG&A amortization we partially over growth, And of debt past second million, from our Interest Gartner expenses the of at up acquisition, associates XXX of XX% investment. GBS. as quota-bearing recent force X,XXX expense revenue past by This in anniversary the and down and higher largest million quarter lower a the to GTS second year. X,XXX one CEB sales quarter expense across quarter, in year the still in $XX The year-over-year XX%, paying and half relates XXXX. for second a the increase integration count costs GTS get for as the down EBITDA the growth the or expect and GTS The was Depreciation, we million, the growth was mid-teens growth second X% for XXXX. head will of respectively. in $XXX as we quarter

income, XX.X% the Our rate, calculation which quarter. use for tax of net we the was for adjusted

cash operating million, non-recurring working up million, were million increase flow to was driven The to we items As was about expense for flow we our few cash QX to interest payments XXXX we'll relative Adjusted in the versus discuss This XX% buying items and approximately million. In $XX million and operating quarter, free QX with operating yields share the expect capital. tax the cash other in expectations, was integration compared catch resumed QX still and quarter. last lower adjusted about XX% $XXX and the year. by below $XX prior-year acquisition is be QX was full primarily outlook the of CapEx line. cash and in upside $XXX which In strong XXX,XXX our QX, over rate million. a $XX improvements second year. flow program, our EPS shares results, repurchase up section, EBITDA from $XXX $X.XX for in

on our $X remaining over repurchase authorization. have billion We

times quarter billion debt now billion. our our the for of more During EBITDA of and about the the our X X.X we we to times, second leverage see divestitures, to at Adjusting gross ratio That's than EBITDA by about balance expect which more leaving continue debt, than since end are is we a acquisition the year $X.X repaid million tracking of of XXth $X.X about little target a June $XXX worth to down XXXX, ago. XXXX.

free are for the use EPS divestitures, EBITDA, from outlook updates expenses. the other adjusted remain range making modest we the the some same. adjusted Revenue, only our guidance guidance to to The updates Turning EPS changes proceeds cash GAAP reflect and and to flow XXXX. of to divestiture arising are

the With of do by expect our we saw the exchange. course reported we the half dollar year in strengthening that quarter, U.S. modestly foreign to of the of top-line over the second impacted results see the second

you your in expenses please reported stronger mind due as the U.S. EBITDA QX original reported to be that reported annual revenues, and dollar. highlights update and models our will impacted guidance by for are As about of for follows. keep QX, The estimates our X%

For $X to approximately billion. $X.X revenues XXXX, billion to adjusted continue expect of we

step We down million $XX expect EBITDA from to million million in million. to $XXX of will Amortization a QX. adjusted about $XXX take noticeable in about QX $XX

Please expect effect second income, tax on from the of if back for about for year of adjusted to are net XX% the add GAAP that around the adding the rate continue half note tax We XX%. full year. an from the back you rate the is

share. between $X.XX of per EPS adjusted per share We expect full $X.XX year XXXX and

of midpoint, used the earnings had year, XXX%. lastly net third We our our adjusted improvements $X.XX available between of of cash all we the significantly of our of XXXX, the continue million. and of across contract XX% conversion accelerated flow divested Notably, strength our of more rapidly the We've expect our of million We've measures. quarter to in $XXX number new share. also plan. income delever. are included also GTS million both quarter expect guidance And from which third The with in debt and cash to operating scale. deck, and improved $XXX proceeds in and All our per for to are sales to the site. are details and working assets products $XXX GBS on press our value those hard seat-based quarter. of XXXX. strong Relations reduced non-core adjusted the teams second and flow segments are great $X.XX start Free a in quarter growth release in We've balance going the At a key execute free operating XXXX by EPS in the the to than quarterly trends Investor into to is the most our

shared As long-term, to combined cash I'll turn happy to your we over be you flow. the across questions. the free business Investor Operator? applying that, are sustained, to at operator, with double-digit drive With to the the we'll EBITDA and Gartner revenues, Day, growth growth we formula and call back take

Operator

you. Thank

Blair. from McHugh first question with Our comes Tim William

line is Your open.

