Earnings call transcript Q1 2023

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

David Cohen

Good morning, everyone. Welcome to Gartner’s First Quarter 2023 Earnings Call. I’m David Cohen, SVP of Investor Relations. [Operator Instructions] After comments by Gene Hall, Gartner’s Chief Executive Officer; and Craig Safian, Gartner’s Chief Financial Officer there will be a question-and-answer session. Please be advised that today’s conference is being recorded.

both a outlook first in for release earnings include results XXXX today’s will site and Gartner’s our and XXXX supplement call discussion quarter of financial earnings investor.gartner.com. This to posted as disclosed

On EBITDA for the as in adjusted to and release adjustments are our the call, earnings otherwise, with subsequent. references stated described unless all EBITDA,

All exits. contributions website. for in Our All non-GAAP and available otherwise. unless foreign exchange numbers average XXXX stated stated references are based diluted counts gartner.com contract on are divestiture Gene’s use the unless to in Investor values share and are rates share all recent and growth we associated related exclude fully Relations counts comments growth otherwise. the section neutral, the for rates Russia Reconciliations we the weighted discuss FX to of rates are

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

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

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

Gene Hall

EBITDA contract drove revenue, today. morning. in performance in EPS. strong Good value, first us the with thanks Gartner for growth And quarter double-digit joining and

these the guidance. makes and actionable interest industries enterprises continues for been serve. adjusting their accelerate. post-pandemic teams industry and inflation to rising source is with The the and between they advice that banking the rate and more. the Enterprise and tools rates. best have tech The demand. of need failure change Many is sector by Gartner in success objective rising to impacted leaders insights, is uncertainty The difference world grappling and leaders for

agile with the changing to times. continue be We

our decisions and segment. whether guide achieve or most between. better thriving, struggling clients in our helping and functions. anywhere leaders they’re major be priorities, profitable their make enterprise We’re largest mission-critical the to all continues across We Research

is sectors, vast more geographies. and ever. value delivering across opportunity market than Our sizes And all we’re

a continue strong we analytics, slower cybersecurity, contract including quarter, artificial cost End portion than non-subscription by helped Contract intelligence, work, first traffic, grew contract was clients business. technology double-digit clients. more. optimization Research growth in value the value was research range XX%. of both also remote of In growth affected data average X%. value Total our affected growth user revenue with rates. at vendor to our grow and GBS for This GTS the and

CEOs Sales, their includes able proven or sales, finance, value value and GBS, including HR, two our to their serve and sales grew contract vendors, Through of teams Sales, serves teams or teams beyond channels. leaders IT. managers. This and to X%. legal practices, and serves serves Business GTS unparalleled contract leaders GBS and chain, execution also deliver and We product distinct through value we’re XX%. grew clients. more. technology GTS, within relentless executives leaders marketing, GTS Technology IT. supply Global Global their

Clients Gartner to Research. continue prioritize

qualified in-person conferences a Our engaged of Gartner XXXX. year will Conferences to deliver despite full environment. audience. and first valuable business external complicated the insights volatile remains resilient be and since extraordinarily This

levels, excellent. Attention be continues start. is and advanced at to We’re strong, off to record feedback bookings are a great

is first project-based work. quarter. Consulting Consulting through Consulting deeper, of Gartner an Research. strategic Research is execute to in Gartner extension clients our most IT XX% complement important revenue the extended, their grew business. an initiatives Consulting helps

talented our by Our business associates. fueled highly is

our and long-term hiring aligned recent our We demand have carefully with opportunity.

long-term, positioned drive growth. We sustained double-digit well to are

global environment. of finished ahead the our despite expectations We volatility in QX

higher-than-normal in more level detail. a We’re increasing the take through allowing guidance Craig will world. our outlook of for you in still uncertainty for XXXX, our while

In closing, anywhere of and in their enterprise We between. growth. function achieved teams leaders or value across are to unparalleled deliver whether another quarter struggling they strong thriving, Gartner every major

exceptionally right things the in be agile the and continuously adapt successful changing to we environment. and world, We’re to to know do any

Looking ahead, positioned record continue to our into far we sustained are the of future. well success

We expect in net free modestly we over generate flow increase margins significant to well cash income. of And time. excess

and excess we Even over time. levels significant to of reduces growth, shares as for shareholders, capital we’ll return outstanding invest which increases our future returns

hand over I’ll to Safian. our that, Financial the Craig call Officer, Chief With

Craig Safian

you, Thank morning. good Gene. And

growth revenue, First quarter stronger FX-neutral than adjusted results EBITDA our were strong EPS. growth reported in value, even and contract results. was with double-digit

upside delivered again management. revenue also our and our increasing With We results Consulting are we and of reflected better-than-planned ahead cost guidance. The Conferences EBITDA expectations, stronger XXXX margins. disciplined

quarter was reported XX% up and neutral. FX First revenue billion, year-over-year XX% $X.X as

addition, In year. prior total XX%, XXX points down margin contribution basis the versus was

million, year-over-year $XXX XX% XX% was up neutral. EBITDA and up FX

Adjusted $X.XX XX%. EPS was up

million. And the in $XXX was free cash flow quarter

year with prior X% from end quarter up quarter. XX% associates, fourth and the from the finished We XX,XXX the of the

