IT - Earnings call transcript Q3 2018

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Operator

Good morning, and welcome to the Gartner Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask question. Please note this event is being recorded. At this time, I would like to turn the conference over to David Cohen, Gartner's GVP of Investor Relations. sir. ahead go Please

David Cohen

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

the supplemental expanded press document detailed In XXXX. starting operations. and the divested for Heritage we January financials included the release, supplemental addition Gartner an which a full of a document and Heritage provided CEB, provide and excluding today's review the in divestitures all analysts, to And table removes combines P&L, investors X, This and have non-GAAP our business we results operating metrics. of

XXXX, For from if had EPS to adjusted XXXX. proceeds used that provides reflects net XX, view December down business PDF This the to on as the for how investor.gartner.com. table neutral, we We've XXXX debt are a you the gives otherwise divestitures we unless the and the are results growth as Gene's website, about thinking All stated plan for FX release press posted to rates in our we supplemental XXXX. comments repay

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

divested flow in section as earnings described divested references excluding are and all accounting in divested release related stated numbers available adjusted All gartner.com divested excluding of to operations. operations exclude otherwise, no to adjustments otherwise reported All the are revenue are Reconciliations the revenue purchase deferred for the which Investor and non-GAAP adjusted stated to excluding are divested the for revenue we the unless operations. unless all website. and adjustments with use references as call, the On EBITDA recently EBITDA contribution divested the margin numbers the operations businesses. operations margin for with our adjustments and adjusted cash excluding Relations contribution

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

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

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

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

Eugene A. Hall

and quarterly quarter strong to joining Good up XX% morning with of us. earnings total welcome EBITDA QX revenues and We Thanks up double-digit our XX%. for drove in growth call. another

attendees was of within was on We revenue same-event year-over-year. continue XX% up number businesses; three up up XX% our reported was a Events. up and Research, XX% each of strength Consulting the year-over-year. basis, was XX% with to backlog Consulting revenue year-over-year On up Events and see basis. a XX% Research revenue

We again and continue in up Global every delivered every region to growth double-digit Formula in Sales. and the Technology company across Business for industry. every both and was virtually Technology to Global Gartner Sales XX% Global to growth apply size Sales

and enormous the pursue prospects. to continue with clients growth opportunity We our GTS

and We restructured short-term growth organization. XXXX. unusually for Gartner learning of the GBS. put Gartner an affected Formula this also by required We in eliminated productivity, terms discounting puts more change the Formula for many this expected. GBS the place a Applying as introduced applying during seat-based to double-digit an new the sustained and XXXX we everyone magnitude the on We enormous impacted changes. amount Change has conditions. made in of changes foundation offerings future. opportunity and We and curve These have reconfigured large growth contract and

the to future resulting the on foundation sustained place, double-digit in much advance of learning Looking growth. our in with the curve, we teams will expect

leadership in They our to Gartner are skills bought they're products. day. and salespeople the Clients executing GBS incredibly strong every and Gartner better understand their this will. With the new and and team the seat-based Formula determined are our appreciate value have excited succeed proposition ahead. in getting First, opportunity fully Formula. excitement, to in about They're the the determination

their quickly third rapidly. and result, sold a salespeople of over selling proportion more. past who once deal, has the our their quarters, And in three salespeople accelerate As deal the grown sold first they've seat-based second, first their

As proportion has value expect, also a the you grown. rapidly contract of might seat-based

have GBS colleagues productivity in salespeople development business to achieved already of similar in levels GTS. Our their

Our account process. executives seat-based accelerating also Account sales to also their of renewals are executives products. have

than So, rate slower their are seat-based sales business at the a accelerating development salespeople.

tools of business Gartner of in are critical and the Throughout implemented We've analytics-based already world element selling tools These the service Formula. the is Gartner Retention added GTS. in in in XXXX, we're We're critical seeing performance in the will One these for teams. benefits advanced we've deployed same places GTS GBS elements key strong and way. we've our GBS the class. these tools. recently Formula the benefit is for teams

is this retention. Formula. Gartner scale Focus the drive we another of element GBS, further areas of expect we will improvements core other on As

divested as And So much in extending sell sustained we the expect senior we in XXXX the more. of experienced with we foundation mission-critical delivered to three salespeople, the we in will I closing, Gartner their businesses insights substantially the of business add In place, recently in weren't helping our decade and we've curve executives in record accelerate, empowered our more power if inspired close a So IT when a capacity our have of of finally, North a America. resulting that CIOs We'll Conference This with to result learning from during were more achieve Orlando. to executives double-digit segments. track event we important and important in than gathering will growth. event. have more central at is Symposium we the strengthened that I of The priorities most clients strategy. attended know our more even GBS, this XXXX succeed and all

excited Gartner these were of about incredible equally clients. attend inspired deliver associates at power the all of to for Our we to value and you of experience encourage the to least our one yourself. I events

know and have come. applying now in in growth achieve the Officer. that, to large I'll track things With Craig years on We the do sustained Financial to over and business flows Formula double-digit for the success our to call market to by an our we're turn We right drive incredibly opportunity. cash Safian, revenues, to earnings, Gartner Chief