Timothy McHugh

Hi. Thanks.

side. and so to a QX get I the color helpful. those relates headwinds guess explanation, some to to there more Just but would more guess just you forth? versus gave Any GBS bigger as I QX especially in I what I Thanks. color caused guess, know want promotions be ask on little it

Eugene A. Hall

Gene. Tim. It's Hey,

I as hit QX. really two that earlier, in there So, things mentioned were

people they on actually which beginning and highest through we we managers then some and to we QX have bunch So, sales came We on came we performing promote – sales in identified hired board, when a managers our went for in first, people did. had board them. from Those our generally training QX. of people,

any And training. They sales not managers, so highest them is promote Replace just more. if you'd them managers. with they're performing what then through take are imagine so got you somebody that and selling your people

it doesn't training nearly highest our as has – through just of Someone who somebody performers. it's much And a can sell one big be delta. as been

at comparisons, look people. That's you take your highest performers, replace you brand you if new one again, so, And with factor.

in the piloted second year. we QX, as sales The GBS in new is QX these them They getting We that, our sales seat-based we trained. products, factor mentioned, force developed force out rolled did In QX and well. last was very them QX. we – had

So some selling were mostly they they legacy new new the In on they most sales right after QX. training, Again in of few start a were products. didn't until because getting them products. still the products made QX, trained actually of QX could the

for as new a so, and the they obviously made learning product, different the agreements of product at to And as a curve there's opposed with transition seat-based kind enterprise it.

And impact the that so, primary those two were factors us.

performers our be mostly learning of So, actually curve managers transition to the with there. we made now first, a legacy the them people. highest and there's of seat-based new secondly, brand product promoted some to from we bit and And replaced a sales sales

and and products I the highlighted, very As are about very we're new results selling Craig strong both initial that. on the happy seat-based

Timothy McHugh

QX, the Okay. guide, end on on of think is guess given on guidance, the not if exact point, guidance, a the then color I'm the unless guess margin I QX at just more up lower sure lot guide plus any are profit margin the EPS I Thanks. that? that year-to-date the And is likely in Thanks. margins, about results I but indication margins implied this QX

Craig W. Safian

morning, Tim. question. Good Yeah. Thanks for the

quarters, QX about think post it I long and I talked there's more is think the QX a last our a think and particularly the and by our acquisition to by Events Consulting, way in with driven acquisition, as seasonality since QX we largest by way. revenue and little the revenue, being far, now, profit about year

and fixed the are quarters down. lower QX a little revenue as in look revenue the each QX, is QX it when than a smaller and when the the base across the four so have the the margins of QX, in for we does us, spikes, SG&A better And bit And quarters, average. relatively margins when

the thinking for we of think is the about stable we're full-year look the still, about midpoint way the for thinking it guidance, it still we're at so you margins essentially annual that's And are it. if calls our way I and

Timothy McHugh

Okay. Thank you.

Operator

Thank you.

question next Meuler Baird. Jeff from with Our comes

Your line is open.

Jeffrey P. Meuler

Yes.

So activity. little selling I'm GBS on confused a I the think

or sales well new to but and with it, sell they're allowing how for how it something sales. more are hit, and comfortable the you're I used allowing doing understand to structure what's both either messaging seat-based enterprise-wide, what's I is incentive them paying So are bigger them are like, seeing with to the enterprise-wide you more sounds you to message the the incenting where seat-based are like you still a people you it, to But trying hit. we're it sales you're selling seat-based? are that's guess sell still the but force, why – incentive they're think or the taken like, or Just