We from perspective our headcount opportunities a low ten-year invest calibrate and expenses based growth operating associates up territories we of near-term open coming to new are to curve. and revenue with on carefully well the the And and positioned talent for levels will future. continue

X% grew basis. year-over-year quarter FX-neutral first the in as an and X% on revenue Research reported

Subscription XX%, FX grew revenue neutral.

to travel. have margin caught as we contribution and on down expected XX%, new was quarter return one hiring levels First point the research up about of

or the the up Contract prior end of CV billion first XX% the value at versus $X.X quarter, year. was

both neutral grew growth divestiture. recent one research value with of and at metric the is enterprise The GBS compared in CV million. performance mid-single was Quarterly grew digits every excludes $XX first outstanding teens ever last from high quarters the double-digit net growth function CV provide. on and GTS from nearly quarter to our and year quarter FX XXXX. across increase, Russia strongest we CV tech was rates. of NCVI, leaders first or vendors contract

metric. As we’ve this there discussed is in in notable the past, seasonality

transportation, sectors rates other single-digit media, of in sectors, across fastest and and retail our practices, technology industry practices, We the broad-based grew our was all enterprise all Across double-digit company categories. and regions. which mid-single-digit both geographic growth public The rates. growth high sectors. at sizes growth had across than grew size at CV industry was combined

double-digit growth ten high in of We top single-digit drove also or countries. all our

$X.X the value Technology contract the end quarterly Global billion first of NCVI X% year. was had at prior million. GTS Sales quarter, the of up $XX versus

high was year metric. GTS for prior the to retention this a compares for XXX% the While XXX% we quarter, which for when record saw in

tech retention While was business year. a last under net on spend compared GTS the X% versus our year. to new clients pressure, prior wallet basis, us more with remained vendor down

compared compare. year against prior leaders tough function the IT with to business increased the New

tech very with business declined last New performance vendors strong versus year.

GTS year-over-year growth a up on XX% XX% quota-bearing headcount compound annual basis. and rate was X-year

on manage hiring opportunity. both the short-term performance to We and medium-term will continue based

set Our GTS can supplement. full regular be metrics found of earnings the our in of appendix

quarter, contract $XXX which end the end XX%. the of XX% XX% medium-term first up value was at Sales at is the high to of million Business Global year-over-year, of our outlook

million our than Supply double-digit than $XX fourth sales continued of practices increased chain faster GBS at grew and and other rates. marketing XX%. All the CV GBS both quarter. to from HR grow

we XXX% to saw XXX% was GBS compares for when the which quarter, year metric. prior in for this result the for the retention highest end While

last GBS divestiture. two-year headcount our headcount client very clients X% X%. annual they The to new with new compared significantly the was to against for up XX% than growth continued strong with associated year down more GBS addition QX year spent year-over-year. business did compare. rate business us excludes strong quota-bearing a In ago. was compound retention, was a This

set full appendix regular our of can found supplement. GTS, with be in the As GBS earnings our metrics of

was first and our with ahead the for Conferences we saw $XX of strong attendees. expectations as revenue quarter both million, performance exhibitors

but is quarter quarter, the off year. a destination for in quarter Contribution margin first XX%, ten with seasonality. seasonally we to We start the small strong conferences The always the was consistent all are in-person. held a typical quarter, in

increased quarter quarter, to and margin $XXX million. travel. year-over-year with the incremental revenues were the consistent first to by Consulting On revenues FX-neutral basis, Consulting contribution up an return XX% in First XX%. hiring was XX%

and on continued X% stream. million, QX an XX $XXX FX-neutral Labor-based revenues neutral XX% with versus last an March Backlog on FX booking basis. year was up increasing million, X% $XX year-over-year at basis were of up

another XX% XX% the basis reported Our versus year. as on FX-neutral and had very up Contract strong quarter, business prior an Optimization

in As the of part detailed past, this Consulting we have variable. the segment highly is

in continued quarter reported Consolidated first FX-neutral cost as of year-over-year XX% driver the to increase XX% on support an increased basis. was higher the services strong growth. of and The biggest headcount our

with return a increase also conferences. in-person to saw We cost in year-over-year an

growth. associated basis. estate in year-over-year the the an on of as X% quarter real result a partially FX-neutral offset SG&A The increased increased by first X% rationalization. increase was with reported charges and as SG&A in headcount lower quarter

XX% up year-over-year FX EBITDA was basis first for up a million, and neutral. XX% quarter $XXX the on reported

exceeding to quarter our expectations and and our in expense revenue First Conferences upside planning. Consulting EBITDA reflected guidance prudent

$XX up was of modestly quarter to the million in compared Depreciation XXXX.