Craig W. Safian

our segments. Demand everyone. world in you, around and the Thank morning, our services and remains three third quarter, we primary Gene, across the results good robust financial operating delivered for excellent

expect fourth demonstrates, we deliver of revenue our outlook quarter year XXXX generation. As double-digit growth cash EBITDA to and another strong flow with

Training I for for businesses. Before Workforce motion million million In those about provide That our divestiture update Matter Sales million. which This operations in for Assessment give divested an for CEB and XXXX. planned $XXX QX non-core in excludes to sold about adjusted QX, Talent Challenger closed website, well are about reviewing sold $XX $XX EPS. look $XXX a on with allows our divest to QX our to focus normalized, which non-core we for Surveys as process XXXX quarter our provided we we million. related to full delever thinking us P&L, yesterday non-GAAP you these We CEB the Metrics by and set utilizing activity. performance, our business, balance to a on a we you proceeds to wanted to about assessing Divesting sheet. for assets business were about we core we've our businesses increase reflects the P&L the as how XXXX down rapidly as to clean plan On Once

revenue was for quarter FX-neutral $XXX to $XXX,XXX up revenue on was an XX% Third basis. down accounting for quarter. about and the up purchase XX% deferred adjustment The million,

of deals and the billion year. third in I'll also greater per basis. amount quarter always spending since margins that GTS at year-over-year excluded about margin million, QX wallet We quarter. Wallet contract significant of value growth now Contribution and third with the a prior GTS $X.X GBS. prior cash retention improved. basis quarter also GTS the of our third X% new EPS at in grew $X.X was business excellent year. performance XXX prior XX, quarter, Research FX-neutral In The level contract in business and greater versus flow combination revenue reported We and GTS spending the excluding year-over-year and remained value third rates $XXX operations was now contract closed rates retention of quarter terms. the new growth up September points GTS value October for increased our up $X.XX report XX% contribution for We highest had Total growth number strong. of growth XX%. The quarter XXX% in in FX-neutral clients. retention $X.XX of Client Research was had higher in of the since the of details the share. retention divested GTS adjusted has of Research strong FX-neutral, for for share XX% quarter, the the for an out the was revenue. for we the XX%. the the up million. was pipeline with XX% year-over-year year. XX% last very XX% from measuring remains value quarter on larger of reflect versus review XX% have billion. was GTS both versus contract of Free slip delivered margin we've and points GTS. $XXX and basis contribution year, and per XXX about divested operations EBITDA XX%, another

in ended in of of This see $XXX,XXX It to X% spend to average across value QX The to new CV reflects both to additional drive consistent year-over-year. upgrades enterprise also the GTS, continues per and our growth existing continue GTS clients, and compared grow. services per increase We X% existing clients continued new enterprises. contract stands XX,XXX a up We and XXXX. ability quarter sales average and to now up new at through enterprise clients. with mix third business

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

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

Business to Turning Sales. Global

GBS the and numbers XX, the Challenger of have Training value businesses. of changed some that That divestitures Sales growth contract representing historical reflect Note of the As of Matter $XXX X%. had year-over-year September of GBS million, to Metrics

XX%, up was an retention to more basis for prior continue client prior retention up We basis progress metrics. with GBS. year GBS retention versus the all-time than about and the XXX up year from than and was make XX%, basis high points sequentially. XX points wallet XXX GBS points more GBS

quarter enough period. to the yet New of GBS the business the up X% prior ended offset declined products. of quarter the versus year clients, by X% seat-based legacy with versus growing We sales in wasn't third sales X,XXX prior-year as products the lower the

relatively shifts quota-bearing a team quarter with the we beginning Gartner $XX,XXX, third head few sales by year. year was last second thousand products. both stable this increase of dollars down period quarter or of quarter The contract operational XXXX of compared productivity the and quarter GBS, of For net year-over-year new seat-based the and to was NCVI reflects XXXX. second productivity both divided value count have making The the compared third the the to

Since growth as at of the detailed their contract GBS Day. GTS. sellers This the we third formula average number quarter and products, GBS our ability improves. reflects our at enterprises last CV we Our business as year, at and data more new about that value The gain to productivity both GBS improvements to follow a existing and growth operational through the $XXX,XXX. that have with increased show new drive as experience made per analytics of Gartner to Investor X% enterprise increase the changes to well

the provide All for earlier improvements highlighted long-term double-digit changes Gene foundation and sustained growth. of these the

wallet business retention in in Research productivity. increases was sales very Our QX strong. was performance GTS and outstanding with

a gross contribution same-event had basis, increased events in quarter XX% and a For early XX% XX% $XX value million. reinforce XX%. in year-on-year growth margin last to with In was our year quarter. for contract QX with in attendees. by XX%. increase last XXXX. percent outlook next indications Gross revenues GBS, were QX from Events, growth third double-digit destination was in We Events XX revenues year. XX% FX-neutral increased contribution consistent same-event, growth year's up XX-plus On FX-neutral the