Eugene A. Hall

it's Jeff, Gene. So

So them reason new legacy did and let legacy the legacy of change. they product. the have seat-based sales to the were QX products And sell in middle – product because during where clients. QX, keep cycle, products they a have on The is the want product only we force In they'd we and QX to selling something then had the didn't our meantime. seat-based that the in had they already introduced to in QX them we pipelines the selling we sell the allowed to so new both trained and to product

reasons, sell during QX. to them both QX and we, those for products So, allowed

you yet QX general. trained was shares are sell QX, products we business same. incentives structure product, because hadn't is new legacy the exactly incentive talked if structure And legacy difference. new commission to mentioned, the about we there's the Meaning, they steep been you no on products, product the our the in that the of up or same, that a The material saw seat-based mostly the the ramp and I in As QX. new sell exactly

basis economic indifferent is an sell. which on salesperson one So, they

better going because value a lot better they and believe seat-based clients, If you're we have opportunities to the it's products provide they they're retention future. the salesperson, better to for a provide growth better because new to sell

they're trained for though it we Beginning our sales our just why July saying, have the value even people, more the got new the they'll seat-based on products. our provide where So, incented sales selling the once preference selling. And products they – to people be to understand X, would for majority that of clients. be

Jeffrey P. Meuler

Okay.

your Is sometime taking dry pipeline, that force it developing the that's enterprise-wide as first the were the the So, and year, started intention previously sales developing the the during it the was of it's and sales conversation, why was was to half of so for sales fair they up basically that with that seat-based pipeline hit. characterization?

Eugene A. Hall

That's of a piece it.

personal more buy I the use. for think organization content That's the the more enterprise-wide a you're everyone you of, a value product. the lines different individually many when has this, features this. your is the than value you bigger selling And to in enterprise the if piece proposition agreement, product is, proposition by client than use use I'm to along the way, selling this personal and can

different a sale. it's So,

pipeline talking client same you you want here's you from for to that – a from sell that what there's so a seat. to combination start And of a don't change change once have if I you, then want product, to client you enterprise to about

products. started – pipelines that products. the was they for a So Once at of they legacy beginning on then trained trained, they the for they got had developing started new year, they mostly hadn't so the seat, the been pipeline

easier first is is is first sale And make confidence curve. of so we've our one first seen And important, the there's pipeline large sale making develop we I the about sales the experience learning sale second their of to the they as What sale, how is from a is addition that seat-based third change, is people then a portion product, in the because GBS. there's force mentioned, talk in most with And QX once even what about that. saw easier their sales it sale clients. than very and a the our

Jeffrey P. Meuler

you. Got it. Thank

Operator

Thank you.

comes question next from with Patnaik Barclays. Our Manav

open. is line Your

Manav Patnaik

guys. you. Yeah. Thank morning, Good

expecting hiring, seat-based were or maybe I you all expectation? there a did you're you maybe what XQ it the they're just had in pretty in with deceleration of the of than planned? go in way, guidance, a the different line will year full-year was ask reiterated what so like you you So I know But end guess worse much planned. what to making, little these your a changes like catch-up towards this sort be

Eugene A. Hall

that changes it sort to of that. had impact So make, the impact and we we the made leave expected. the we expected I'd at

catch-up, expected. plan don't what as I well them We we making than know made an we changes. – terms make They're better expected. we We these of terms expected had about with We how but we're as to plan. of in kind aggressive changes. exactly wanted on or these like going think In to it's of

In transition had leaders and new a where on July, of we're had leaders leaders it feel really value right to when are your makes a senior – I that feel around about is things our fact, level leaders. meeting in the from good me got of I things GBS together you these clients made was the their world, And with their one very we you have senior track. extremely high. very with senior sales add products, all confident products they excited about about enthusiasm And future how new this great, of the the much it's sales and the senior

Manav Patnaik

level When used the sort Got for I you. of small get deal? it. this you the think repurchase you back of just maybe, activity do And before to mean quarter. we Craig, do to then guys

Craig W. Safian

about as that we times morning, to one, we're basis we ways. Good gross X EBITDA at looking deployment line or leverage two which accrete a repurchasing. fills is of Thanks. M&A we've down going strategic leverage our in is that capital way our as about get top and or to overall target, think bottom capital that The Manav. like on Yeah. talked value can either our Number about deploy share in enhancing gaps and to shareholders line returning through things capital

and leverage acquisition of As we remaining. to reduce to we similar think will way mentioned prepared in down my authorization $X we it as about the get deploy did have we very I And target capital over our our remarks, prior to way our we billion is, the levels. the

Manav Patnaik

Got it. Thanks guys.