interest deferred Net hedged in balances. cash is the quarter financing modest million, quarter rate first down resulting million debt the we expense, from on $X versus our XXXX, $XX interest excluding through have The of was income higher costs floating maturity. fully

tax adjust for that The XX% net quarter. QX used income, XX% adjusted the the adjusted to The for tax rate, was income the rate quarter. for which we calculation use for the of items was

X% close an quarter. XX% shares in XX million We first on shares EPS the up $X.XX, or unweighted reduction a the million about QX three had with quarter year-over-year. basis. We to first about exited of million shares year-over-year. in Adjusted was outstanding is This XX

cash X% year. $XXX was for the last to quarter Operating compared flow down million,

technology and equipment as the up for million, a quarter XX% CapEx was in associates. investments an year-over-year for modernization result of new increase $XX

percent on four-quarter income EBITDA. rate GAAP Free $XXX the and quarter free gains, XX% of cash as impact of revenue for and a after-tax was the cash flow from of flow revenue Free net conversion XX% divestiture interest a was flow basis rolling swap for XXX%. was Adjusted cash million. the of

CV Our is generally conversion flow is cash higher accelerating. when growth free

million At of quarter, the first of the cash. we $XXX had end

Our March balance XX debt $X.X billion. was

gross reported two was trailing EBITDA under to Our debt times. XX-month

on revolver balance cash strategy repurchases and to of tuck-in remaining cash on free Our provides share available capital flow M&A. and allocation expected sheet excess strategic liquidity ample the generation, deliver our

balance liquidity, very sheet levels of low Our of rates. effectively $X.X is billion with and strong fixed interest leverage

March stock more during the had We million quarter. $XXX share on about our $XXX than remaining of at We first million repurchase authorization XX. repurchased

shrink. time. will share shares, per to This base combined also delivers capital is we invested capital As repurchase earnings profits returns on and continue to with increasing accretive growing our over

still increasing the while strong level full to the in year world. higher-than-normal reflect QX our are We performance, allowing for a guidance uncertainty of

As more the we growth. visibility revenue needed through and the and year, to business corresponding support have into expenses drive we the the move outlook

proposition continue value research, clients very and For compelling for prospects. provide we a to innovate and

compares across XXXX with as Our business we two. allows plans for last for quarter GBS and We’ve range tough particularly the in higher-than-normal outcomes and another of for got vendors discussed quarter. tech or a

We’ve taken we’ve on guidance. a which in prudent trends, reflected historical approach based the

of the We direct part of destination expect faces continues and XXXX part is than XX XXX% conferences segment. stronger seasonality the person. outlook to has different the tech business our the to non-subscription in based vendor calendar, There the The is be non-subscription for the of The which from to tough matter. based conferences spending. subscription on running than growth more compares the historical business business exposure on

largest year. expect quarter the QX QX of and the be the be We smallest to to

very variable. revenues, than we backlog highly fourth contract second half usual. as the We and in year quarter pipeline had quarter. based into second the the especially on optimization our composition Consulting Contract of optimization a more in remains XXXX, in For visibility strong have the

built behind this we original growth with future guidance. run investing can QX year, while expenses the the lower for we successfully into we consolidated than for comfortable With are us, business

both expense will and We margins. future continue to support strong to growth prudently manage deliver

X% XXXX Our growth updated $X.XXX of modestly Research February. FX-neutral revenue for QX guidance X% billion, least We divestiture. follows: research about excluding which expect the from up or is guidance at is is revenue as of

revenue Conferences at is $XXX least XX%. about of We expect growth of million, which

Conferences outlook by our million. for increased have $XX We

outlook result revenue modest increase least of growth growth consolidated about million. least of FX at February. neutral X%. which million, an $XX The and increased we’ve at Consulting expect revenue billion, for Overall, of outlook is which from revenue a X% a is $X.XX $XXX is our by We FX-neutral of

$XX now an for quarter, I and in expenses revenue, the million mentioned EBITDA year applies cash planning prudent free increase prior least well. taken to We $X.XX This As flow. operating of our in to up approach last a at margin full and XXXX. expect from as outlook our billion, we’ve guidance

to stronger economic revenue We of We than EBITDA. $X.XX. our is expect adjusted expect guidance to EPS at deliver our If outlook, to we be least on upside margin in XXXX now able most scenarios. expect

million. from flow free proceeds. This GAAP still least income reflects For almost of conversion $XXX excluding XXXX, net of the divestiture XXX% the expect after-tax at we cash

weighted repurchases which guidance Our March. based diluted of fully made on shares outstanding, the is through XX average million end reflects the

the Finally, expect EBITDA at quarter second of for we of least XXXX, million. $XXX

the performance and of to returning on than our notable flow the cash strong shareholders million our have $X despite year to continuing double more first our over free global repurchased value XXXX. more Contract behalf remain overall Conferences XX%. profitability. with in uncertainty committed We and recent to we deploy capital Combining divestiture, shareholders. billion excess had start of than after-tax in available $XXX We to generation proceeds our of expected quarter grew the a with EPS stock macro digits. during grew

grow model XX% are financial and the deploy expansion, XX% gross of research Looking benefits modestly our free fast margins. our in our the growth, EBITDA we capital clients we strategic G&A growth. We of on we’ll least out growing medium leverage, time as flow value-enhancing to double-digit because time With term, expectations over as continue CV M&A. upfront. sales revenue us repurchases, needs on margin CV our cash tuck-in can line and And with can lower share CapEx will count to With over modest share which and unchanged. over paying costs the deliver expand and at

take and With questions. to that, operator, to the happy turn over be Operator? call your I’ll back the we’ll

Operator

comes Meuler from Jeffrey question first Our from Baird. Instructions] [Operator you. Thank

line is Your open.