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

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

was bookings helped optimization in versus up our business by was contract and prior Consulting contribution third easier encouraging. Overall, margin Our the The strong QX an compare. quarter. performance remained is quarter, year pipeline XX% XX% the gross

earlier, Other discussed no there essentially we divestitures in the segment. is revenue the left With

will Events. year-over-year The a the the Consulting Research by on Adjusting segments; amount in and SG&A divestitures GAAP items, reporting on consolidated quarter and basis. forward, basis, the increased for will we SG&A in business and left year-over-year X% be Going an non-recurring an Research, XX% in other third basis. segment. our FX-neutral FX-neutral increased small Other be three into On X%

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

about third was the as $XXX $XX biggest of expenses were paying we X,XXX million, XX%, EBITDA respectively. to quarter, the year, the million, flat have down had moved and down past work. part continues This $XX a force the or in from XXX Depreciation sales quarter The in includes and at year-over-year end year. we GTS be amortization largest XX% of debt up in the integration in quota-bearing of interest X,XXX associates in FX-neutral Interest expense relates lower third Our while down XX%. integration quarter was of the last XX%. the quarter Research. GBS, investment third and our to growth with EBITDA growth million was past were the XXXX. and expense for in over

performance, tax for was of to to the than to costs Adjusted tax the benefits stock-based adjusted we The certain large Our from the of as as quarter the EPS, expectations which income, a the in was quarter driven benefits well was compensation. including into attributable divested strong lower for that for calculation of statutes operations due adjusted excess QX, limitation $X.XX with includes quarter. some our below-the-line operating number anticipated rate, of items. rate upside slipped XX% use part in net by and which fourth the relative expiration

by was was in to operating free planned operating strong operations, cash $XX XXXX operations. cash divested rolling other $X.XX in capital. $XXX XXX% the had income, compared was acquisition and slipped and We quarter. was adjusted catch-up including flow QX share. free cash flow In than in the is and million adjusted the was working quarter. interest driven expense operating more four-quarter our and of QX nonrecurring of CapEx million. payments $XXX integration items and year. million Excluding This QX year basis, versus a million, improvements cash flow approximately net QX million increase XX% fourth $XXX up were which On CapEx cash $XX prior lower into The divested conversion EPS QX QX, per last some yields flow results,

which a basis improvement will as the same strong, business measure GBS see flow our And expect for we The cash as we QX cash expect reduce corresponding cash a temporarily again. to trailing on GTS that free in very see has working in capital While we modest our metrics. conversion would business. flow contract XX-month value, free characteristics is free acceleration GBS a flow, conversion

of our acquisition. XXXX, of XX billion. at down debt balance quarter third more million $X.X the repaid than the debt, That's billion $X.X During $XXX about we since September leaving

fixed our is As QX, of rate. debt end of of all the

on EBITDA target. leverage X.X divestitures, leverage are basis about now leverage gross for ratio is times in Adjusting And reported with Our range the fourth in of about X EBITDA the gross strong we quarter, our times. a EBITDA. is our

Our flow We strategy our capital cash allocation and free shareholders same. deploy strategic buyback remains sheet returning the capital our flexibility programs. on balance to M&A and our value-enhancing through

$XX to of price million over of During of we the the advantage stock. October, worth our repurchase took month stock lower

website, Turning to financials to moving on parts we With forward. set available completed, will than evaluate we fourth a business related provided we the our to guidance supplemental provide the going all divestitures, use we the provided document February with guidance XXXX. on guidance year. have a non-GAAP In for to walk the the outlook are from planned in now. With the providing have the rather giving divestitures of full the the you we're original for we for quarter we basis our

operating are to what February. the we outlined in for Our expectations full tracking year first

Our EPS as depreciation, upside compensation equity tax flows below-the-line now through. and outlook adjusted stronger is from

With quarter to reported course by quarter, the in fourth that U.S. the our the saw of strengthening FX. third of results over the impacted we we top-line expect again see dollar the

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

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

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

year a XX%. the tax tax adjusted you net fourth the rate of XX% around is effect about about for for are the note the that add-backs adding Please quarter of XX%. GAAP We the fourth quarter rate full back from expect if tax income, rate an implying in on

We of expect divested between fourth quarter XXXX excluding per operations, adjusted share. $X.XX and EPS, $X.XX

be year, seasonality divestitures, million. to $XXX free net slipped capital Consistent basis the free adjusted income with some the conversion full fourth typical XXX%. for to is At slightly almost comparable in the the into we flow expenditures million we expect cash negative. that the without midpoint, expect For $XXX of quarter, flow adjusting quarter the fourth the and cash from

details the site. of are of All Relations our Investor on included our guidance

operating strong we Free operating all GTS quarter. GBS cash continued segments in strong third and performance financial of growth in continue scale. our to Our value XXXX the significantly across XX% of the quarter. contract our products quarter sales and the improved in new seat-based Notably, flow sustained for of

quarter We have $X.X more plan. XXXX delever. assets since our by divested proceeds The reduced the debt are strong billion all balance in identified those going and the trends the of used fourth and executing are teams We've non-core into than the our to rapidly acquisition XXXX.