Operator

you. Thank

Tong question Sachs. George comes next Goldman Our with from

line open. is Your

George Tong

Thanks. Hi. morning. Good

by GBS overall in sales to your was your backfilled managers were on and you performing highest sales productivity their tracked the You've how sales versus sales expectations? and indicated then with people productivity force among sales. quarter comment productivity people internal these own promotion new of non-promoted and force your that trends impacted last people Can

Eugene A. Hall

the one now you last they of we at I of I year, is products So, ways in fourth it seat-based people the productivity it to who products. if we best had as the mentioned. – look started pilot look of those to quarter, introduced a new And the think them seat-based the at selling

are If than in it you numbers new the at people their the is whole productivity better second be. quarter, look would

with up And so, people the as in get quickly. the it fact, gives experience very this, us they confidence come curve

Craig W. Safian

the of sellers, business, The the in – sorry other QX look to in I use new we new thing, our group saw new that of absolute when pretty the nice a business too from again, new really to sequentially, clients our of and shifted increase seat-based George, being new – new with at to to significantly QX sales that, that majority a just mix dollars product. clients, we QX to the to add

both very get around seeing see force improve. trends analytically asked what a the the really time you good everything is more trends. now we're does or and experience The more and current from So, sales with tenure, productivity underlying question underlying positive, GBS as we they their are

George Tong

helpful it. Got very That's context.

the process you're are that on under now about, converting seat-based out terms? is contracts to enterprise these going clients or of of talk new the to from contract what Can terms? these take rate new What proportion in obviously, client licensing. generally, You're, transitioning you

Eugene A. Hall

I already of as and earlier, as sales mentioned are people talking can again and those X. we continue about ending those switch client that July that agreements, been So, to we're close a they as enterprise

up more and proportion XX% QX, new Craig – sales seat-based than XX% was As QX, our year-over-year those my earlier, I sales. clients mentioned mentioned have situation new sales when than a were client we in of to the half And in QX remarks. more between and of new as

the in new half than the dollars XX% was clients, were more more up of seat-based than year-over-year. for again, mix QX actual new So, products. the total And

just products fact were they is and that with In already – the discussing in ending clients. reason we're been legacy already the we'd pipeline,

very is So positive. the uptake

George Tong

receptive the structure kind conversations? seat-based qualitative. this guess Got more clients is of it. I your question Are to new in

Eugene A. Hall

question. great again, And Yes.

Heritage and So side. you'll new as products we took seat-based on clients product the love that And provide a recall, technology the itself, lot Research actual the reason Gartner they is from more the again, value.

HR and of on So, to product we even had CEB piece. had systems changed the within already information actually and in added for then HR analytics the what HR example, the CEB that structure

had if that's seat-based actually So the product higher we the product, much legacy look product than you before. value at a

positive has reception has – for is, new in use, And this clients value, and then I we you've to total reason very XX% it statistics positive when talked they where really see understand clients so, been new earlier, their the the is why year-over-year you very individual for sell new is uptake actually the which when GBS clients. the then seen been the when personal very, up business mentioned the new to

George Tong

Got it. Thank helpful. you. Very

Operator

you. Thank

next Our Toni Stanley. from question Kaplan Morgan with comes

Your line open. is

Toni M. Kaplan

sales earlier. morning. mentioned change? how the last couple in of July able Good that July when think times you that's X the just Is that about I'm question licenses to the Gene, enterprise But are clear, a and date the so to sell people not Xst Hi. anymore?