Jeffrey Meuler

thank Yes, you.

in CV channel. going relative later still vendor tough in I the is are it the know comp. that still considering tech is year. you good two. the sounds said to weakness or I the So concentrated thought and I don’t was quarter comps like what macro just But another do macro the know

stepping in on retention a So, that’s on sequential sold I basis, guess, new adjusted seasonally the trends for in incremental any stabilized up any look the after with a renewal or sector at and question have the of business business have recent kind a last down trends those basis as it? sort on channel banking seen Or you coming of vendor effects metrics quarterly guess weakening, I concentrated quarter is, year? challenges including you derivative from tech

Gene Hall

Jeff, it’s Gene.

because the on are is year-over-year whole very for I things the two going tech ago. factors on biggest there described. then realigning it that’s business. it’s industry but strong impacting is think year those the comparison just characterized which you is our right, business, the that’s a the and going tough as you And such a are going are big on, affecting smaller are And that things

Jeffrey Meuler

for deterioration, like incremental challenges, Okay. the smaller a things, those But you? or banking they that is including are causing meaningful factor are not

Gene Hall

I would I small Yes, – it’s to think characterize meaningful. don’t opposed as it as

pretty less but selling we’re that’s clearly, isolated. Republic, Bank So at or Valley Silicon

China. always things segments perfect. But like there that surprisingly we countries like on. regional like is with some so things is going And increased were there and There not like isolated going have that are on, that things banks, are always

Jeffrey Meuler

I you And well guess, guess, generative sales Got on demand the as risks Thanks. your hot easier benefits how any risks client content areas platform, curate your opportunities a love it. that the along a just Also how library, with fronts, becomes could high-quality could to you you to about client engagement. Good productivity, the via curious productivity, that I then improving publicly given topic number to AI, content I perspective, potential think experience on including the I lot and are research AI. among hear. anything as potential and see of mentioned on available drive implementing Gene from on me, And it. generative just on, far

Gene Hall

Yes.

So business. we see really generative our AI as being for helpful

we’ve you coming of had years publicly are a where teams five lot ago, there of information. As humans we said, internal had – available through efficiencies

things to. of on Now continue we to our actually we’ll AI those efficiency improve today use generative kinds and

And that of in now surprises interface to testing situations. we’ll and to I’m the of some correctly we’re point, have language our at second you seen doesn’t sure it is and sure it have a more testing, make public The get all works some to area any is natural for clients. just are having we as

provide clients see efficiencies, so internal a all, will efficiencies say, interface I’d of going available for an to every will that. business. it tool so be where in as with area time a like our part – great Even better first over it well. frankly, help you clients a our It’s it’s publicly mentioned And salesperson help with wants to internal and synthesized on our of it’s information, it’s if of get help great

so basic with an client demand that’s our area And that well. helps as

situation of about insights, differentiated of there. information process, we’re we the have asked proprietary a proprietary I say which highly insights these independent important you have get, proprietary public of kind quite and You objective. course, because in competitively kind are would we generating is from we our of research lot information, a

been lot efficiencies interface So we has cetera. better clients, helping with say generational a our help both a clients with AI really it, internal probably with of et

Jeffrey Meuler

the comprehensive Thank answer. Appreciate you.

Operator

question. for our next moment One

from question of Balsky We have a from America. Heather Bank

open. is line Your

Heather Balsky

sort my as question. tech taking we of vendors good of think the Hi, year-over-year. move now, about year, CV as comparisons environment right through Thank help of sort you as with the Can for us cadence you into just morning. well especially taking account both your the

quarter? into and the outlook? as improvement kind progresses of Just the sales curious the to softness Thanks. kind fourth based Just expect your of do year you what’s

Craig Safian

This Heather. good morning Craig. Hey question. Great is

how couple a of we back about look. rolls, points little guess, business just I way the as the think historically around bit, a things So, zooming just

generate new the amount our business of there’s quarter And year. in the fourth that. the a first of pipeline lot lowest in make quarter reasons we amount amount So, dollars builds fourth the over quarter. of We’ve and we quarter. of to most got least a dollars sort quarter. of positions for our of generally, of through We changes of in new more new work the conferences year quarter our quarters. But lot the business new first and quarter, and the a in the that We that fourth lot business. lot business, of leverage in promotions Fourth a typically first

more CV be to quarter can In quarter terms of of CV lot. It the expiring. is that and way of terms the vary bit a first amount flows, the weighted tend little a in fourth heavily