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

Operator

Mr. Safian. you, Thank

begin question-and-answer We will session. now the

Blair. be Please of Your from Timothy first question William will ahead. go McHugh

Timothy McHugh

as guess, made, development was GTS, the staff to I guess you follow-up Hi. the which same aren't. but was Thank one discussion. you. comment, that wanted executives think, I GBS it account on at productivity the productivity the kind business just of And I

And are, at the can GTS, of at already the productivity of much than those? guess, executives comes of help from guess, each lower the the So, level severely if I is comparable of GTS. role activity understand, I guess, you us one account how implication I business

about at Thanks. talk you can all So, that?

Eugene A. Hall

I'll and can Hey, Tim. Gene. follow-up. started then It's get Craig

different both of two that then business very aren't we we existing a that those that which job basically, kind have sales comparable as – well additional And existing is of set clients. to to today at their from clients who And the salespeople, So, buying GBS. renew point clients, of cycle. and is this been salespeople. productivity very existing things kinds those one call developers mentioned, business anything GTS we've have developers one business to is kind of selling sell us of so Business that we the a the our between gone actually roughly that's have developers and account executives, prospects sales of have to and has and that you productivity of

of BDs. all On executives have two sell new is to side, me new of the product. to things. they to clients do have with this don't – first what's on so, let They developers, going is account all Business The go to renew all those. salespeople,

they renew learning sell that product one simpler maybe And whatever have the old so, I clients if you're curve (XX:XX) lot all the old have extend just the or selling is new clients. if say product, have a have to you it have to and can the also new to than I – selling versus

nicely So, a the they've because selling simpler much curve and business on that is a developers what's learning going task. learning have it's gone much up really faster curve

executives, account mentioned, to curve, learning have first, I all a renewals. through the more they complicated the because On as go have they

amount that the of do GTS addition, the to account have relative executives. is quite high they to In renewals

over that changing time. are We

of account do. the reducing So, of has that each the renewals to over executives amount time, we're

term, their available – GTS sell to executives. because account they the products short so a relative substantially than GTS the account have is Over the executive. That renewals new that of more limited to time limits

their new well. selling result, slower. on doing curve learning quite And a so, They're is as products actually the

now substantial you look least total a force. sales each of of quarter, sold sale proportion our one and seat-based in growing account part sequentially new been the that that's quarter-over-quarter, products if So have in has executives – at it's at the it

talked sold a the have pace you acceleration selling for business at one quarters those about. – just who've has slower that for continued if and The ago, they that but accelerated. developers selling at they're again, reason addition, I three sold those look to In now they two, same accelerate

curve, quite all that given nicely, they're from And they curve have climbing have to learning do. but they've workload the slower the they additional learning so, up renewals a

Craig W. Safian

leadership thing which is that And executives and going forward. is And GTS which center, the to renew on seat-based, having have to will then a then be account account inherently, that in to then all selling, there, the around because executive largely But add just the mentioning, us products migrate. to will business those covered account the worth their developers opportunity sold license haven't that on councils and/or enterprise legacy will same council. Tim, other executives actually the by territories allow Gene's the further we we way the point, business territory penetrate have seat-based leadership side. the We'll in function do the more buying organization, the in are

Timothy McHugh

And the is you. just people confidence express have on guess, just of I the think questions broadly, one I improving. trying GBS' I Thank Okay. growth you more guess, biggest probably share to, then rate

to besides guess, of So, executive guess, you that I maybe productivity? is reinforces I get on, confidence it what most would focus kind that point seeing this will better the here? from are that that the metric account that, this you you the

Eugene A. Hall

set the Tim. Yeah, things. It's of

a sustained a GTS, it's in it elements the are, that lead in my we there's from metric. our remarks. of growth. know Actually, double-digit So, talked what I single is to things really And through prepared not set that foundational experience

off pay putting been And foundational remarks over talked time. in we've so, And the elements about that things know in will I my place. those we opening

examples. I'll some you So, first, give

know also gives as So, and you retention more you a said, seat-based we gives seat-based Craig to product both we product, to a opportunities growth rates it. switch and products higher

when so, Now, yes, as value products, the as we're you actually get value. get much one they professionals HR use seat-based professionals? things is, then the one the much of seeing professionals IT questions is or as And do finance just of

very uptake the So, as accelerates. successful mentioned, I those been been very introduced And we've and has good. in new uptake the we've – products

So, some that put the have already what been got clients. legacy pipeline have you've is into been in – proposals products