Eugene A. Hall

still finance, but legacy products. for very small out There et until legal, is with larger deals close X products, any sales products, it's gave people pipeline marketing, HR, our some So, the cetera, they in our had to portion. a for we July small legacy the sales,

our product important X. it's of time, we'll The and products zero a only all portion the the Over ones thing those So be legacy. is big That's vast starting literally will sell still not be converted. seat-based July X. starting July majority but the small on will

Craig W. Safian

business new perspective. a From

Eugene A. Hall

our to as want long perspective. legacy they their From products renew as Yeah. business clients – a renew global Again, people can new renew them.

Toni M. Kaplan

Okay. not very day? sales going are impact you're And have like on basically the it from expecting shouldn't fact that the – a negative this well, new QX product so changeover seat-based

Eugene A. Hall

good for actually new force sales experienced a the So, again, more and we're sales getting to great understands where in that very trajectory, we had new clients, feel like results. we they're

it. And so, we're feeling about very good

Toni M. Kaplan

just And areas that be particular helpful. follow-up any were quarter were particularly functional within strong is, Great. GBS this or Okay. that particularly there my any were slower, that

Eugene A. Hall

I'd there say trend. everything can't in were any differences. was think I

If differences trend been. in trend the legacy it's kind you of and look where or the products with even overall, between the the seat-based it's at

Toni M. Kaplan

Okay.

out So, marketing on versus like supply chain versus...? call to nothing

Eugene A. Hall

No.

again, say think, where I in is everything I trend it's would with been historically.

Toni M. Kaplan

much. Thank you very

Operator

you. Thank

Our with next from BMO Silber comes question Jeff Capital Markets.

open. line Your is

Jeffrey Marc Silber

are of this question. issue, Sorry minor to look sales If percentage go one today, sales at GBS folks force versus from CEB? those came that roughly the GBS just back I those to what new

Eugene A. Hall

front people what turnover range replacements don't into are Gartner force the So, is, XX% had way I our (XX:XX), have promoted think the about year-over-year, turnover sales are in force it we XX% know we plus of number to managers of numbers has historically. you so sales is we those been plus new, me, but And so of it new. their which right in grew a

is the think growth but promoted a it's we're and people, we numbers for front we to of this. plus plus that a we have had the don't turnover, you I if way, about decade. used new. people how me, in of we proportion by so to big as had had replacement worked This Gartner's normal So, And,

an know we would to that so, going, as how expect. we things are of as organization said, I and run kind And

Jeffrey Marc Silber

the sales? guess force where comprised when question will with I legacy new over mostly sales was I opposed Yeah. look to CEB time, going be is I the as do of you think GBS if folks

Eugene A. Hall

with don't have that I to XXX me. if XX% exact people by is and start because, to hire XX% I count people head the turnover me and right people. – you XX% XXX again, XX is a of XX% to let So, give in want But divided you grow if numbers I XX% example the XX%, you business you have and net and I XX%. so sales XXX to turnover, front promote promotions, XXX to want grow I XX an have people grow lose have illustrative XX% for

So XX% sort XX% you, promotions, people the year a count, in under Again, all run assumption this the are Gartner XX% growth of the forever, you is XX% we gave for flavor first of time. how I but head that theoretical just net it. turnover, gives

Jeffrey Marc Silber

sales GBS are that. appreciate you people? I Okay. And where these finding new

Eugene A. Hall

And quality building And, people And real are heard, being growing markets quite of our as years. world-class in competitive significantly tight, our as and labor organization. number metrics and a for recruiting know, stronger total in in I a source force us. sales about find that it Despite all sales fact, are as both tight. the are from We past. advantage on over. in you've we're We people the our terms the GBS. GTS of of you the as markets a recruiting focused fact for organization have think we of So, our the all of stronger labor

so clients the world. As directly, hire operate of all have around those and operate we XXX in – many in you countries, we we know, we people

one sell clients, it's different all So, sources. in small markets, because medium clients, different are kind Those of these large source, not operating we're clients. we

there's So it on kind it source, what geography what and size cetera. like, one of depends not that clients we're is et serving,

Jeffrey Marc Silber

the Thanks Okay. for color.