Our pull But QX sales as teams they highest our expiration QX will also business see quarters. typically often opportunities. are forward and

terms vendor us just is the comparison on look clients of toughest at In comparisons was can and QX productivity, most I comps still our with the for growth, contract retention, you about pretty it. GBS. think, you back, QX peak are and comparisons, wallet overall every and/or measure XXXX of the if whether The and with you tech look name through QX, value it tough notably the

new So our and board, really if course again, and of our with of building comparison and a as the our very help slate we’ll GBS. you well. clients was cadence, bit building comparisons et it’s new about year. QX, but at QX across as dollars The with our business full the the as mentioned, comparison I’d most a think Gene year. look go still, business, conferences of high the business point research pipelines the if across do growth, the notably got entire still you little a And ease is half vendors we as and get need tech a there comparison We’ve again, in-person normal say, be even still again, as clients But metrics potential tough tough and CV the pretty into back well. second our over cetera, well. a

well, deliver and to new the deliver So we business we as great rates the our our can we so all need deliver that we're focused also through on to to clients, making sure value pipeline those drive opportunities work well. as renewal

Heather Balsky

whether in you. retention it's like Thank banks, customer to and GTS follow-up, them research active in are realigning as from Thanks. an both my on strong? say what's doing seeing GBS the the And right tech that. customers what going industry, [indiscernible] keeping that the perspective on keeping now, side Gartner I you we're appreciate to environment

Gene Hall

question. Yes, it's great a

always most are on we're on that things focused So important research our the to clients.

be that's focused down today, really cybersecurity. about If are it enterprises the as area guard a so help today we're an few can that that let you things like think can they There would on. only cybersecurity their and get,

other using data and their one analytics The business. is

the cost lot on a that a making to they do they business. little understand The perhaps. still sure other We is demand how one digital cost value optimize tougher see conversion of in optimization, environment

lot We of also optimizing like a things computing. see demand on cloud

some research focusing wrestle making some is going cloud the of our leaders organizations are the really are with still optimizing tough that the focused senior analytics, issues struggling, you're have these those really which our for So examples. are like with, we're examples. issues on But And research important, and cybersecurity to data are way clients and those on is things sure computing. to that even deal

whether it's something that struggling they're thriving. so clients are whether or And applies

Heather Balsky

very Great. much. Thanks

Operator

Thank you. One moment.

Kaplan a with Toni have question We Morgan Stanley. from

Your line is open.

Toni Kaplan

the except much. positive there, give on prepared for little areas sales seeing? more Thank some mentioned anything just about and more comp? color you is ask each you're a grew of I remarks GBS, Can quarter, a that just are sure bit you – in and digits, all of is to tough maybe negative. some so the are double a know Or Wanted maybe what that I'm slowed Or marketing.

to it is there? call or anything normal So out of sort

Gene Hall

a great Yes. Toni, question. it's

nothing they GBS have other marketing and it's if There's So are good look as sales effectiveness any our well together. as isn't doing the in working business, kind operational well, own is more the some always all growth, operational It's marketplace that going well about that intrinsic. all units great other the quite of of great. working were you strong, what's as units sort we in and and that's as that and in aren't it's at pieces of because very there's are as some strongest have or the like still working there's The GBS not they really all pieces not something the had that kind GBS. making that. sure extremely parts in well. nothing just really together But strong It There's of as but functions. of growth is

Toni Kaplan

are Great. also the later Wanted it salespeople, lot imagine to ask we I about labor guess had sort tighter I of than in was now the history market. how better potential retention of Could a recent should about thinking talk when you it's that productivity that maybe a this And sort with if regard improvement have to salespeople? year? about maturity of of guide see the upside for we result. as

Gene Hall

business question, it's our Toni, behind Yes, to in caught business of current great which to years. are now last and We're the is up, fully fantastic. future We couple salespeople got and over both growth. hiring a critical

takes low about our We we've salespeople. our lowest get have It number ever very to productivity. years of with to open turnover salespeople seen And three among positions. our full the is

recently, that be they get salespeople we've about to are growth XXXX business powering of productivity. full when you XXXX these and think all up So in to added the going really

lower this as rate retention, being the sorry, see rate advantageous to turnover business. higher really – we As retention lower I'm

one us is other hiring for get us do really ever but best we great seen. see markets market either the and salespeople, The the is as We it's of we've needs or salespeople hiring that from salespeople, from for thing can for hiring we growth, have fantastic fantastic. turnover always

Toni Kaplan

you. Perfect. Thank

Operator

will from question Fargo. Seth our next you. with come Thank And Weber Wells

open. Your line is

Seth Weber

I through? ask were that you that about morning. wanted quarter? relative raised there how there last the just EBITDA like for higher something margin feel you Good Or Thanks. you changed else is about Hi. thinking business to the has Is of a year. revenue to function the flowing outlook

Craig Safian

Hey. Good morning, Seth.