And covers, CEB, selling that, seat-based if also I of that also you our and been then traditional understand clients in make enterprise HR mentioned rising sell value. a or a in had then, of us The really one, then right about beyond have the a on have things good the account in four both sequence. confidence been HR, to the new we and rising just the that product. talk a rise is we and sale let the there's been the every at been legal from before, sale. that as other is the like And value falling them more seat-based well through. how the but you So, reason of proportion sale lot follow then and we of you've the or you salespeople And there's rapid the research, under And business like the selecting clients all, quarter off. care all is better recap, agreements, that you a first looks we first the three say, do really a first sales force. sales ones executive about What's like another, kind that developers zero, it's then there. who've products They foundational at net related get an I'd and things those selling and the been has like, good have we And products. see Those substantial gives rapidly – to product of what that now hardest seat-based that but first to rising made this see then talk them. we – That's really two our there's as portion that, track value for look better and inherently same implement just that's get – is we're all on functions. stuff finance element sold is true thing to like HR leaders Workday to technology like of that, things and products how seat-based to rate. And

the how to understand Once is explain we confidence, both the might proposition get of Once first to they as we the how to the get don't clients, get so, they expect, sell products, for client curve would they with the terms sale fact one objections seat-based that those accelerates. hardest. they one, have their they learning product, and address value And discount. the first down that first their and tracks kind that talk

as taken continued have they – been so, well. of make the have that made salespeople made And of look early sale products. to it first improved. at takes products clients can being the it, sale those their number The with And that proportion – first rapidly. love amount of are has make sales The on sale growing we further a time has accelerated up the

In that this, Gartner and driven support, has great have I we seat-based products to all the the traditional have retention. which services so addition mentioned new –

with leadership more some councils found people on We that onboard, legacy to have up that support. substantially. pilot throughout impact That'll of the just didn't kinds end Those whole we came XXXX. implemented see year these expect of of last of to We've of the same new would did we'd did that retention in that we've done that those continued leadership add retention and now we support line. groups product this went first improvements Our year. as that to kind we councils really that service ones but the our at

by level, our products. it and single not. clients. really totally whether are change value down seat-based It is GBS or have you gives bought I more most having individual important, those salesperson leadership are bought changing to some And to understand So, thing team, in. more the are time I'll They guess one program, – and important much which opportunity provides mention that the any thing other in are people a that the that's the is

dealing discount, strategy. you're on and going our time talking to spent of in which value focused it understand team. be of not is they're I a you're all sort it, in. lot excited with it. bought They and And actually they're If about of that understand bought They about

a really could good us others through. through But are we're are that track. talk others there things my that give went those so, couple And trajectory. on a kinds confidence go the in I of I

Timothy McHugh

right. All Okay. you. Thank

Operator

next go of be the question Baird. And Please ahead. Jeff will from Meuler

Jeffrey P. Meuler

you. Thank Yes.

if some referenced of it. maybe I'd factors, the hope some You we around put numbers can but

QX QX the help guidance, like guidance, impact. the in what on understand the then the of terms divestiture just Just upside QX and us is

what a into those How cost are You FX worse, are much SG&A QX. slipping is talked that was or Are about they? they? some factor.

So, just of of on cited help some bridge some with rough guidance factors and you QX kind upside can if maybe the you us the QX numbers. the

Craig W. Safian

morning, Jeff. Good

flow expense, upside QX shares of rate, way from about QX the upside little and came below-the-line from upside the perspective. into benefit which EPS. equity there's notably compensation think tax that the And we depreciation, items, of to So, QX, most the through bit a sticks lower a in the is bulk guidance obviously, and on

$X.XX of top expected guidance Probably that beat QX. side, the we our pushed half about was we EBITDA to of On in in end QX by the quarter. that happen about the into spending that got

tightened EBITDA, revenue, higher the range the foreign And is that the same quarters the out. and think as of about started for the a we tightened we marking midpoint actuals midpoint QX nature, rolling you up into first midpoint essentially about And to when on where than look also operations, we on so, full-year and and QX of the exactly way as the three initial bit things is We ranges the per ex-divested guidance, apply but share. to it it EPS, then we range rates the guidance is $X.XX moved about guidance. at exchange tightened the little think on

about. that of benefits talked the All below-the-line baked we into

In two longer are come million now that we $X it's businesses a out part million to Gartner. that of terms will not those EBITDA the around in have worth operations of $XX no QX, of divested that

Jeffrey P. Meuler

ramp. I And was head for sell given a count you. that it And growth would have under already seeing good they CEB them the business business. to productivity in model, enterprise-wide staff executives me – for head a think Okay. think business guess, Thank metric lot the being the a selling side, question, I variation me, but just with account new then, GBS deals, a lot the Tim asked hard of thought development on it the count the where was occurring that of just were is I you're previously down, help new X%, I of the growth – understand, all on keying in this of

a hard these business in sales. just I'm new Thank reconciling with all time having a So, factors GBS you. decline

Craig W. Safian

and Yeah. will wrap Gene on start up then off Jeff, I'll the question.

I think consider. a things few to

So saw we the decline than number one, in QX. new was what business actually in better

new on saw So, the from of to performance side. business we acceleration an actually QX QX

enterprise new new the amount those a business licenses, sell areas worth was making And and they did business developers, now still incremental attempting while decent to, account leadership learning bulk but sold the migrate there to all accounts, councils transition renewing to. those executives The those account if who other sell mentioning, the products The the councils, were business. seat-based covered new business, were the products. businesses that smaller within seat-based or executives functional those into they new by they're some of incremental thing to of functions did leadership selling want

expected, taking is that as we some with time, team. the that that so, given And all implemented we've change

year less than first time. Gartner, year as thing of very worth first know, over productivity this your who have we proportion you and or last generally with terms is improve the one other sellers in And that talked it see is low mentioning in we They the from high and are year. have a such we of low, their capacity experience. incremental about The experience quarter in relatively our of

the essentially and doing way foundation XXXX, all XXXX we're the about again, formula so, in apply right we the really things. think laying and beyond. We And for growth accelerated know is this to we're the

Jeffrey P. Meuler

Thank you.