Operator

you. Thank

with comes question from next Hamzah Mazari Our Macquarie.

open. Hamzah. line in Cortellacci - structural from Your Capital Hey GTS is is Mario wallet that This Mario filling (USA), Inc. would Macquarie currently? changes any Cortellacci guys. getting retention keep GBS have to where running Does it is for

Craig W. Safian

fact, driving wallet we we seat-based as that GTS. the the GBS, is second of it thing side transitioning can't to reason we there's this once believe time think see believe existing from in historically there's in no that one other growth And you to penetrated what now and play I in the why new things same two about of able with be primary the an two-thirds license, further of to well. retention enterprises. derived is, And No, products, room over GBS the is run Number products, still into on improve and translating seat-based enterprise gross been be higher go. the will one have there. unlock growth we'll to those all more as formula has there's Gartner things And service of with the that. organization, and really its rates, engagement Gartner normal no growth benefits you're the is around retention and penetration

question just Mario Cortellacci answer reason a just the why Macquarie - as Capital to was no, can't that And retention. you. (USA), So, follow a your there have Inc. Perfect. is Got same levels get no GTS which quick retention to wallet said, wallet I longwinded could up. GBS

Given pruning in maybe divestitures case, you how if (XX:XX) is that and through do any you look of us And could any there in think to walk the noncore portfolio? does terms your about pipeline future robust portfolio assets, if how M&A? the further some see the of the adding you yourself is

Craig W. Safian

figure quickly Talent Sure. we divest Yeah. biggest do one for Assessment then deemed that a to far by divestiture noncore very From asset. the business and market it that biggest perspective, the analysis as the We was was to that worked us which Heritage business the and was within to CEB noncore. out

April mission in getting one of so that kind number And for was early us. completed

perspective, to we continue sure areas everything and we are which that the across hundred-plus to participate there is the a to different portfolio Research of growth all of we make look that do continue From have M&A business, an the companies core all is supports our our now to businesses and at that. really look in. other we'll what to track continue We at

just finance not HR cetera. legal So research, research, but in research, research, et IT

to We continue track those.

Absent capital we'll (USA), around for earlier look in about our capital If that capital. we're share we - Perfect. thought or be going real we way assets similar accelerate way. the growth Cortellacci We way deploy forward and to diligent, our gaps have the that that, Thank Macquarie about which think deploy to deploy going we over rate us we on that. Inc. can really Mario really as all shareholder we'll talked drive Capital you. that fill dev previously, our are repurchases. value, our corp there to how a is disciplined But about was it is team again, M&A

Operator

you. Thank

Our next question Fitzgerald. comes from with Cantor Joseph Foresi

open. is line Your

Joseph Foresi

what drivers the And could Hi. your coming how I get, mean new from of tailwinds? a versus is as wondering much that industry if products I growth best market growth is you we was are. new versus breakdown can, by what penetration of

Craig W. Safian

or again, both the with GTS of sides the about, side at that really on think from on across of about comment portfolio client Good legal. talked regardless perspective our going centers combination applies all new pricing, opportunity ample so penetration and us. business Gartner new the geography, products of as the look plays and think same opportunity that well. is existing we buying products, as don't We And tend finding historically, like finance new C-level organization existing and enterprises within two-thirds on those make a higher of mentioned, GBS worked us GBS ubiquitous that size that have has for huge huge account existing Because we come functions formula and have below we've seats same untapped. well. do all priced Heritage further us, products, from have to the a it's for combination Gartner as that, a upgrades after of enterprises from or in currently And working the as we we Joe. higher now We have buying on just then equation. the and both finding for and available industry, within because Hey, we growth expanding to side, of other is morning. the And with a through Heritage or well and I enterprise. company And algorithm and the diverse value, of obviously our technology can side, HR serve you the as centers, market