revenue So million in drove on were based most prudent as took outlook outlook. balance macro expense we've to, what conferences about. are three we uncertain if as $XX pretty say performance the our operating the four the outlook months we QX and raise that's $XX look at efforts expenses for a based in our the on the we full able by up reduced environment, in and to still of the the million. increase bit. now notably the to million, top you what by year, the a look we've behind EBITDA our year. us outlook entered overall $XX got with pretty – dealing and took the have And approach expenses that all about for line a I'd better OpEx particular of we a like going We refine the planning year, And is talked we

able the And XX% higher outlook again, so to initially well, bit by margins as $XX again, a that's on why yielded and than raise we're we by reduce revenue and little to. the math million OpEx the had that guided

Seth Weber

to guidance? of remember, outlook. there notable Right. pickups out free there? like things and raising call seem were the last anything couple That quarters, that over with that. makes sense. cite flow Anything not Thanks. collections the cash flow And then maybe just I free on Is the some you'd there you maintained cash

Craig Safian

It's Yes. call a good out.

out both of large is very free though a of calculated the as we not strong The as look would think there an very So for associated stepping flow outlook, to extrapolate a additional free number is the forecast. that well, four-quarter we been if main numbers thing raise burden the our the conversion with tax a on and cash basis, back second, I we have still divestitures. cash for cash rolling able

cash year that. initial baked year, proceeds this in sold profit which more was results year, from strong very guidance. February got which a had and we last into We a the business taxes So in small non-core

didn't guide dial enough divestiture. cash with the initial in Our associated taxes

free strong for an is cash main additional tax associated our the with here recent so thing would And have but is really divestiture. raised cash burden flow really,

Seth Weber

you, Got appreciate Thank it. helpful. it. That's I guys.

Operator

William from Thank Instructions] you. Blair. Andrew [Operator Nicholas

open. is line Your

Andrew Nicholas

side? on Thanks where a Hi. on I up the to taking there's upside margins pretty cost talking of implied bit time still earlier then questions guidance ramp-up some bridge for of in And Wanted of through last understanding seems first it year. quarter, that versus from the like start; the on a upside to you the significant or few change follow of the quarter the Good remainder spend a on morning. question. the or EBITDA could came my first, expenses guess, Craig,

little second more just in impression could half I you under that. If the on now bit that give rate. run hiring the activity color was a was

where out So increased next couple just trying to quarters. figure over from the expense comes the of else

Craig Safian

Andrew. Yes, the for Thanks question. absolutely,

most was planning in little the combination and of In as notably quarter. be well prudent Consulting a Conferences, a modest revenue of bit in terms say QX, I'd it in but expense

So way performance. of QX I the describe think the would that's I margin

you terms think expense if as into of increase baseline, looking expenses QX people In sort remember if effect of our like the on you the composition our the number about goes quarters April that of operating expenses three adjusted phasing X. of our and of a business, related, use merit our are forward, and

And OpEx QX. causes step-up in so rolling the that out in a QX, QX,

conference QX. Our calendar up, also QX notably picks most and

expenses up so step associated that. operating And the with in

QX the we pick-up that's so to well. a as OpEx and in spend more tends and and QX, travel seasonally Our pickup

QX support just set those from point conference in out this And keeping volatile probably revenue – listed planned of increase biggest continue then the for mind in the of just we being amount and two rate modest impacting run and sure. year, to the hiring already merit balance the for going calendar lot outlook into the effect dynamics growth. growth And through OpEx, got earlier, proud the so your And I you've hiring we've macro QX. got of again, the now that and OpEx I our got We've a year, to a pretty the again environment. think QX we're carefully is the last

Andrew Nicholas

seem just little also bit hiring on for a kind Very you nimble Thank would and you. need helpful. more does much a away? of a to you guess, people hoard there's it talent you on It feel not ago follow-up, ask is of to impact the Or if growth my all mentioned I talk be front? year bit is your a good you think headcount right bit sales how careful supply, and I one, the little versus like best maybe? like bunch little CV And the dynamic you ability you. different bit about environment you're gap then all between there out environment. have wanted then those can a growth fantastic. talent and why be to so and that today little decide for advantage And to of headcount more Just guess, where growth? being about take you narrower headcount thinking dynamics? that's I Thank how a a can it Gene, potentially

Gene Hall

we're mean, so the reason of so an choice. Andrew, first, I market Yes. is, employer the is good

We the a we brand recruiting have in and great have marketplace, great teams.

we lot a realignment, that technology most well. operational of market why with that companies. top there's reasons in So the the talent then, things compete check whole our going is On are of people for

laying aggressive they're people it so about not off that's And when as if talent and market. helps us the hiring, obviously primary

that fact teams, combination a combined with it's place just scaled we're have the hiring back work, have a talent scaled So are and to lot. competitors we great great great really reputation, a really of our traditional we recruiting a

we really using to so as hire sure people. that make great an And we're opportunity

we look bit growth impact forward, that as the negatively. that want to Craig I doesn't CV our growth remarks, our we, our our margins are net so a turner and our As both well so incorporates have as as in we it we behind said hiring hiring make sure CV we

Andrew Nicholas

Understood. Thank you.