Operator

ahead. Manav of The will from next question be Please Barclays. go Patnaik

Manav Patnaik

sell subscribing how pushing on are that understand the morning, trying back gentlemen. offering I trying there. Good in the then question clients providing folk for us your switching like are and, I choosing does and on guess, My help are then, understand that you much was, to to time staff, how to? your maybe Thank spending not But the that they're imply for new renewals, you. I just much comment they're guess, seat-based your when in go renewals of presumably, support first terms they're to that? can Like, because of

Eugene A. Hall

Manav. Gene, It's

we're the with they forever, client a want approached we've to with this, happy So, and that if happy have keep philosophy product renewing basically, that. with an we existing

And to it. increase it the to we're we them year, so, through we want with do are our little go and do renewing is satisfied what with do keep products happy price we and legacy a let we clients each and that have very those and

them those products. show about some we new have value, the sell the higher, For by we that priced whatever, and questions way, products, go we and the new them higher, are which substantially

actually we're existing So, that the We're sales uptake necessarily good the actually clients seat-based among I'm happy of good substantial and in the a uptake conversion and not executive our that product. channel. say, account with getting getting portion

It's happy be them on so, cost, actually is And the legacy going the great happy to would are our got keep margins client that We're with not we're and other renewing. it the very selling that thing low a gross incremental We've focus – renewing. we for great – sales about new. if margins keeps a products.

proposals salespeople a the as now and we've been is, lot new declining will them, switching you but amount new has get the that's on meantime, covers, to added what's people, stopped obviously, so products, productivity the selling kind is been go as because we'll expect sales have Their capacity, proposals, said, mentioned, clients didn't selling and curve. of has any binary in legacy because said, year. that we they As been going though making the the seat-based first the that product flat a in based then trends, rising sense, first rapidly we in the of the ahead under far, know, lowest, you and as been let change. of Craig they've and And to the stop, their pipeline, And I also, Craig on products, close. the even year. In and up first year you train in hire newer you

Manav Patnaik

it. Got

I anecdotally growth in how next take what expect of see double-digit how in we your or, what's does either kind cadence don't I sort it Okay. you of quarterly get Like in when And broadly, midyear? like terms then understand guess, mean, there. start you to long detail does of up and should by year just showing XXXX, of to I that, growth it there? to XX% know, into get makes commitment maybe get on guys sense go guess, this I going I to terms But

Craig W. Safian

target, Manav. confidence committed and as laid The in it morning, sense end we as been. think Good target is, that that the remain that XXXX. of hopefully, the expressed Gene a obviously, out And way about target by we to we've our ability for nail we've the got to you've

course is rate commit will or not quarter. to is the should percentage we expectation baseline a see going XXXX. see Our not The to progress number. huge We're over certain of a by

to a bit next of end being hit is downside. of a or upside able by to double-digit bit sensitive it committed to XXX% remain the we But So, little year. little growth that CV target

Eugene A. Hall

Yeah.

to new need. we've we we out rate need, productivity renewal what productivity to target. modeled get that So, what rates what need – business do Like what sales need, to we Manav, quarter-by-quarter, what we

dream. basically know so, a It's hope out. And do. what a and modeled We have it's we to it not we've

think zero do three and Our teams of we sales be know going double sudden see service all and the quarters to and throughout what XXXX. it we'll of goes teams not digit. to acceleration it's they then have And growth a to

You'll see the acceleration.

Manav Patnaik

right. All it. Thanks, Got guys.

Operator

Please Bisbee will ahead. from question Bank America next Merrill Lynch. of go The be Gary of

Gary Bisbee

(XX:XX) guys.

today. you I in growth it's pace of plan meaningfully should step of of or to work and would this that, continuing sales – a sales kind you contract we hiring? need would likely In excess value well to of head count deliver? expect staff you up value think in through need to next the year, of productivity to think slowing you're the hit it mean, that the expect season would you with But head continued that obviously, pace while to double-digit substantially do growth GBS. what words, faster that deliver hiring count it the sales So, contract other can while you

Eugene A. Hall

still GBS believe faster has low. we the basis, on a penetration GTS sustained to grow the potential because So, is that than

actually that, exceed just but to a I sales than our from hit very I'm to we're the not bigger and GTS, increasing but saying XX%, number we're – so, growing good. – which is sales And won't count far head getting our number, we're head exact count to not

laid speed. anticipation as And so, our question that those soon earlier, get hit the not the that, actually, but first people Craig go your growing part the GBS sales answer to we're as to up with of will we out is will those count targets head the just beyond we