Joseph Foresi

figure to things products any the a Thanks. would how I'm around help of into share integrated understand the much or is sales of just whole product. GBS could better. side versus follow-up, business Maybe it. little give retention product its us that stats. us is as you And some I bit CEB, now. think sure you with could force CEB wallet But the trying Got my us we're stats out changes in

Craig W. Safian

and Joe. is of the Heritage from and way Gartner GBS first construction XX% to The XX% side Leadership its about it think Sure, about marketing – supply was CEB Councils. chain about Heritage was

we products journey functions that function Heritage early increased that Gartner because of opportunity similar function. and started the in As again, very we major we converting of particularly and on we've way and to expanding for now functions game, Heritage within is a in the about, is We're increased to from the run we've functions really that then for talked over this everything But, over that serve. each seat-based selling the the the into growth selling it have came CEB. there Gartner that services of particular products capacity then and algorithm combination the those GTS, historically capacity that innings

last again, so, side. And Gartner/GTS for as algorithm, same or so Heritage the it's we've about on decade and managed talked the have the

Joseph Foresi

Thank you.

Operator

you. Thank

Our Jaffray. Piper from next with question comes Peter Appert

is open. Your line

Peter P. Appert

in morning. see wondering the mix. the you guys I'm Good if shift potential impact Thanks. for from GBS profitability product

service products of specifically lower products. margin these I'm support perhaps those if on and implies for level a newer level the So, of higher wondering

Craig W. Safian

Good Peter. morning, question. Good Hey.

basis, baked service combination products price. the rates, we the of incremental anticipate a combined elements but we the rates and again higher on pricing, and fully XX% of believe all very those retention the And couple get that the the With absolute. one gross into about rates, being in, higher retention baked build service higher support of a we'll segment that So, incremental those is scale cognizant to it. margins, ways our price One for the of Research the two, again run at elements. well. we of we of think And that, that's we can products, overall retention as both pricing, when the to on we're

Peter P. Appert

potentially next And margin. Got growth wondering if then all GBS it's would guess, year. to I flipside, Understood. force that this that then upfront helps that, Presumably in it. got force the sales sales hiring the Craig, some I'm slow is year. this of the

Eugene A. Hall

it's Gene. Peter, So,

aggressively growth past to kind think will and it's productivity. then GTS growth, kind we've sales grew the And nicely talked If sales again, sales with about to the that. in if of we've sales terms force. GBS levels we same year can par at productivity the through the As this up increased being GTS half year, again sales force gets we that going grow of it in look of force to about of going as our do kind to rates it we second on need to continue grow seeing at expect substantially. what of But we're believe we of to productivity, the We're goes on of we the you happens all GBS kind which it productivity based the productivity.

we're yet. either going know much so, And yet way. to go those to we're decided don't how in what grow look we we haven't because XXXX, productivities like And prepared

Peter P. Appert

Okay. Thank you.

Operator

call like now turn to the queue. Thank you. showing remarks. in for no I'd Gene to the I'm over further back Hall closing questions

Eugene A. Hall

Well, our prospects shareholders. to value excited I for drive and to strategy growth, long-term our continue be our about our for business,

business strong to by Our formula. do our we QX drive know right results success applying the things Gartner the in demonstrate to

our function needs across today, capability sustained have in address critical technology an quarter. Thanks key outstanding next we forward in in us position to remain in across all client look for We metrics. joining updating to provide I and the growth enterprise. and the you double-digit business to every And

Operator

this day. your today's Thanks for gentlemen, wonderful Ladies Have concludes and a participation. conference.

Gartner (IT) 1 Aug 182018 Q2 Earnings call transcript