Operator

you. Thank

Our next question Tong Sachs. with Goldman from comes George

Your line is open.

George Tong

Thanks. Alright. Good morning.

Research outside about end You CV relatively of stable talked markets in being vendors. tech

on you seeing are How seeing are topic, you're that characterize what client verticals? can And you back to you How performing? Just would in going environment? selling with cycles? sales budgets what elaborate the other

Gene Hall

George. – So hey,

what most So are in that clients. for important know we're I is. topics what our earlier, that companies sense sure delivery people, it some are our then sales And issues the our that what research clients. the we to And company back people make sales some our strategy can – are the make that up of tailor what is and helping about right I also thriving, on are, talked there normal on those that have front there that the kind again, to with sure problems is it be companies challenged. let's it's which focused working we let's is the more say situation are And gets

things optimization, cloud the issues has every you like if the it's digital cost business, are before, computing, all are, each mentioned of for I they depending we that but of important most look not cybersecurity, and company, kind company as analytics, where them so And optimizing data building the those, a – them. with at on help

George Tong

outline it and hiring the bulk cadence what remainder look year over relates research your this that expectations, of should can you Got it. is behind now like sales the GTS to of the in GBS And you? hiring headcount of as then

Craig Safian

as calibrating across terms in GTS mentioned good morning. we a from lot agility, that and GBS. I frontline particular, George, appropriately we we again and Especially of with in exit are in overall an of all in making are where and perspective year Yes, this and Gene prepared sellers remarks, sure both headcount Gartner both

the agile strong headcount so both And perspective but from on investment that for we've and and sustain perspective. next proposition but recruiting, can great margin can about calibrated range enough be well. we as markets this we fact there's that make sure performance acquisition value we've labor all make organization, so growth enter world-class really the dynamics given from got and feel that a in we as sure deliver We also a year our that And appropriately like also we just talent full of year a a growth, got outcomes associate with well. the are talked the we contract pretty value to

George Tong

Thanks the Got color. it. for

Operator

you. Thank

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

open. Your is line

Jeff Silber

increases lower I know are doing far that renewals seeing of of extending direct Thanks. And to but some year, if or we're contract much. something not necessarily in focus expectations the price pricing can the so Wanted the this so pushing what on what rest for remind environment, been you you've research us through your Thanks year? space considering? Is companies but others you're price. that may competitors, terms taking their this be

Craig Safian

Good morning, Jeff.

our bulk X effect which the pricing, terms so this In impacts on pricing goes of year. our November current into of and

wage we that X% And we to sure inflationary again more of so of the at back and closer X%. cycle you the more to minimum, increases little recall to pricing around were inflation X%, given less to past and roughly inflation, so year seeing the This was we harder range. prices we little we then; are November-ish this are that we if again, a offset X% bit a so on on seeing. went bit a make pressure want a And environment. to price less in increasing much XXXX, little And it XXXX in were wage

generally, In like – that, terms of managed say the or we're environment and to hold our terms. giving terms anything I'd to on we've

giving not our in pushing we on which away of obviously or paid. extra months when we're get up of is very We're so terms front, machine. And still could flow hard core cash getting a part free days paid

overall about small and Gene pretty I contracts representing the our a clients, budgets. our of As all items in their ticket or have teeny for past, generally talked are relatively small-ish portion

and our to not again, we're pricing without well. and negotiations not on generally without discounting as but strong hold able to And holding so terms so our no structure, conversations,

Jeff Silber

I it utilization choppy, going or that first quarter. segment, If the Thanks. the to Can was we what be helpful. year pretty know what's That's Consulting can on rest metric? I for switch are down expectations on the the your but in talk significantly about Okay. of

Gene Hall

question. great Yes,

business like year. On course of in playing headcount the catch-up hiring and Consulting we're a on – over last side, of we the lot our

did still we the demand. fairly utilization team tough a year. overall a over really good the in the QX. last year, on hotter so And but We're first we so were grow I'd say the in perspective. half We're last backlog the last aggressively exiting a position demand than back And good seeing that half we of really based comp normal seeing ran from bit it's year in little year, of particularly

the we also and sure we to the top headcount make making sure it just we're that situation and feel now line like And delivering We've calibrated from but continue perspective demand. Consulting. right perspective, are got demand in again, monitor deliver the appropriately are on we'll with that got that strong can good business, we're backlog, rest a there a we like of strong and make sure We've well. as margins to both we

Jeff Silber

Okay. Thanks color. much. Appreciate so the

Operator

you. Thank

from next Manav with Patnaik Our Barclays. question comes

is line Your open.

Manav Patnaik

is now? the help Good that hoping on right I expense you. the us could was the through quarters S-part of And like SG&A, you just still cadence with side, morning. two-thirds the Craig, Thank just specific mix to there.