In terms there... the numbers specific of

Craig W. Safian

mentioned, things one And have more. count of The way about Good We'll we're be last learned the end the head of when that observed of frontline as year-over-year as that Gary. – decade to and think at about end sellers that the in at morning, sell over GBS the so we XX% XXXX. we QX. we've Yeah. executed Gene actually or more of in and neighborhood sellers,

what a no And productivity in productivity GTS help from be experience, or we well. as as mirror the is obviously people perspective, head the back one of required, term. based we've where into year the so, terms that a We'll long XXXX the in GTS or roll delivering today shouldn't than largest as And And delivering year over target you it have will productivity productivity we've higher there's laid It opening of productivity more we'll ever out. on that with perspective to perspective. more from extrapolate which fraction why going would that next think is than XX% are of a achieve XXXX but of you can a entering into a is army there. out people percentage count had past, who year GBS we've said have sales we reason from we're more currently GBS be the a enter

in of, at a of XX% it's the We and is believe XX% enormous hit end end Gene's and year combination to market opportunity to point, untapped. we're so, vast just XXXX. game next And and at the not that this of

capacity driving actually after accelerate to growth go or count that into adding head so, and count opportunity our And future. we're head the market growth big

Gary Bisbee

Okay. Great. just then Craig. a And follow-up

you'd this haven't moving at beaten more forward? a we have convincingly, going of lot your tax these quarterly predictable, set back ability the Are you predictable. now the been performance Thank look year you business you've EPS below-the-line and an with through where lot. I realize with I but But might items. divestitures, when there's quite moved some and your numbers to parts all full-year that moving the everything? the expect should of you. fairly to have awful bogey or now out factors around be divestitures some expect So one should to do that the the spending Are place a we predict do moving financial be around in continue quarter-to-quarter to

Craig W. Safian

executed out right. of going a assets now we've from a It noisy a CEB a operations, excluding or document you can that to, P&L divested website, – which set there's few we on four if from to businesses gone you'll adjusted view, like in provide investors great of – Gartner. these really were perspective. perspective, things businesses so never efforts supplemental the find our we were to part why as that major see to our with as the acquisition. plan what you're So, EPS And And a the the came over looks part divestiture we've that's down has divestitures the on been on,

into from a, getting environment that I'd call, much more operating normal so, of perspective. what And we're

predictable. the I business businesses, highly, a and with there subscription predictability great think, is Obviously, is associated degrees them. are highly, highly with of research business Gary, our different

Some businesses down up a variability prior. haven't been around little bit more cause guidance the exactly foreign them. what have a that, of compared we months go which go And in numbers exchange environment XXX% even either, our top was other of to can on to three stable or

normal, predictable that variability, terms I you're now and the going behind some of our So won't more businesses in little a, forward. predictability environment businesses is right, your it and of right a more noise remains same we're normal us, expect bit with the the of subscription-based think other and of have call revenue, a but completely we'd really a lot operating in I that assertion

Gary Bisbee

you. Thank

Operator

The of will Warmington Wells Please be next Fargo. from question Bill ahead. go

William A. Warmington

Good everyone. morning,

So could very just strong. driving a revenue question contribution and and all hoping you was I margin on that. was growth what that on for attendees the comment same-event looked you

Eugene A. Hall

Bill, we've events, that basically, marketing. Clients and and have a So, have seeing lot content, come in at It's it of based we we our obviously it. great that great we in business, been of that, business. the on kind value very Research as Events research as are simple marketing those effective for our from clients –

clients that and so, it a And value why growth. of of come you're that's and seeing the get out lot

Craig W. Safian

it's not you event when some leveraged the extent. again, nearly lot business, at an And our a see to growth of as obviously Research as or of the because the foundation business, conference are but the costs of fixed

exhibitors when So more more we have and attendees, flows through nicely. it very

William A. Warmington

growth fourth then guidance is the And us could fourth GTS operations, growth sense get Okay. assumption you what of quarter without of comment in give and CV quarter a if to GBS some both that? in CV that guidance terms discontinued on for

Craig W. Safian

out essentially But growth. quarter. guide extrapolation of CV historically an of guided contract there Yeah, we the don't contract is runs Bill, on ending the in Essentially have or CV kind that QX revenue and the on – value value, the in not growth. we just

William A. Warmington

you. thank Well, right. All it. Got

Operator

Sachs. will Please next from The be question ahead. of Goldman go Tong George

George Tong

Good morning. Thanks. Hi.

levels development earlier from Within the while has account selling the execs that indicated that pace GBS is GTS improved quarters. segment, learning and a slower of productivity had comparable curve, you have business to

on growth the CV that Given those factors accelerating from dynamics, prevented can you prior quarter? elaborate the from