Craig Safian

Yes. Manav. morning, Good

a high-XXs About is you and S-part portion, of so look GTS the the if rolling to on a again it notably, percent or selling. running of think the most two-thirds basis. SG&A So the – it line, mid-XXs selling GBS at revenue four-quarter as of

other Although rate for what cadence do rate sales a run have Andrew's rough the the Merit that QX, adjusted sales to April as is I spending impacts we that our on goes and run S-line few in with OpEx questions well. question, conference so similar organizations organizations few look the of and And outlined SG&A – effect SG&A QX, QX rate. run ago, X, and into at QX.

we do QX. more and mentioned, in travel – travel I As QX

QX expense QX, you that SG&A you And QX, view have on and those how of should bake you a if bake should year. pretty so good look in, in, things this

Manav Patnaik

it. Got

my how question because help is helpful. That's that be multiyear duration And more, then should us contract, your was that business Okay. of remind much is what Like obviously your now more multiyear you here? average can resilient second you just contract? what

Craig Safian

absolutely. Yes,

multiyear So the a our overall XX%. around as of research contracts is percent business

in a that up strategic good of resiliency large not the and having renewal for focusing to contracts small two-year due multi-year in that contracts, we value than recognize The segment portion up two-year will of are XX% the of about but more do thing have although force are contracts. multi-year are growing bulk right, XXXX our course we multi-year we contract contracts So have a tied the this a in year, nature. us. some contracts. clearly of multi-year of on them note that Important you're of value the clearly is of And importance over business terms contracts the come but of in obviously, for

well. as do salespeople Our

in frankly; quite good are of of contracts, have multi-year much tied it's for them well strong a that the so too. it's most clearly element as business do contracts. clients But again them but two-year Our up we

Manav Patnaik

Thank Got you. it.

Operator

moment. One you. Thank

Moore have We with from Jefferies. a question Stephanie

open. is line Your

is open. line your Stephanie,

Stephanie Moore

Yes. No. you're has I clearly business, changed just on and other hearing get Hi. wanted strong Good bookings side Would [indiscernible]? if color to Hi. demand growth. Good touch of morning. maybe what still the levels to that love advanced demand maybe more all throughput the versus really to on morning. comp regards in to

Gene Hall

question. great a it's Stephanie, Yes,

a demand do really that own that. there's for our robust Conferences and on So important Conferences events, to exhibitors. which of part take are and we're it business, is in-person lot of a demand pent-up from My very Conferences, both of attendees of part from our seeing are

And so business. strong we're all seeing very demand the of parts on

Stephanie Moore

Or macro? of the number that of in fees a part And seeing at or the side then activity? kind and Great. curious on just same overall general just Maybe given all Thank clients for customers upselling just follow-up. level you're an cross-selling just you. Consulting still in you. are from the any seeing on I'm back pulling Thank what uncertain you're standpoint. of

Craig Safian

Craig. its Stephanie Hi

because your I I question at it heard sure then I research. not heard clarify Consulting completely. beginning, the heard to I'm but just So

you could the Would mind? you just question? So repeat

Stephanie Moore

cross-sell late, maybe standpoint, I'm seen upsell you. Thank and and I activity all? back I change No. as just sorry. seeing what of any apologize. if clients in pulling you're was an curious at on from you've

Craig Safian

Yes.

we've clearly wherever environment sort do in upselling We're described is want with vendors, tech and can. a license like Gartner so and they think fully huge and value out their or challenged they to really here in our get their our I relationships, tech or seeing don't this of may clients that particularly so there. vendor are areas the So reduce cancel we as tumult [ph] in certainly the what challenging in upsell clients given think detail, the still recalibration of I we space. more two

help. well, of and doing back to overall, We're it seeing as be Gene that. things offering really value we'll need end I a as comes But we're that all regional user strong in really industries proposition as we're our that think or some clients And more the in and get banking like look challenged that markets as and like mentioned, of of impacted year. every we able level increase should at And to spend when retention growth each – delivered. maintain you wallet if average our within on right stabilize, kind amount to those the in investment fact the the historically things back numbers we've clients, the then long

Stephanie Moore

much. so you Thank Understood. Great.

Operator

you. queue. for closing And questions there remarks. to the Hall other to no in Thank are I'd like it back Gene turn

Gene Hall

Gartner take across away from Well, you value incredible are or today's in here's saw XXXX, what we to In the strong delivers growth I'd of struggling of business. like anywhere that call. thriving, between. first again the quarter enterprises

insights by the changing delivered Our exceptionally to success. being world, address mission-critical priorities. and today's sustained And of agile adapting we've a record

to long-term environment. know to demand in covered hiring We be things and the aligned with successful any our and our recent We've right around opportunity. do

to positioned far future. growth are we ahead, well into Looking drive the

generate We net flow well expect in of income. modestly and increase cash free margins excess over significant time, we to

Even time. our increases as growth, of outstanding excess to future shares significant over returns invest we'll shareholders, and we levels return which in capital reduces

Thanks for next forward updating today, look we joining you again us to and quarter.

Operator

for you participating. concludes Thank This conference call. today's

disconnect. now may You

Gartner (IT) 2 May 232023 Q1 Earnings call transcript