Eugene A. Hall

George. Hi,

there's on productivity. because good Just and wasn't the productivity product new developers, the And AE wasn't the of what's as They BD again, to is uptick proceeding sales the an it's GTS. the had on they that productivity curve, a clear, uptick business legacy as BD sales the had of products. as of on so in but like fall-off in And as learning well. quick terrible good It before. going side, is so, BD be then –

it was on productivity on the BD products was the good the good. seeing not you're new reason the legacy So, is, and products

been it's didn't the productivity, AE lot. – On change a that based so

legacy GTS just about On up the going at increase has because been hasn't AE what's of of fall-off made seat-based productivity, wasn't it products. far so And is levels. risen net that productivity the on substantially the AE for equally in with the

that for It's Now, because, opportunities. we will encouraged we're there's a over And additional the mentioned, workload we're to and around, selling of priced sale have going AEs time number higher renewals the secondly, the reducing that product as turn that I new seat-based see. to well. as products, productivity up business have more is started that their new

up. this with having more more pricing, additional gone the has are but it's Those have yet, in having sell. that – in to over so time combination the numbers workload, productivity we their a of underlying in we factors the seat-based that and where sale hasn't that, new see renewals, – happened it time workload having smaller addition have opportunities, you can then So, it higher products to reduced

their that selling in now, which will they're We continue again, sold the it first for to now continue doing already second, XXXX. We're through getting we'll people business throughout do And productivity. it but do third, have to their product, acceleration fourth, seat-based the increases that new XXXX.

George Tong

helpful. it. That's Got

quarter You'd in down GBS XXXX? by target to new trend business you to last growth and does how new quarter. it X% was indicated in your order for need CV double-digit was that What business the hit

Craig W. Safian

Hey. Good morning, George.

business about compared QX, year. in new to So, down XX% was the prior

mentioned to from which improvement great. a QX actually we question, I is as on previous So saw QX, a nice

say, I continuing growth to simple target to improve will contract for allow think earlier, about Number levers that progress two double-digit we've one allow And and rates. that, us simple I obviously, that there's three rates. to that nice XXXX. the us work to on get we is retention to should levers, or get seen value GBS retention as that on talked

intent big GBS will over you pretty a and that of on which retention GTS, are between we However, note wallet retention time. of wallet closing there's gap still

what we're equate is number that to sales help significantly growth. for path And that's Number that business capacity support terms that And perspective. kinds really what one. new that business can GTS growth will on us. look obviously, have lastly, we're CV use a doing will And growth. you that selling And then, more at mid-teen from going as number. So double-digit you to into more in kind and to double-digit is of of two, required a in new again, of and guide

growing double-digit into think I contract see to as expect new growth future. would a the well perspective double-digit growth so, to value support at business And rates sustainable from we

George Tong

Got helpful. you. it. Very Thank

Operator

And Please go be for gentlemen, have Markets. and question will of ahead. we Capital one it time ladies additional from Silber BMO and Jeff

Henry Sou Chien

guys. It's for on Hey, Henry in. Thanks Jeff. for squeezing me Chien

the Just wanted business. to ask about GTS

seems are it both it is you're productivity going seems So, there. like and really really CV and strong gains nice seeing like in things growth well

a that pace a you're at is just steady that any curious, area that to that thinking investment You want for of you? keep about. upcoming sort and Just level cycles business in satisfying

Eugene A. Hall

We'd levers. satisfied all rate rate. The GTS, great. the terrific. is we're have working growth growth we're We're in higher doing not growth Henry, and like the So, with to

salesperson. are we we work improving improve So, to to we new improving continue per and believe retention And can on business we are on retention. continuing work continuing to

While talked that capacity productively rate rate set believe is that. salespeople. I've manage the third the also the as it's it what want the can lever, improve grow get we can the grow to of good, at think managers we And And is number have about we programs by additional believe salespeople. we we to in we we past, the and their have and again, sales deploy better force we to

if so, we'd that, salespeople, team's growth as to can in accelerate meaning accept management head ability rate And we increase the our well. our count more

those of we're And so, levers. three all working

as So again, not for and great, that. significantly satisfied growth productivity our you better. said, while, CV GTS is is aspiration And with we're

Henry Sou Chien

it. Got

content of That's that been in of great. supply have you is that Is see mentioned right the sort sort growth. in the just terms still past, for trends GTS, any for case accelerating you product and good of I marketing, I there sort the know that Okay. drivers know now? or lines chain And by of the that

Craig W. Safian

in I contributors to opportunity is as think have we tremendous And we that all be growth acceleration all across the the the we that the serve our expectation Yeah, functional the we will business, accelerate functional serve. growth in areas healthy rate. GBS areas

Henry Sou Chien

Okay. Great. Thanks, guys.

Operator

session. over hand conference and And Mr. our closing his back like to will end remarks. ladies to to the the would gentlemen, Hall for of I us bring this Q&A

Eugene A. Hall

as today, so you do heard success to our right strengthened of to Formula. in the our Events. Gartner drive Research, we Well, have business and all the applying things three Consulting, We businesses: by know

to next vast quarter. you opportunity us and joining We've in strong look there track in performance. deliver organization market as we're cash on flow today sustained deliver well. put revenues, growth We've resulting incredible that to and Our for of GTS enterprise. forward and accelerate the major sustained continues double-digit deliver much to Thanks growth will functioning we GBS, place double-digit We in learning value foundation earnings, for curve to for the updating every to years come.

Operator

Thank sir. has and attending presentation. conference for Ladies concluded. you, Thank gentlemen, today's the now you

You may now disconnect your lines.

Gartner (IT) 1 Nov 182018 Q3 Earnings call transcript